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1. How will the city pay for all of these projects?

In September 2013, the city issued $59,815,000 of Special Obligation Refunding and Improvement Revenue Bonds, Series 2013. These bonds will be used to fund the projects listed. Monies received from the sale of bonds was also used to pay off the remaining balance of a $10 million bank loan (Capital Improvement Revenue Note, Series 2008) that was used to fund Vizcaya and other park improvements.

2. What are bonds?

A bond is basically a loan or an IOU. Instead of obtaining a loan from a bank, a corporation or government can issue bonds. The bond itself represents a promise to pay (1) a sum of money at a designated maturity date plus (2) interest at a specified rate based on the face value of the bonds. The city’s bonds have a face value of $5,000 each and pay interest annually at rates of 3.25% to 5%. The bonds mature at various times between 2017 and 2038. The buyer of the bonds receives interest on an annual basis and then receives the face value ($5,000 for Miramar) when the bond matures. The Series 2013 bonds are tax exempt which means the buyer generally does not have to pay taxes on the interest earned on the bonds.

3. How will the bond proceeds be spent?

The city received approximately $60 million in bond proceeds. Of this amount, $39 million will be used for the capital projects and approximately $9 million was used to pay off the bank loan mentioned above. An additional $7 million is for capitalized interest; these are funds set aside for future interest payments that will be paid to the bondholders. The city will not make principal payments on the bonds for the first 3 years, but interest will be due and payable to the bondholders starting from the first day of issuance. The remaining funds, approximately $1.3 were for underwriter fees and issuance costs.

4. Why didn’t the city just borrow from a bank?

Banks have a limit to the amount that they can lend a government in any year, as well as a shorter time period to pay back the loan. Since Miramar’s anticipated projects exceeded that amount, issuing bonds was a practical way to obtain the funds required.

5. Why did the city pay off the Vizcaya loan with bond money?

The Capital Improvement Revenue Note, Series 2008 (the Vizcaya loan) had a higher interest rate than the interest rate on the bonds. It was more economical to borrow more money to pay off the higher rate debt.

6. How will the bonds be paid?

The bonds will be paid from any legally available Non-ad Valorem (nonproperty tax type) revenues, impact fees and other funds appropriated in the annual budget.

7. Will my taxes increase in order to pay for the debt service on the bonds?

No, nonproperty tax revenues, impact fees (parks and recreation), and other legally available funds will be used to pay the principal and interest due on the bonds.

8. Why didn’t the city wait until they had the money available to pay for these projects instead of issuing debt?

It would take an extended period of time for the city to accumulate sufficient funds to pay for these projects. During this interim period, our residents and businesses would not have the police headquarters, other public safety projects, or be able to enjoy the park amenities envisioned for the park improvement projects.

The city also decided to borrow the funds since interest rates are low and as time goes on, the cost of construction (labor and material) rises and waiting would exponentially increase the cost of the projects.

The city’s decision to use debt to pay for projects now is the same as the purchase of a home would be for a family. Most families do not want to wait until they have enough money to purchase a home but instead take out a mortgage to buy the home now and enjoy the benefits while paying for the asset.