The Financial Side of Miami Beach's Resiliency Program

Resiliency

Susan Askew
Susan Askew

The Financial Side of Miami Beach's Resiliency Program:

Commissioner wants review to include understanding of the access to and cost of capital

As Miami Beach reassesses its resiliency strategy, Commissioner John Alemán is focusing on the impact, to date, of the City's resiliency projects on its access to and cost of capital.  She’s added a discussion item to this week's Commission agenda with the City’s financial advisor to raise the issue.
 
“As Miami Beach continues forward with infrastructure upgrades to its aging and failing water, sewer and stormwater systems, both access to capital and cost of capital are extremely important,” Alemán said. “To what extent the City’s response to climate change is affecting the decision-making of investors, credit rating analysts, and bond insurers ought to be well understood. These aren’t sexy questions to most residents, but they are crucially important for us to understand as the impact could be in the hundreds of millions of dollars if we are perceived to misstep.”
 
During a discussion in April regarding the issuance of a General Obligation (G.O.) Bond, Julie Santa Maria, a Director with RBC Capital Markets and the City’s financial advisor for the past ten years, said “Ratings agencies have increasingly focused on climate change and made it transparent that they are going to or that they are factoring in management and cities and counties response to climate change in their planning. They are making it very apparent to local governments and investors that they will take action in terms of downgrades if they don’t see governments responding in a sustainable manner to address these changes.”
 
She noted that because Miami Beach was “ahead of its time” in terms of resiliency, the City issued the first tranche of stormwater bonds in 2015 for projects to address flooding and sea level rise “and we received very strong ratings." When the City issued the bonds for the Convention Center construction, Santa Maria said, “We received a lot of questions from institutions and the rating agencies about the City’s response to climate change.” Being able to point to the first tranche of bonds, along with the City’s implementation plans, and its commitment to issue future bonds to complete those plans, led the City to receive another favorable rating, she said. And, when the second tranche of the stormwater bonds and water and sewer bonds were issued in 2017, the City once again received strong ratings.
 
“We had lots of questions about the plan and the continuance of the plan,” she said. “It is just very much on the forefront of investors' and rating analysts' and insurers' – bond insurers' – minds of how coastal communities are addressing climate change.”
 
 
 
 

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