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Fitch Rates Miami-Dade County, FL's Public Facilities Revenue Bonds 'AA-'; Outlook StableFitch Ratings has assigned a rating of 'AA-' to the following revenue bonds to be issued by Miami-Dade County, Florida: --$227,475,000 public facilities revenue and revenue refunding bonds (Jackson Health System), series 2015A; --$55,870,000 public facilities revenue refunding bonds (Jackson Health System), series 2015B. The bonds will be sold on or about June 23 via negotiation. Proceeds will refund the county's outstanding series 2005 and series 2009 bonds yielding an estimated net present value savings of $34.3 million or 11.1% of refunded par. Proceeds will also fund a $25.5 million project fund deposit to pay or reimburse the Public Health Trust of Miami-Dade County (the PHT) for the cost of certain additions to PHT facilities. Fitch also affirms the 'AA-' rating on $77.4 million (pre-refunding) of outstanding public facilities revenue bonds (Jackson Health System), series 2009. The Rating Outlook is Stable. SECURITY The public facilities revenue bonds are payable in the first instance by the gross revenues of the PHT derived from the operation of certain county health facilities including but not limited to Jackson Memorial Hospital and Holtz Children's Hospital. The bonds are also secured by a cash funded debt service reserve fund (DSRF) equal to maximum annual debt service (MADS). The county covenants to budget and appropriate non-ad valorem revenues to replenish any draws from the DSRF. The obligation of the county to budget, appropriate and make payments to the DSRF from its legally available non-ad valorem is subject to the availability of such funds after satisfying funding requirements for essential governmental services of the county and debt service on bonds secured by a lien on such revenue. KEY RATING DRIVERS NON-AD VALOREM COVENANT: The 'AA-' rating is based on Miami-Dade County's covenant to budget and appropriate non-ad valorem revenue to maintain the balance in the DSRF and Fitch's view of the county's long-term general credit quality. ADEQUATE FINANCIAL POSITION: General fund operating results have been variable over an extended period, often sensitive to broader economic conditions that impact its property and sales tax revenue streams. Reserve levels have improved from the trough of the recession, providing a good cushion against unanticipated budgetary pressures. Good revenue raising capacity exists under statutory property tax limits. Expense pressures are driven by labor costs and contributions to health and transit operations, which warrant close attention over time. MANAGEABLE LIABILITY PROFILE: Overall debt levels are expected to remain moderate. Pension benefits are largely provided by the Florida Retirement System, which is adequately funded, and a fully funded county sponsored plan for certain employees of the PHT. The cost of funding the county's debt, pension, and retiree health liabilities consumes an affordable share of the governmental fund budget. ECONOMY VIEWED FAVORABLY: Fitch expects the broad expanse of the economy and its significant depth to stimulate growth and lend stability to the rating over time. RATING SENSITIVITIES FINANCIAL CUSHION: Fitch considers the maintenance of an adequate reserve position as important to the county's general creditworthiness. Erosion of reserve levels over time would be inconsistent with the current rating. CREDIT PROFILE The PHT is an independent body created by the board of county commissioners in 973 responsible for the governance, operation, and maintenance of the Jackson Health System (JHS). JHS is an integrated health system consisting of Jackson Memorial Hospital, the primary public safety net hospital and teaching hospital for the University of Miami; multiple primary care and specialty care centers; two long-term care nursing facilities; Jackson Behavioral Health Hospital; and Holtz Children's Hospital, among other facilities. RATING DRIVEN BY COUNTY GENERAL CREDIT QUALITY The 'AA-' rating on the public facilities bonds reflects a strong link to the county's general credit quality evidenced in its covenant to budget and appropriate non-ad valorem revenue to maintain the required balance of the DSRF. The covenant shall be cumulative and shall continue until such legally available non-ad valorem revenue in amounts sufficient to make all required payments shall have been budgeted, appropriated and actually paid into the DSRF. Despite recent periods of financial stress and rate covenant violations at JHS the DSRF established for the public facilities revenue bonds has not been tapped to pay bondholders. Legally available non-ad valorem revenues are significant - estimated by Fitch at $654 million in fiscal 2014 after deducting debt service on bonds payable from a specific lien on such sources, legally restricted gas and fuel tax revenues, and a share of essential governmental services not funded by ad valorem taxes (in contrast, post-issuance MADS on the public facilities revenue bonds is projected at $24.1 million). Non-ad valorem revenues are an integral funding source for the county's general fund budget, approximating 50% of revenue on an annual basis. The county's overall financial health is characterized by an adequate reserve position with unrestricted general fund balances totaling $195.2 million or 9.9% of operating expenditures and transfers out in fiscal 2014, a history of uneven operating results but an improved near-term forecast reflecting growth in the economy and related fee and tax revenue, good legal capacity to increase property tax revenue, and moderate pressures from long-term debt and retiree liabilities. See "Fitch Rates Miami-Dade County FL Transit Sys Sales Surtax 'AA-'; Outlook Stable", dated April 29, 2015 for more information on the county's general credit quality. HEALTHCARE SURTAX A STRONG DEDICATED SOURCE FOR REPAYMENT The intended source of repayment for the bonds is a gross pledge of all revenues of the PHT and specifically a voter approved discretionary sales surtax imposed by the county at a rate of one-half cent since 1991 (the healthcare surtax). The healthcare surtax is collected by the state and distributed directly to the county on a monthly basis. The surtax ordinance specified that the proceeds shall be considered unrestricted tax revenue of the PHT and shall be used only for the operation, maintenance and administration of Jackson Memorial Hospital. Therefore the proceeds of the healthcare surtax are not available for other general purposes of the county. The county and the PHT entered a memorandum of understanding (MOU) in 2005 pursuant to which the county will make monthly deposits from healthcare surtax revenues to the debt service fund established under the bond ordinance for the public facilities revenue bonds. The healthcare surtax totaled $228 million in fiscal 2014 or 9.5x MADS on the public facilities revenue bonds. After the monthly debt service fund deposits, the county will remit the remaining healthcare surtax proceeds to the PHT. Additional information is available at 'www.fitchratings.com'. In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates, S&P/Case-Shiller Home Price Index, and IHS (News - Alert). Additional Disclosures Solicitation Status https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=985617 Endorsement Policy https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. View source version on businesswire.com: http://www.businesswire.com/news/home/20150529006139/en/ |
