Broward County, Florida, bonds upgraded by Moody’s

Broward County, Florida’s Tourism Development Tax, sales tax, and Professional Sports Facilities tax and revenue refunding bonds were upgraded by Moody’s Ratings, affecting about $628 million in bonds.

Moody’s upgraded the county’s TDT revenue bonds, Series 2021 (Convention Center Expansion Project) to Aa2 from Aa3; sales tax bonds, Series 2020, to Aaa from Aa1; and PSF Tax and Revenue Bond, Series 2006A and 2006B, to Aa1 from Aa2. The outlooks are stable.

Moody’s affirmed its Aaa issuer rating on the county government, whose total debt including enterprise debt is $5.3 billion.

The upgrades took place in conjunction with an update to Moody’s U.S. Cities and Counties methodology.

The agency rated the Tourism Development Tax bonds two notches below the county’s issuer rating, reflecting what it said was a narrow pledge but a solid maximum annual debt service coverage that currently exceeds two times and is expected to remain that way for the near future. The upgrade affected $479 million in debt.

The upgrade of the sales tax bonds reflects the “broad nature of the pledge and strong maximum annual debt service coverage of about nine times. Debt service coverage is expected to remain around this level. The revenue stream has shown limited volatility and average annual growth over the last ten years has been 4.74%, Moody’s added. The upgrade affected $97.2 million in debt.

Moody’s said its Aa1 rating on the Professional Sports Facilities Tax bonds reflected the narrow nature of the pledge considered in tandem with the strong maximum annual debt service coverage of approximately four times. The rating benefits from a closed lien and covenant to budget. The revenue steam has had limited volatility in recent years and average annual growth over the last 10 years has been 7.56%. The upgrade affected $51.3 million in debt.

The tourism development tax bonds are supported by three percentage points of the county’s 6% tourism development tax.

The sales tax bonds are supported by the county’s portion of the state distributed local government half-cent sale tax levied in the county.

The PSF bonds are secured by three revenues: a 2% PSF facilities tax levied on hotel stays of less than six months, proceeds from the state sales tax rebate (capped at $2 million annually), and a county preferred revenue allocation from Amerant Bank arena, where the NHL Florida Panthers play.

“The county is pleased with Moody’s recognition and upgrade,” said Monica Cepero, the Broward County administrator. “We believe this is reflective of the fiscal prudence and acuity of the Board of County Commissioners and our management team, coupled with strong debt service coverage.”