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HomeMy WebLinkAboutLTC 540-2025 Moody's Credit Ratings for the City of Miami Beach23 540-2025 MIAMI BEACH OFFICE OF THE CITY MANAGER LETTER TO COMMISSION LTC# TO : FROM: DATE: Honorable Mayor Steven Meiner and Members of the City Commission Eric carpenter, City Manager ~ ¥ December , 2025 SUBJECT: Moody's Credit Ratings for the City of Miami Beach The purpose of this L TC is to advise the City Commission regarding the results of a recent credit review completed by Moody's Ratings on the City of Miami Beach issuer ratings . • Moody's has affirmed the current Aa2 rating with a stable outlook on the City's General Obligation (G.O.) Bonds while concurrently affirming the City's Aa3 resort tax rating, Aa2 water and sewer revenue bond rating, Aa3 stormwater revenue bond rating, and A2 parking revenue bond rating. Moody's has mainta ined all the City's current ratings and all with a stable outlook. Moody's stated: • Related to the general government -"Finances are very strong and should remain stable given strong budget management" and "the stable outlook on the city reflects strong management which has grown reserves in line with budgetary growth." • Related to Water and Sewer Fund -"Rating on the water and sewer revenue bonds reflects the utility's very low debt burden and above average debt service coverage supported by automatic annual rate increases." • Related to Stormwater Fund -"Rating on the stormwater revenue bonds reflects the system's very strong cash position , adequate coverage and high debt burden in excess of medians." • Related to Parking Fund -"Rating on the parking revenue bonds reflects a large enterprise (including 16,836 parking spaces in 74 lots and garages as well as metered on-street parking) which is largely dependent on tourism activity. The rating also reflects strong coverage and cash driven by timely rate increases." Please find attached a rating agency credit scale for your information as well as a copy of the credit rating report. Should you have any inquiries regarding this information, please contact Jason D. Greene, Chief Financial Officer. JOG J.&- Letter to Commission Moody's Credit Rating December 19, 2025 Page 2 of 2 S&P Moody's AAA Aaa AA+ Aal AA Aa2 AA-Aa3 A+ Al A A2 A-A3 BBB+ Baal BBB Baa2 BBB-Baa3 BB+ Bal BB Ba2 BB-Ba3 B+ Bl B B2 B-B3 CCC+ Caal CCC Caa2 CCC-Caa3 cc Ca C C D I Rating Agency Credit Scale Rating Description Prime High grade Upper medium Investment-grade grade Lower medium grade Non-investment grade speculative Highly speculative Non-investment Substantial risks grade Extremely AKA high-yield bonds speculative AKA junk bonds Default imminent with little prospect for recovery In default MOODY'S RATINGS Rating Action: Moody's Ratings affirms Miami Beach, FL's Aa2 issuer rating; also affirms related ratings; outlook stable 17 Dec 2025 New York, December 17, 2025 --Moody's Ratings (Moody's) has affirmed the city of Miami Beach, Florida's Aa2 issuer and general obligation unlimited tax (GOUL T) ratings. Concurrently, we have affirmed the city's Aa3 resort tax rating, Aa2 water and sewer revenue bond rating, Aa3 stormwater revenue bond rating, and A2 parking revenue bond rating. At the end of fiscal 2024, the city had approximately $1.2 billion in debt outstanding. The outlook is stable. RATINGS RATIONALE The Aa2 issuer rating reflects the city's strong economy driven largely by tourism. Full value per capita is high, in excess of $1 million, reflecting luxury real estate and the large commercial tax base, primarily hotels and retail which cater to tourists. The city's substantial property wealth contrasts with a resident income ratio that lags medians at 76.3% reflecting the high cost of living, tourism based economy and substantial retiree population. Finances are very strong and should remain stable given strong budget management. Long term liabilities and fixed costs exceed medians at 290.2% and 18.7% of revenues, respectively. The city's location on a barrier island in south Florida leaves it vulnerable to sea level rise, flooding and hurricanes. The Aa2 GOUL T rating is placed at the same level as the issuer rating based on the unlimited ad valorem tax pledge. The Aa3 resort tax rating is a notch below the issuer rating reflecting the narrow nature of pledged resort taxes (hotel and food and beverage taxes), which is offset by strong debt service coverage of 8.8x in fiscal 2024. The Aa2 rating on the water and sewer revenue bonds reflects the utility's very low debt burden and above- average debt service coverage supported by automatic annual rate increases. Although cash is somewhat narrow for the rating category, this is offset by the fact that the city is not responsible for treatment, which is done by Miami-Dade County (water and sewer rating Aa3 stable). The system is a business-type enterprise of the city, which benefits from a tourism-based economy, strong overall finances and an ample full value per capita that has doubled in the last decade. The Aa3 rating on the stormwater revenue bonds reflects the system's very strong cash position, adequate coverage and high debt burden in excess of medians. The A2 rating on the parking revenue bonds reflects a large enterprise (including 16,836 parking spaces in 74 lots and garages as well as metered on-street parking) which is largely dependent on tourism activity. The rating also reflects strong coverage and cash driven by timely rate increases. RATING OUTLOOK The stable outlook on the city reflects strong management which has grown reserves in line with budgetary growth. The stable outlook on the water and sewer enterprise is driven by the city's strong management of assets and automatic pass through of rate increases from the county as well as automatic annual rate increases indexed to CPI. The city's ongoing investment in mitigating physical climate risks is also incorporated into the rating outlook. The stable outlook on the stormwater enterprise is driven by strong management of the significant debt profile, timely rate increases and maintenance of stable cash and coverage levels. The stable outlook on the parking enterprise reflects strong management of assets, strong cash position and timely rate increases. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS -Reduced liabilities and fixed costs (all ratings) -Improved coverage (water and sewer and stormwater ratings) FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS -Significant additional debt (all ratings) -Narrowed debt service coverage (water and sewer, stormwater and parking ratings) PROFILE The city is located on a barrier island in southeastern Florida in Miami-Dade County. The water and sewer enterprise provides retail water and sewer services to the residents of Miami Beach, Florida. The enterprise serves approximately 13,745 water and 10,046 sewer accounts. Water supply and treatment, as well as wastewater treatment, is provided by Miami-Dade Water and Sewer enterprise. The stormwater enterprise provides stormwater services throughout the city. The Miami Beach Parking Enterprise maintains over 16,000 parking spaces throughout the city on street and in lots and garages. METHODOLOGY The principal methodology used in the issuer, general obligation, and resort tax ratings was US Cities and Counties published in December 2025 and available at https://ratings.moodys.com/rmc-documents/455983. The principal methodology used in the water and sewer and stormwater revenue bond ratings was US Municipal Utility Revenue Debt published in March 2024 and available at https://ratings.moodys.com/rmc- documents/416489. The principal methodology used in the parking revenue bond rating was Publicly Managed Toll Roads and Parking Facilities published in May 2023 and available at https://ratinqs.moodys.com/rmc- documents/403120. Alternatively, please see the Rating Methodologies page on https://ratinqs.moodys.com for a copy of these methodologies. REGULATORY DISCLOSURES For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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