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HomeMy WebLinkAboutLTC 545-2025 S&P Credit Ratings for Parking BondsMIAMI BEACH OFFICE OF THE CITY MANAGER LTC#LETTER TO COMMISSION TO: FROM: DATE: SUBJECT: Honorable Mayor Steven Meiner and Members of the City Commission Eric Carpenter, City Manager � {1,p� December 29, 2025 S&P Credit Ratings for Parking Bonds The purpose of this L TC is to advise the City Commission regarding the results of a recent credit review completed by Standard & Poor's Global Ratings on the City's Parking revenue bonds. •S&P has affirmed and maintained the current A+ rating on the City of Miami Beach's Parking enterprise revenue bonds with a stable outlook. S&P stated: •"The rating reflects our view of the Miami Beach local economy and its ability to generate demand for parking, despite exposure to the cyclical tourism industry. It also incorporates our view of the system's strengthened reserves, which have eliminated the need to issue additional debt to cover current capital projects." •"An advantage of the system is its good pricing power, as its rates are generally lower than those charged by privately owned competitors." 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. 545-2025 Letter to Commission S&P Credit Ratings for Parking Bonds December 23, 2025 Page 2 of 2 Rating Agency Credit Scale S&P Moody's Rating Description AAA Aaa Prime AA+ Aal AA Aa2 High grade AA-Aa3 A+ Al Upper medium Investment-grade A A2 A-A3 grade BBB+ Baal Lower medium BBB Baa2 BBB-Baa3 grade BB+ Bal Non-investment BB Ba2 grade speculative BB-Ba3 B+ Bl B B2 Highly speculative B-B3 Non-investment CCC+ Caal Substantial risks grade CCC Caa2 Extremely AKA high-yield bonds speculative AKA junk bonds CCC-Caa3 Default imminent cc Ca with little prospect C for recovery C D I In default S&P Global Ratings Research l'pdale: RatingsDirect® Miami Beach, FL Parking Revenue Bond Rating Affirmed At 'A+' December 19, 2025 Overview • S&P Global Ratings affirmed its 'A+' lo ng-te rm ra ting and u nderlying ra ting (SPUR ) on Miami Beach , Fla.'s parking revenue bonds. • The outlook is stable. Rationale Security The bonds are secured by net revenues of all but three city-owned parking facilities . Our ana lys is i ncorporates the character istics of th e entire parking system. The bonds are additionally supported by a debt service res e rve funded at maximum annual debt service. As of Dec. 1, there was approximately $54.7 m illion in bonds outstanding. In addition, there is $25.8 m illion outstanding on th e 2020 loa n with JPMorgan. Though this is an obligation of the city's general fund, debt service is supported by net parking revenues and the loan is reported as a liability of the parking system in the c it y's f i nancial stat ements. We consider the contingent li quid ity risk exposure from t he 2020 J PMo rgan loan as remote. Credit highlights The rating re flects a dominant parking provider for the Miami Beach area, w hic h ha s cons istently generated good demand for parking desp ite exposure to cyclica l tour ism. It also incorporates our v iew of the system 's improved reserves, which have eliminated t h e need to issue additional debt to cover current capital projects . Key strengths, in our view, of the parking system include its: • Genera l ly favorable demand for parking supported by a vibrant service area that is experien c i ng above-average population growth and is relatively car-focused; • Financ ial metrics we expect wi ll rema in healthy, with S&P Global Ra t ings-calculated debt service coverage (DSC), debt to net reve nu es, and unrestricted days' cash o n hand above 3x, www.spglobal.com/ rati ngsd i rect l'ri111aIT <:011t:1cl Quinn Rees New York 1-212-438 -25 26 quinn .rees @spglobal.com Kayla Smith Englewood 1-303-72 1-4450 kayla.sm it h @spglobal.com December 19, 2025 Miami Beach, FL Parking Revenue Bond Rating Affirmed At 'A+' below 5x, and above 400, respectively, considering relatively level debt service requirements, planned rate increases, no additional debt plans, no transfers out of excess revenues from the parking fund to the city, and plans to use some cash reserves to f u nd system capital needs . The parking system's key credit weaknesses, in our opinion, include its: • Geographic concentration in Miami Beach, which faces above-average exposure to physical hazards such as hurricanes compared to peers; and • Open flow of funds structure that, in the past, resulted in material transfers out of surplus parking system revenues to the city. Environmental, social, and governance We assessed the i mpact of environmental, social, and governance (ESG) factors on risks and opportunities for the parking system's credit. Per S&P Global Sustainable1 data, Miami-Dade County faces elevated physical exposure to hurricanes and extreme heat compared to peers. We note that the city is working to ha rden its physical assets to mitigate some of these risks, recently completing a sea level rise vulnerability assessment to identify exposed assets and target investment. Given the region's exposure to to urism, we believe a severe storm could reduce demand for parking in Miami Beach and pose some risk to the system's operations if it were to decline over a sustained period . We consider social and governance factors neutral in our analysis. Outlook The stable outlook reflects our expectation that financial metrics will be maintained at or near current levels, even as the city expects to draw down parking system's cash reserves to fund system's five-year capital improvement plan (CIP). Downside scenario We could lower the rating if the city resumes transferring excess revenue from the parking fund, or if the parking system draws down reserves and li qu idity below 800 days' cash while DSC simultaneously falls below 3x. Upside scenario We could raise the rating if the system sees further improvement in its financial metrics, though we are cautious of the system's exposure to severe weather events, open flow of funds structure, and competition from other operators. Credit Opinion Enterprise Risk Profile: Strong Diverse, car-dependent economy with some competition among parking providers Miami Beach is on a barrier island on the eastern side of Biscayne Bay in southeast Florida. It participates in the Miami-Fo rt Lau derdale-Wes t Pal m Beac h metropolitan statistical area (MSA), www.spglobal.com/ratingsdirect December 19, 2025 2 M ia mi Beach, FL Park ing Revenue Bond Ratin g Affirmed At 'A+' which, despite exposure to tourism (11.7% of employment in 2024), has a well-diversified economy, with the top three sectors being trade, transportation, and utilities (22 .3%); professiona l and business services (17.6%); and education and hea lth services (15.6%). The MSA also has healthy wealth indicators, with personal income per capita at about 120% of national levels . Th e parking system consists of over 16,800 parking spots spread across 62 surf ace lots and 12 garages, in addition to approximately 4,800 on-street metered spaces. Despite tro lleys and buses providing public transportation options in M iami Beach, the area still emphas izes cars . The parking system faces overall moderate competition , with its share of public parki ng assets ranging from about 14% in Mid Beach to 60% in South Beach . The system's current largest project, the 72nd Street Community Complex, will expand its foothold in North Beach , adding about 500 spaces to the system's offerings . Management insights: proactive and sophisticated management has supported system performance Though management does not maintain comprehensive financial targets beyond liquidity, it gene r ally budgets conservatively, and the syste m regularly outperforms its budget. Strategic focus areas include the 72nd Street Community Complex to expand system assets and improve its market share in North Beach. Th is project is the highlight of the system's five-year CIP, which is updated annually and is broken out by funding sources. Parking rates are reviewed reg u larly. While the city commission blocked an automatic rate increase tied to CP I in 2024 , management sa id this did not have a material impact on revenue as it only affected res ident parking rates. The city is also planning for deve lop i ng risks such as cyber security and environmental disasters, both of wh ic h are considered as part of the budgeting process. Recently improved r eserves, in our view, should mitigate some of the impact of a n unexpected disaste r or expense. Financial Risk Profile: Raised To Very Strong DSC should remain above 3x despite expense growth S&P Global Rat i ngs-ca l culated DSC has been maintained above 3x since 2021. Though it has declined somewhat recently (from 4.2x in f iscal 2022 to 3.6x in 2024), we expect it wi ll stabilize near its current leve l. Much of the reason for the decline was compression of net revenue , which in turn was driven by rapid expense growth in 2023 and 2024 . According to management, this was t he r esult of a phased re instatement of ro l es t hat we r e el im in ated d uring the pan d em ic to cut costs. Management also exp lained that i ncreased usage has also driven greater need for landscaping and clean ing services, which increased the system's contractual services expense. Going forward, management believes expense growth shou ld stabil iz e and reflect more standard inflationary ad j ustments. Previously discussed issuance cancelled due to strength of reserves Prior to the pandemic, the city of Miami Beach, of which the parking department is a component un it, r egularly tra nsferred excess parking revenue from the parking fund to the city's general fund at t he end of the f iscal year. Thi s transfer has not occurred since 20 19, and as a result t he parking system's financia l metr ics have improved significantly. Based on 2024 audited information, the parking system's unrestricted cash has nearly doubled since fiscal 2020. The lack of transfers www.spglobal.com/ratingsdirect Decembe r 19, 2025 3 Miami Beach, FL Parking Revenue Bond Rating Affirmed At 'A+' out, combined with conservative budgeting practices, has allowed management to cancel a previously planned $20 million bond issuance, instead opting to fully cash fund its CIP. Management says that t he c ity has no plans to resume the parking transfer, w hi ch has not occurred since 2019 . However, were the city to resume these transfers from the parking fund, we could lower the rating, depending on the amounts withdrawn and the resulting impact on financial metrics. As a resu lt of the city ceasing the transfers of excess parking revenue to the city's general fund, the parking system's reserves have grown materially over the past few years . The park ing system had previously planned for $20 million in bonds to complete the ongoing 72nd Street Community Complex but now is able to cash -fund the project. Management said it now has no plans to issue additional debt. Existing debt service is approximately level until 2041, when the to tal annual debt service payment rises about 4 .2% to $6 .3 m i llion from $6 million. The 2020 JPMorgan parki ng loan has a f i nal matur ity of 2040, and the outstand ing 2015 parking revenue bonds mature in 2045. CIP is dominated by 72nd Street Complex, rehabilitation projects The park in g system's 2026 -2030 CIP totals about $54 .5 mi llion, with approximately $24 mi ll ion of t hat go ing to the 72nd Street Community Complex in fiscal 2026. The rema ini ng amount is going primarily to repair and rehabilitation projects spread throughout Miami Beach's owned parking faci li ties and includes updates like lighting, painting, fire alarms, and signage, a mong other th ings . While we expect some deteriora t io n in liquidity because of management's decision to cas h-fu nd the CIP , we be l ieve the system has c us hio n at the c urrent rating level to absorb t he anticipated spending. Our assessme nt incorpo r ates the impact of the parking system f ully cas h- fund ing the entire CIP, based on aud ited 2024 actual cash and equivalents. Miami Beach, Florida--ratings score snapshot Enterprise r isk profile Economic fu ndamenta ls Industry risk Market pos ition Management and governance Financial risk profile Financial performance Debt and liabilities Liqu idity and financ ial flex ibility Miami Beach, Florida--financial and operating data --Budget----Fiscal year ended Sept. 30-- 2026 2024 2023 2022 2021 2020 Financial performance Total operating reve nu e ($000s) 54,639 50,398 49,641 46,301 37,467 31,761 Plus: interest income ($000s) 2,645 3,965 2,754 1,319 501 1,216 www.spglobal.com/ratingsdirect 3 2 3 2 2 2 Medians for 'AA' category rated parking systems 2024 76,555 MNR December 19, 2025 4 Miami Beach, FL Parking Revenue Bond Rating Affirmed At 'A+' Miami Beach, Florida--financial and operating data Medians for 'AA' category rated --Budget----Fiscal year ended Sept. 30--parking systems 2026 2024 2023 2022 2021 2020 2024 Plus: other comm itted recurr ing NA 4,736 4,198 3,637 2,750 2,662 MNR revenue sources (SOOOs) Less: total O&M expenses and like 40,313 37,264 33,461 25,916 25,738 29,288 48,368 transfers out, if any, net of noncash expenses Numerator for S&P Global Ratings ' 16,971 21,835 23,132 25,341 14,980 6,351 MNR coverage calculati on ($000s) Total debt service ($000s) 6,004 6,004 6,004 6,004 3,607 4 ,743 MNR Denominator for S&P Global Ratings ' 6,004 6,004 6,0 04 6,004 3,607 4,74 3 MNR coverage calcu lation ($000s) S&P Globa l Ratings-ca lculated 2.83 3.60 3.85 4.22 4.15 1.34 1.32 coverage (x) Issuer provided/indenture ca lculated NA 5.24 5.88 8.66 4.95 1.58 N/A coverage (x) Debt and liabilities Deb t (S OOOs) 80,517 83 ,218 85,836 88,371 90,856 90,941 164,093 EB IDA ($000s) 14,326 13,134 16,180 20,385 11 ,729 2,473 MNR S&P Global Ratings-ca lculated net 16,971 21,835 23,132 25,341 14,980 6,351 40,957 revenue ($000s) Debt to net revenue (x) 4.7 3 .8 3 .7 3 .5 6.1 14 .3 5.4 Debt to EBIDA (x) 5.6 6.4 5.3 4 .3 7.7 36.8 5.9 Liquidity and financial flexibility Unrestricted cash and investme nts NA 102,402 86,988 73,662 58 ,668 52,154 196,325 ($000s) Unrestricted days' cash on hand NA 1,003.0 948.9 1,037 .5 832 .0 650.0 MNR Avai lable liquidity t o debt(%) NA 122.6 101.3 83.4 64.6 57.3 MNR Operating metrics • parking Parking revenue ($000s) 50,184 55,467 52,816 51,256 37,467 31,761 MNR Metered or on -street spaces 4,843 4,843 5,048 5,04 8 5,048 5,048 MNR Garaged or off-street spaces 11,993 11 ,993 11,996 11 ,961 11,961 12,033 MNR Total spaces 16,836 16,836 17,044 17,00 9 17,009 17,081 3,306 Garages or off-street facilities 74 74 74 74 71 10 MNR O&M--Operations and maintenance. EBIDA = Total operating revenue -total O&M expenses exc l. noncash expenses. S&P Global Ratin gs-ca lculated net revenu e= (Total operating revenue + other recurring nonoperating revenue committed to debt service) -total O&M expe ns es excl. noncash expenses. Ava ilable liquidity = unrestri cted cash and investments+ total contingent l iqu id ity resources -contingent liabilit ies. Examples of t otal conti ngent l iqu idity resources in clude worki ng capital line of c redit and other ava ilable cash reserves not already i ncluded in unrestricted cash and invest ments . See Global Not-For-Profit Transportation Infrastructure En t erprises: Methodologies And Ass umpt ions criteria for more S&P Gl obal Rati ngs definitions and calculat ions. N/A--Not applicable. N.A.--Not available. M N R--M edian not reported . Ratings List Ratings Affirmed Transportation Miami Beach , FL Parking System A+/Stab le www.spglobal.com/ratingsd irect December 19, 2025 5 M iami Beach, FL Parking Revenue Bond Rating Affirmed At 'A+' -h'3 c ,.u1~. .., ) mg :)elo;; t •1 :1 UA-S. r .J e l ;;re .1t101 .;'t j l)t 1 JGl:11 1 1r: ut t r c, d t ·.o•t nt"" ,.Jt the U.S . ubl1c ,11,rn, .e ob11c:1c, -:if·~r~ t fw! "r·iting.sthu.nth, 1 t1115o'nse••t~rln,cxt cthe,.~S1Dd1p 'wr Jb11~; r1on, .,uch '1> cro?.rJ1r Pnhari"·r.:m;:,,,t, :t.~ ~ r· -ult n1 defed~--l.nce> or trer t .c \SID ·I,; .._or t \;f!1 )n., Peth':'1 n• P t ,r:-.. c.1 :I d 111t r 1 ~Ci mc1Lrit ~:,. T"n nnt nt ~ .:,t I Jr I ;.-> e1 t ot.r -to• .. 'kfrJ. c1a1oi:1llfl"r\ .. ' n ,\e1ert1_e)~ th ~nrnt 1tP;.fOi.lJ'.,:! t d~;T•"'rnl agJ· r ~d£;•-ur )ur-:-th r ct n-s,.t Ji~/ p, ym • Certain terms use d in this report, particularly certain adjectives used to express our view on rating releva nt factors, have specific mea nin gs ascribed to them in our criteria , and should therefore be read in conjunction with such criteria. Please see Ratings Crite ri a at https:/ /disclosu re.spglobal.com /ratings/en/regulatory/ratings-criteria for further in formation . A description of each of S&P Global Rati ngs' rating categories is contained in "S&P Globa l Rati ng s Defin itions" at https://disclosure.spglobal.com/ratings/en/regu la tory/article/-/view/sourceld /504352 . Complete ratings information is available to RatingsDirect subsc ribers at www.ca pi taliq.co m. All rati ngs referenced he rein can be found on S&P Glo bal Rati ngs' public website at www.spglobal.com/rati ngs . www.spglobal.com/ratingsdirect December 19, 2025 6 Miami Beach , FL Parking Revenue Bond Rating Affirmed At 'A+' Copyright© 2025 by Standard & Poor's Financial Services LLC. All rights reserved. No content (including ratings, credit-related analyses and data, valuations, model, software or other appl ication or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior wr itten permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. 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