A general obligation bond is a form of debt obligation that, when issued, provides local government with funds to finance large capital improvements, such as those currently proposed for enhancement of the City’s arts and cultural facilities.

General Obligation Bonds are backed by the full faith and credit of the City of Miami Beach, which means that the City is obligated to pay back the bonds plus interest by pledging its ad valorem taxing power. As such, the City uses a portion of its property tax revenues to repay the General Obligation Bonds in the form of annual principal and interest payments.

General Obligation Bonds require approval by a majority of the voters voting in a citywide referendum.

General Obligation Bonds allow the City to pay for major capital investments having a public purpose, such as the proposed bond program to improve facilities for arts and cultural institutions throughout the City, including museums, performance venues, artistic playgrounds, senior/cultural centers, the botanical garden, an aquatic sculpture park, and related artist/workforce housing for arts and cultural institutions.

Bonds are sold to investors and the proceeds from the sale of these bonds are used to pay for capital projects. Bond funds cannot be used for everyday operating costs, such as salaries for City employees (other than those working directly on capital projects). Such operating expenses are paid for by annual revenue that support the City’s General Fund, including property tax revenue, resort tax revenue, and other revenue.

The City is proposing a $159 million Arts & Cultural Bond Program.

The City dedicates a portion of its property tax revenues to repay debt incurred for bond-funded improvements. The proposed Bond Program would be funded by a City property tax rate increase for debt service. The $159 million Bond Program would be issued a few months after voter approval so that projects could begin to be implemented during 2023.

Yes. The City’s tax rate for debt service is a component of the City’s overall tax rate. For each individual property owner, the tax increase is estimated to be $21 per every $100,000 of a property’s taxable value once the bonds have been issued.

The City’s current tax rate (referred to as the “millage rate”) is at a historically low level. The debt service portion of the millage rate has increased recently to reflect a portion of the debt service associated with the implementation of the $439 million 2018 G.O. Bond program. Of the three planned tranches, only the first tranche of $151.1 million has been issued to date.

The Bond Program includes many planned and recommended large-scale projects for cultural facilities throughout the City. Current funding for capital projects in the City’s operating budget is very limited, compared to the number and costs of capital requests. Using bond financing to fund large-scale projects, in a period of relatively low interest rates and lower costs of borrowing (especially given the City’s favorable AA+ credit rating), allows the annual City operating budget to be allocated toward annual and ongoing costs such as maintenance, personnel, operations and public service programs.

The City of Miami Beach’s financial strength and stability has been recognized by independent credit rating agencies (Moody’s and Standard and Poor) that have rated the City’s bond program. The City’s credit rating from Standard & Poor is AA+, and its Moody’s credit rating is AA2, each reflecting the City’s track record of prudent fiscal management. The AA+/AA2 credit ratings mean that the City pays lower interest costs when bonds are sold, compared to municipalities whose credit ratings are not as strong as the City’s.

As of September 30, 2021, the City’s property tax supported debt is $179.3 million, which amounts to 0.4% of the $41.1 billion assessed property value in the City. The State of Florida limits property tax-supported debt to no more than 15% percent of the total assessed property value in the City, which means that the City cannot have more than $6.2 billion in property tax-supported debt outstanding. If the proposed Bond Program is approved by the voters, the City’s tax supported debt would be 0.8% of the total assessed property value in the City. If the remaining $284 million of G.O. Bonds for the 2018 Bond program are included, the City’s tax supported debt would be 1.5% of the total assessed property value in the City. Both of these amounts are well within the 15% G.O. bond debt limit permitted by law.

The existing G.O. Bond Oversight Committee, which has responsibility for overseeing the implementation of the City’s existing G.O. Bond Program, consists of City of Miami Beach residents, with two members residing in North Beach, two from Mid-beach, two from South Beach, and one at-large member. The City Commission tasked the G.O. Bond Oversight Committee with evaluating the proposed arts and culture projects, and recommending 3 different levels of funding, referred to as: Silver, Gold and Platinum.

The Committee prioritized and recommended projects taking the following into consideration:

• List of priorities provided by each of the institutions
• Cultural benefit associated with the proposed capital improvements
• Facility ownership (city-owned versus non city-owned)
• Previous funding received from the City, and additional funding potential through grants and/or donors

On July 20, 2022, the Committee presented to the City Commission a Silver program ($108 million), a Gold program
($141million) and a Platinum program ($175 million). The City Commission approved a final list of projects totaling $159 million which overwhelmingly accepted the Committee’s recommendations.

Transparency is of utmost importance to the City and the City has a G.O. Bond project website atwww.miamibeachfl.gov/2022election/. The website will provide updates as to the timeline for projects and progress. If the proposed Arts & Cultural Bond Program is approved, it is anticipated that the G.O. Bond Oversight Committee will be tasked with overseeing the implementation of the program.

Visit the City’s website at www.miamibeachfl.gov/2022election/.