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Fitch Affirms Miami-Dade County (Florida) Stormwater Utility Revs at 'AA-'; Outlook Stable.

NEW YORK -- Fitch Ratings takes the following rating action on Miami-Dade County, FL (the county) as part of its continuous surveillance effort:

--Approximately $88 stormwater utility revenue bonds affirmed at 'AA-'.

The Rating Outlook is Stable.

SECURITY

Parity bonds are secured by a first lien on revenues of the stormwater utility, which are defined as all revenue received by the county from the collection of the stormwater utility fees less the amount retained by the county as an administrative charge.

KEY RATING DRIVERS

--Strong financial margins provide ample debt service coverage, sizeable excess cash for annual capital funding and substantial reserves.

--Collection of user charges is consistently at or close to 100%.

--The system's affordable fees offer additional flexibility.

--Debt levels are low, amortization is above average and no future borrowing plans exist.

--A strong additional bonds test that requires 1.5 times (x) maximum annual debt service (MADS) coverage by historical revenues for parity debt issuance provides additional protection to bondholders.

--Future incorporations may reduce the size of the service area and operating revenues of the system, although the impact of pledged revenues for currently outstanding bonds would be neutral.

CREDIT PROFILE

Annual debt service (ADS) coverage, while strong at nearly 4.0x in each of the past three fiscal years, has diminished since the earlier part of the prior decade, primarily due to the issuance of bonds in 2004. Nevertheless, the utility continues to generate sufficient revenue to comfortably meet debt service obligations and fund its capital needs on a pay-go basis. The county reports that the stormwater system ended fiscal 2010 with a substantial $46.7 million in unrestricted cash.

The stormwater fee is included on the county's water and sewer bill, and the current fee of $4.00 per month per ERU has not changed since the beginning of fiscal 2004. Officials do not intend to raise the fee until fiscal 2015 when a 19% hike is forecast. Fitch believes the low cost of the service and long trend of maintaining rates at the current level provide ample flexibility.

Stormwater utility revenues are derived from a fee levied on property located within the utility's service area, which includes the unincorporated area of the county as well as the cities of El Portal and Palmetto Bay. Since 2004, the service area has been reduced from incorporations including the city of Doral in 2006 and Miami Gardens in 2008; the county does not expect additional incorporations in the near future.

Newly incorporated municipalities may elect to be exempt from the utility, which could reduce the size of the service area. However, this should not impact coverage on outstanding revenue bonds; Miami-Dade's home rule charter and state law include provisions for protection of creditors of governmental units when boundaries are changed. This requires municipalities that incorporate to pay a pro rata share of debt service on stormwater revenue bonds outstanding at the time of incorporation. As required by county ordinance, the county will maintain responsibility for collection of stormwater utility fees in newly incorporated municipalities that exempt themselves from the utility.

Miami-Dade County's (general obligation bonds rated 'AA' with a Negative Outlook by Fitch) stormwater system was created by county ordinance in 1991. Like other Florida municipalities, the county levies fees on properties to support its extensive stormwater and drainage system, consisting of more than 180 miles of canals, 1.6 million feet of pipe, 2.7 million feet of drains, 8,000 manholes, and other assets. Fees are levied based on equivalent residential units (ERUs) and vary based on the number of dwelling units per parcel or developed impervious property square footage, which affect runoff to municipal drainage systems.

Stormwater utility fee receipts, less county administrative charges in accordance with state law, must be deposited monthly to bond payment accounts. Stormwater fee nonpayment results in a property lien on parity with those related to ad valorem tax delinquencies, as well as water service shutoff, helping to ensure very strong payment rates close to 100% of the annual levy since fiscal 1995.

Capital needs are estimated at $28.9 million over the next five years and will be funded entirely from excess operating revenues and reserves. Future capital projects are focused primarily on improvements to drainage systems, pump stations and collection facilities.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Revenue-Supported Rating Criteria' (June 20, 2011);

--'Water and Sewer Revenue Bond Rating Guidelines' (Aug. 10, 2011);

--'2011 Water and Wastewater Medians (Jan. 18, 2011);

--'2011 Outlook: Water and Wastewater Sector' (Jan. 18, 2011).

Applicable Criteria and Related Research:

Revenue-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=637130

U.S. Water and Sewer Revenue Bond Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647331

2011 Water and Wastewater Medians

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=593285

2011 Outlook: Water and Wastewater Sector

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=593286

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 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.
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Publication:Business Wire
Geographic Code:1U2NY
Date:Sep 16, 2011
Words:1051
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