The bonds are expected to sell via competitive bid on 18 hour's notice as early as
In addition, Fitch affirms the 'A' rating on the following bonds:
The Rating Outlook is Stable.
The bonds are secured by a portion (63.31%) of collections of the state documentary stamp tax, which is levied primarily on real estate transfers, after payment of an 8% general fund administrative fee and
KEY RATING DRIVERS
VOLATILE REVENUE STREAM: The pledged revenue stream, which is derived from economically sensitive real estate and other transactions, has historically been quite volatile. Revenues have resumed growth with recovery in the state housing market.
RAPID DECLINE IN DEBT SERVICE REQUIREMENTS: A large portion of outstanding parity debt was retired at fiscal year-end 2013, resulting in a drop in debt service requirements and, accordingly, a sizeable increase in debt service coverage. Coverage declined significantly but remained adequate through the recession.
STATE NON-IMPAIRMENT: The state covenants to not reduce the allocated percentage of excise taxes securing the Florida Forever and
STATE CONTROL OF PROGRAM: The state controls future debt issuance and has flexibility regarding offerings under the programs. Legislative action during the recession to increase the revenues available to bondholders is indicative of state support of the program.
The rating is sensitive to the degree of volatility in the revenue stream.
The documentary stamp tax revenue that secures the bonds is derived primarily from real estate activity, with additional revenues coming from other transactions such as car loans. Documentary stamp tax revenues have historically been quite volatile and rose dramatically during the boom in real estate through the middle of the last decade, from
Revenues bottomed out in fiscal 2010 at
STATE CONTROL OF PROGRAM
In response to the steep revenue declines, the state legislature took action in 2009 to bolster the revenue stream available to pay debt service if pledged revenues are insufficient. State statute was revised to expand the revenues available for debt service to include the balance of non-pledged documentary stamp tax revenues, less a small amount needed for debt service on other bonds. In addition to the inclusion of the non-pledged portion of revenues, the legislation waives the 8% service charge and other collection costs if pledged revenues are insufficient. The pledge underlying the bond security remains at 63.31% of revenues; however, the inclusion of the balance of the revenues clearly enhanced coverage of debt service requirements when revenues narrowed. When these additional revenues are included, coverage of maximum annual debt service from fiscal 2014 increases to 10.3x.
REVENUES SUPPORT VARIETY OF ENVIRONMENTAL PROGRAMS
The state has levied documentary stamp taxes for more than 70 years and has issued land acquisition bonds of several types since 1964. The state began issuing Preservation 2000 bonds in 1991 and Florida Forever bonds in 2001, pursuant to constitutional amendments. The two programs provide for revenue bond issuance to acquire land and water areas for conservation, recreation, water resource development, and preservation. The Preservation 2000 bonds have matured and no further borrowing is permitted under this program. The state has authorized issuance under the Florida Forever program to a maximum of
Everglades Restoration revenue bonds, which since 2006 have had a parity lien on the documentary stamp tax revenues, fund the acquisition and improvement of land and water areas, including water supply and flood protection, under a
The additional bonds test takes into account debt service under both remaining programs and requires 1.5x coverage of maximum annual debt service (MADS) by pledged revenues in any 12 consecutive months of the prior 24 months. Additional bondholder protection is provided by covenants that ensure the allocated share of revenues is not reduced, the state's degree of control and flexibility in issuing future debt, and the rapid amortization of outstanding debt.
Additional information is available at 'www.fitchratings.com'.
--'Tax-Supported Rating Criteria', dated
--'U.S. State Government Tax-Supported Rating Criteria', dated
Tax-Supported Rating Criteria
U.S. State Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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