S&P Global Ratings revised the city of Miami’s outlook to stable from negative and affirmed the AA-minus long-term rating and underlying rating on the city’s limited ad valorem and non-ad valorem bonds.
“The outlook revision reflects our view of the demonstrated stability in the city’s operating budget through the COVID-19 pandemic and our expectation that Miami’s reserves will remain stable or strengthen in the near term,” S&P credit analyst Jennifer Garza said in a release Friday.
Miami Mayor Francis Suarez, who was overwhelmingly re-elected this week, was pleased with the rating action.
“We are grateful for the upgrade in our outlook and we will continue to work hard for the future of our residents. It’s an honor lead our city at a time where our city has the highest bond rating in its history,“ the mayor told The Bond Buyer on Friday.
“The outlook revision to stable also reflects Miami’s stable financial performance in recent years that is projected to continue in the near term despite forecast budget gaps, recent labor contract expirations and uncertain budget effects from the pandemic,” Garza said. “In addition, the city’s labor market continues to recover from the pandemic, notably in the tourism sector, in line with state and national peers.”
S&P said the AA-minus rating was supported by the city’s strong economic recovery after the pandemic and the role it plays as an anchor for the Miami-Fort Lauderdale metropolitan statistical area.
The rating is also buttressed by a weak debt profile, Moody’s said, despite a rapid amortization schedule and low debt-to-assessed value metrics.
“The city could issue additional debt within the next two years, but we do not anticipate that the debt profile will deteriorate,” Garza said.
Looking at the environmental, social and governance factors, S&P said that “given Miami’s location and the projected impact of climate change and rising sea levels, which the city projects to rise 14-21 inches by 2070, the city’s environmental risk is elevated compared with that of national peers.”
However, the rating agency pointed out the city has created a committee to address capital improvements related to rising sea levels and passed a general obligation bond measure designed to directly address this issue.
Miami has also pushed resilience enhancement efforts in its budget, capital plan and bond program and in its long-term financial plans.
This year, Miami has enhanced its environmental planning and presented a stormwater master plan which prioritizes the use of “Miami Forever Bond” funds along with federal monies to support green infrastructure projects.
In partnership with C40 Cities, the city developed the “Miami Forever Carbon Neutral” greenhouse gas reduction plan this year, with a goal of net zero greenhouse gas emissions by 2050 in alignment with the Paris Agreement target.