Fitch Affirms Miami Parking System, FL's Revenue Rfdg Bonds at 'A'; Outlook Stable
CHICAGO--(BUSINESS WIRE)--Fitch Ratings affirms the city of Miami, FL Department of Off-Street Parking's (DOSP) approximately $69.8 million of outstanding series 1998A and 2009AB parking system revenue bonds at 'A'. The Rating Outlook is Stable.
KEY RATING DRIVERS
Healthy Revenue Profile: The DOSP holds a monopolistic position over essential on-street parking spaces in the Miami central business district, which account for about 50% of operating revenues. The department's operation of parking garages, surface lots, and on-street parking spaces provides revenue diversity and minimizes reliance on any single system component. Revenues increased by 0.5% in fiscal year (FY) 2013 (ending Sept. 30).
Rate-Making Flexibility: The DOSP's authority to increase rates at an average annual rate of 3% per year without city council approval has helped the department maintain a solid operating profile and generate debt service coverage levels at or above 2.0x historically.
Fixed-Rate Debt Structure: The DOSP's debt profile consists of all fixed-rate debt and level annual debt service.
Moderate Leverage and Liquidity: Net debt-to-cash flow available for debt service (CFADS) is comparable to the DOSP's peers at 4.5x. Ample liquidity of 245 days cash on hand (DCOH) provides cushion against short-term declines and expected lifecycle costs associated with older parking garages.
--Deterioration in the economic conditions of the city of Miami leading to lower parking revenues and declining debt service coverage ratios (DSCRs) would pressure the rating;
--Additional leverage for the DOSP for capital needs or to aid the city that causes a material change in leverage metrics or DSCRs could lead to a decline in credit quality;
--Significant declines in revenue per space could pressure the ability to pass through rate increases and weaken credit quality.
The bonds are special and limited obligations secured by a pledge of net revenues of the city's parking system and the money and investments and interest thereon of funds and accounts established under the bond ordinance.
Parking revenues increased by 0.5% in FY 2013 to approximately $27.8 million from $26.5 million in 2012. A breakdown shows that much of the increase came from parking lot operations, which grew by 7.3%. Growth in registrants to the Pay-By-Phone program continued in FY 2013, growing by about 85,000 to approximately 190,000.
Operating expenses grew 6.3% in FY 2013 due primarily to increased costs associated with Legal and Professional expenses as well as Other expenses, but remain 2.5% under their peak in FY 2009. Management's investment in Pay and Display (PAD) machines and automated collections in owned parking garages has led to increased operating efficiency by cutting costs related to salaries, wages, fringe benefits and security. The number of employees in FY 2012 was 166, down from a peak of 230 in FY 2008.
For FY 2013 the DSCR increased to 2.70x from 2.57x in FY 2012. Fitch expects future debt service coverage to be maintained at or around current levels, assuming that the DOSP implements future rate increases in accordance with the 2009 parking ordinance and continues to manage operating expenses.
In FY 2013 revenue per space increased to $1,154 from $1,098 in FY 2012. This growth was driven by a 12.0% increase in parking meters and PAD revenue per space.
The DOSP owns/manages nearly 36,000 parking spaces, split between 10,400 on-street parking spaces, 74 surface lots and 15 parking garages. DOSP revenues are derived primarily from the meters, lots, and garage operations. Although DOSP shares in parking enforcement responsibilities, revenues from parking enforcement go directly to the city and Miami-Dade County. The DOSP is an agency and instrumentality of the city of Miami, governed by a five-member board of directors appointed by the city commission.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Rating Criteria for Infrastructure and Project Finance' (July 12, 2012).
Applicable Criteria and Related Research:
Rating Criteria for Infrastructure and Project Finance