Florida Sewer Bonds Stem Pollution Threatening Keys: Muni Deals

Florida is selling $46.9 million in
debt as soon as this week to help finance a $939 million project
to replace septic tanks and cesspits polluting the turquoise
waters of the Keys, home of the nation’s only living coral
barrier reef.

The tax-supported deal will help address a threat to a
fishing industry generating $557 million a year, according to
the state Economic Opportunity Department. Ben Watkins,
Florida’s bond finance director, said he expects an interest
rate of 3 percent or less on the bonds, which will mature as
late as 2032.

Bond revenue will be shared by Monroe County, which
includes the Keys, and Islamorada, the northernmost municipality
in the 200-mile (320-kilometer) archipelago. They’re
contributing an additional $210 million to the project. At least
$264 million has already been spent, state records show.

“This has been a very long journey,” Monroe County Mayor
George Neugent said. “It’s a very monumental time.”

Florida and its localities are paying an average interest
rate of 2.48 percent on tax-exempt debt maturing in 10 years,
according to data compiled by Bloomberg. The extra yield over
top-rated securities is close to the smallest since 2011.

The bonds will be repaid with so-called documentary stamp
taxes on mortgages, deeds and other documents transferring
property. Moody’s Investors Service gave the issue its fifth-
highest grade of A1, citing “extreme volatility” of
collections driven by construction and home sales.

Stamp Taxes

Florida received $1.26 billion from the tax in the 12
months ending June 30. It was the second year of growth after
four of decline. Collections may reach $1.52 billion this year,
according to the state Office of Economic and Demographic
Research.

Studies in the 1990s from Florida Atlantic University
marine scientist Brian Lapoint showed that leaky septic systems
in the Keys contributed to algae blooms threatening John
Pennekamp Coral Reef State Park. In 2008, state lawmakers
included the Keys sewer system among projects that could be
funded by bonds. Monroe County is asking the state to finance
another $50 million this year.

To contact the reporter on this story:
Michael C. Bender in Tallahassee at
mbender10@bloomberg.net

To contact the editor responsible for this story:
Stephen Merelman at
smerelman@bloomberg.net

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