What is a general obligation bond?
A general obligation bond (G.O. bond) is a form of debt obligation that, when issued, provides local government with funds to finance large capital improvements, such as those currently proposed for enhanced parks and recreational facilities, neighborhood and infrastructure improvements, and public safety.
- General Obligation (“GO”) Bonds are a financing mechanism to fund improvements immediately
- Bonds are backed by the full faith and credit of the issuing municipality
- Repaid through the imposition of a dedicated debt service millage levy (Ad Valorem tax)
- Note: The debt service millage is not included in a City’s statutory millage cap
- Historically one of the most credit-worthy financing structures available
- Projects financed with GO Bonds typically have broad community benefits, such as parks, police/fire facilities, or bridge and street related projects
- A city-wide voter referendum is required prior to the issuance of GO Bonds
What can general obligation bonds be used for?
General Obligation Bonds allow the City to pay for major capital investments having a public purpose, such as quality of life enhancements related to parks, community recreation, and cultural facilities; neighborhood and infrastructure improvements.
Bonds are sold to investors and the proceeds from the sale of these bonds are used to pay for capital projects. Bond funds cannot be used for everyday operating costs, such as salaries for police officers, fire fighters, or City employees (other than those working directly on capital projects). Such operating expenses are paid for by annual revenue that support the City’s General Fund, such as property tax revenue.
Why does the City issue bonds to pay for City projects rather than pay for projects with cash?
The Bond Program includes many planned and recommended large-scale projects throughout the City. Current funding for capital projects in the City’s operating budget is very limited, compared to the number and costs of capital requests. Using bond financing to fund large-scale projects, in a period of relatively low interest rates and lower costs of borrowing (especially given the City’s favorable AA credit rating), allows the annual City operating budget to be allocated toward annual and ongoing costs such as maintenance, personnel, operations and public service programs.
How were bond-related projects selected?
The projects identified for this parks bond are in-line with findings from the 2017 City of Doral Parks and Recreation Master Plan. The final plan came to fruition after a long-range planning process that took place from 2016-2017, and utilized a variety of needs assessment and engagement techniques with residents to identify high-priority needs, including multiple community workshops.
The planning process revealed that the city's greatest needs were for additional park space, indoor recreation space, and aquatic facilities. Projects were selected based on public input, staff recommendations and City Council approval. For more information, on what is included in the bond and why, please click on the image below.
Can bond funds be spent on salaries for staff and elected officials, day-to-day business operations or events? What are authorized uses of bond funds?
No. Bond proceeds cannot be used to pay day to day operating cost. The proceeds can only be used on the approved projects indicated in the bond referendum questions.
Will the debt service millage rate be the same every year?
Not necessarily. The millage rate is established every budget cycle based on the County Property Appraiser’s Certification of Taxable Values for the City.
How is the debt service millage rate calculated?
The debt service millage rate is calculated using the County Property Appraiser Certified Taxable Values for the City that is provided every July. That Taxable Assessed Value is then divided by 1,000 to arrive at the value of one “mill.” The annual debt service is then divided by the value of one mill, which results in the necessary debt service millage. For example: the 2018-19 Taxable Assessed Value for the City, as provided by the County Property Appraiser, is $13,185,785,000. The value of a one-mill levy is therefore $13,185,785. The estimated annual principal and interest on a $150 million bond at an interest rate of 4.75% and a term of 30 years is approximately $9.482 million. Divide $9.482 by $13.185 to arrive at 0.719, which would be the millage levied on property owners (commercial and residential). The millage levy in dollar value is then calculated by dividing 0.719 by 1,000 (to arrive at the value per thousand), and multiplying that by the property’s Taxable Assessed Value (not Market Value). In our median home value example, a home assessed at $193,121 (net of exemptions) would equal an annual payment of approximately $139.
Has the City recently increased its property tax rate?
The City’s current tax rate (referred to as the “millage rate”) is the 2nd lowest in Miami Dade County, lower than even Miami Dade County itself. For more information on where Doral residents’ tax dollars currently go, please click on the image below.
How much property tax-supported debt does the City currently have?
Currently, the City has no debt that pledges against ad valorem taxes.
How will I know bond projects are being completed and funds are being used properly?
Transparency is of utmost importance to the City, and this website – where residents can find updates related to the bond projects, timelines, and process - is a key tool to help ensure that. In addition, the City will also institute a Bond oversight committee made up of residents, administration, elected officials, and business owners to ensure that the money is being handled properly.
Will there be a bond oversight committee? If so, what is the purpose and how will you maintain transparency throughout the implementation process?
City Administration will establish a Bond Oversight Committee made up of Doral residents, city staff and elected officials. The oversight committee will monitor and review implementation of the bond to further the City's efforts towards transparency. Furthermore, the committee will be made up of Doral residents and professionals that have requisite relevant experience with municipal finance, engineering, construction, architecture, etc.
Who do I contact if I have a question or comment about the 2018 G.O. Bond?
Questions and comments are welcome! Please contact DoralParksBond@Cityofdoral.com to get in touch with us.