Beating projection, Miami Parking Authority bond rating rises

Moody’s Investors Service has upgraded the Miami Parking Authority’s $49.2 million in outstanding parking revenue bonds, although competing service Fitch Ratings four years ago said that the authority’s bond ratings were unlikely to improve.

Moody’s on July 31 upgraded the rating from A2 to A1 with a stable outlook. In its 2019 report, Fitch said that given the increasing risks of the parking industry, the authority’s bond ratings were unlikely to improve.

The upgrade, Moody’s said, “reflects the parking enterprise’s improved revenues, debt service coverage and cash.”

“I am proud of Moody’s rating action, which is a testament to [the authority’s] commitment to fiscal responsibility,” said authority CEO Alejandra “Alex” Argudin. “The authority’s financial management and high standards of accountability and professional excellence will contribute to the stability of the local economy.”

The parking authority, Moody’s noted, operates with a strong competitive price advantage:

“The A1 rating reflects the parking enterprise’s relatively small system with strong demand as the system is the low-cost parking provider in the city with rates below the proximate private competitors.”

The rating also reflects the annual transfers from the parking authority to the City of Miami’s general fund. The authority was established in 1955 by the Florida Legislature as a unit of the city.

Today, the authority manages 46,700 parking spaces, including 15 garages, 78 surface parking lots and about 11,800 on-street spaces. While the parking authority owns the majority of these, it also operates parking owned by the state, Miami-Dade County, the Adrienne Arsht Center for the Performing Arts, the US post office and churches.

The stable rating outlook, Moody’s said, “reflects strong management which has implemented timely rate increases and reduced general fund transfers when necessary.”

It was, in fact, a bump in parking rates that sent Miami Parking Authority revenue soaring in 2019, the Fitch report then noted, as preliminary results showed authority revenue in fiscal 2019 grew 40.2% to $47.7 million.

The growth was attributed by Fitch to the increased parking rates. At the end of 2018, the Miami City Commission approved the jump, as hourly rates for off-street parking rose from $1.75 per hour to as much as $3.25 for non-residents in areas such as Brickell, Wynwood and the Central Business District.

A strength of the authority, Fitch noted then, was that it could raise parking rates an average of 3% per year. That, Fitch said, “has helped the department maintain a solid operating profile.”

The authority transfers excess revenues to the city at its discretion, transferring $7.8 million in fiscal 2018. The authority has what Fitch termed “a monopolistic position over essential on-street parking spaces in the Miami central business district, which accounted for 54%” of 2018 operating revenues.

Fitch at the time affirmed an ‘A’ rating for the authority, for what was then about $51 million of revenue refunding bonds that the authority “expects to issue… to refund the outstanding series 2009 bonds.” Typically, refunding decreases the interest rate the authority would pay to bondholders.

The Fitch report noted that the 2019 to 2022 capital plan included construction of new garages that included the Regatta Harbour garage, in service today on the Coconut Grove bayfront, and another planned at the Coconut Grove Playhouse as it was to reopen – which to date it has not.

Both the 2019 and 2023 ratings were solicited by the parking authority.