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Fort Lauderdale Sells Almost $90 Mln in Flood Prevention Bonds

By Munichain News Desk

The city of Fort Lauderdale, Florida, issued $88 million in bonds to fortify the city against floods.

The issuance includes $44 million each of serial bonds and term bonds. The serials mature between 2024 and 2043, yielding between 2.61% and 3.57%. The term bonds mature in 2048 and 2053, yielding 3.8% and 3.85%, respectively. The securities received a rating of Aa2 from Moody’s Investors Service and AAA from S&P Global Ratings.

“The Aa2 reflects the gross revenue pledge of total stormwater assessments levied throughout the large and economically diverse city and the enterprise’s ample cash position,” Moody’s analysts wrote, referring to a fee the city imposed in 2020 to manage its stormwater utility.

The bonds will finance improvements to the city’s stormwater utility system, which is tasked with mitigating the harm of flooding. The city will use the proceeds from the sale of the bonds to make improvements in the eight neighborhoods that it determined to be most likely to flood.

The investment in flood prevention comes as climate change increases the frequency of hurricanes and tropical storms. Scientists note that a warmer atmosphere contains more moisture, resulting in heavier rains. In April, a tropical storm dropped 25 inches of rain on Fort Lauderdale in 24 hours. Many of the city’s streets, especially in its coastal neighborhoods, were submerged in two feet of water.

Such flooding could have significant economic impact. After the April storm, the Fort Lauderdale-Hollywood International Airport closed for nearly two days. Officials said damage to the city’s schools exceeded $2 million.

The bonds are special, limited obligations of the city, payable by revenue from stormwater assessments.

Citigroup Global Markets Inc served as lead underwriter on the issuance, purchasing the bonds for more than $97 million. The price reflected a premium of $9 million.

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