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August 4, 2011

Summary:

Miami Dade County, Florida; Appropriations; General Obligation; Joint Criteria; Miscellaneous Tax; Moral Obligation
Primary Credit Analyst: Le T Quach, New York (1) 212-438-5544; le_quach@standardandpoors.com Secondary Contact: John Sugden-Castillo, New York (1) 212-438-1678; john_sugden@standardandpoors.com

Table Of Contents
Rationale Outlook Related Criteria And Research

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Summary:

Miami Dade County, Florida; Appropriations; General Obligation; Joint Criteria; Miscellaneous Tax; Moral Obligation
Credit Profile
US$27.00 mil cap asset acquis spl oblig bndsser 2011A due 04/01/2033 Long Term Rating A+/Negative New

US$9.00 mil cap asset acquis taxable spl oblig bndsser 2011B due 04/01/2025 Long Term Rating A+/Negative New

Rationale
Standard & Poor's Rating Services has assigned its 'A+' long-term rating to Miami Dade County, Fla.'s series 2011A and 2011B (taxable) capital asset acquisition special obligation bonds. Legally available non ad valorem county revenues secure the bonds, and the county has agreed to budget and appropriate annually sufficient revenues for debt service payment. The outlook is negative. At the same time, Standard & Poor's has affirmed its 'A+' ratings and negative outlook on the county's parity debt and its 'AA-' ratings and negative outlook on the county's general obligation (GO) debt. The ratings reflect our view of the county's: Substantial economic base that serves as an important center for the southeast, and Moderate-to-low overall debt burden. These strengths are constrained by the county's: Weakened economic indicators, with a jobless rate of 13.7% (not seasonally adjusted) for May 2011; Recent history of structurally imbalanced general fund operations; and Sizable capital plan with many needs still unfunded. The county will use bond proceeds to fund a portion of the costs of the acquisition, development, and construction of a new professional baseball stadium. The county's financial position has weakened since the beginning of the recent recession, and its unreserved general fund balance is at about half of its fiscal year-end 2007 level. The county derives 57% of its general fund revenues from property taxes, but also collects a number of other various taxes and charges (utility taxes, communication taxes, state sales taxes, and charges for services) that helps diversify its operating revenue base. Based on unaudited actual results for fiscal 2011 (ending Sept. 30), the county is projecting to finish with a $9.5 million general fund operating surplus on a $1.558 billion operating budget. Officials are projecting the county's unreserved general fund balance to rise slightly to roughly $80 million, equal to about 5% of general fund expenditures. We believe this is a positive development, but significant fiscal challenges lay ahead with respect to the fiscal 2012 budget.

Standard & Poors | RatingsDirect on the Global Credit Portal | August 4, 2011

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Summary: Miami Dade County, Florida; Appropriations; General Obligation; Joint Criteria; Miscellaneous Tax; Moral Obligation

The proposed fiscal 2012 budget closed a projected $409 million budget gap through employee concessions ($135 million), service and revenue adjustments ($138 million), state retirement system rate adjustments ($111 million), and a water and sewer loan ($25 million). The budget does not include a millage rate increase. The proposed fiscal 2012 countywide millage rate is 4.805 mills, compared with 5.4275 for fiscal 2011. Although the proposed budget is balanced, the employee concessions and retirement system rate adjustments have not been finalized. The county's labor contracts will expire on Sept. 30, 2011, and are currently in negotiations. In addition, in fiscal 2010, the county advanced roughly $61 million in health surtax revenues and $6 million of its budgeted regular county maintenance of effort revenues to its financially beleaguered Public Health Trust (PHT) enterprise fund, which includes the Jackson Health System. On May 3, 2011, the Board of County Commissioners established the Financial Recovery Board, a seven-member board, to assume and exercise as the governing body over the PHT, which will remain in effect for the following 24 consecutive months. Starting May 1, 2011, the PHT has a new CEO and since then has put in place a new management team, which includes a new chief operating officer, a chief strategic officer, and a chief transformational officer. The June year-to-date financial results for PHT show a $71.7 million loss, which includes the county's year-to-date sales tax and maintenance of effort of $142.6 million and $103.5 million, respectively. Management estimates that the PHT will close the year with an ending cash balance of $61.7 million, which equates to 14.6 days' cash on hand. Management has indicated that fiscal 2011 includes $230 million worth of initiatives as well as some sales tax growth. PHT's fiscal 2012 proposed budget is balanced and incorporates new revenue proposals of $26.1 million and decreases in salary and benefits of $214 million. County management reports that it does not anticipate providing ongoing general fund financial support to the system in light of these changes. However, we consider this to be a potential significant financial challenge for the county and will continue to monitor the county's support of this enterprise fund. Miami Dade County's financial management practices are considered "good" under Standard & Poor's Financial Management Assessment, indicating that, in our opinion, adequate practices exist in most key areas, although not all may be formalized or regularly monitored by governance officials. The county's debt profile includes a mix of tax-backed debt, GO bonds, and debt supported by non-ad valorem revenues. Total debt including overlapping obligations equals $7.8 billion, but, given its sizable tax base and population, translates to just 2.7% of market value and a moderate $3,176 per capita. The county's five-year capital plan details roughly $1.7 billion in needs. We understand a large portion of this plan remains unfunded, and the county plans to issue revenue or non-ad valorem bonds to fund a portion of these needs over the next few years. Near-term plans include $500 million to fund transit projects and roadway improvement projects, $80 million in capital acquisition bonds for seaport and other projects, and $80 million in capital acquisition bonds to fund infrastructure and facility projects for the public health system. The county participates in the state retirement plan. For fiscal 2010, the county contributed $282 million (7% of total governmental expenditures) toward the costs of this plan. In addition, the county administers a defined benefit health care plan that provides postretirement medical and dental coverage to retirees and eligible dependents. The county's annual required contribution was $31 million for fiscal 2010, and it has been funding this liability on a pay-as-you-go basis. As of its last actuarial valuation date, the county's unfunded actuarial accrued liability totaled

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Summary: Miami Dade County, Florida; Appropriations; General Obligation; Joint Criteria; Miscellaneous Tax; Moral Obligation

$337 million. With a population totaling roughly 2.6 million, the county is the largest county (by population) in the southeast. The county is an important center for commerce, tourism, and health services. Its economic base is diverse, but is not immune to the lingering negative effects of the recent recession. The county's unemployment rate remains elevated and was 13.7% (not seasonally adjusted) for May 2011, compared with the national average of 8.7%. Management reports that employment losses have been considerable, with 7,000 government and 86,000 private sector jobs lost from peak to trough. We believe indicators are still presenting mixed signals regarding home sales and prices. According to the S&P/Case-Shiller Home Price Index for February 2011, home values in the Miami metropolitan area decreased 1.4% month over month and about 51% since its mid-2006 peak (not seasonally adjusted). Miami Dade County's economist has indicated that the volume of homes sold has risen since last year and prices have been rising overall since February 2011. However, the inventory of pending foreclosures is still estimated at about 12,900, or about 13 per 1,000 housing units. In addition, concurrent with falling property values, the county's assessed values have also dropped. Based on its July 1, 2011, estimate, fiscal 2012 assessed value fell 2.8% to $187 billion, equal to about $76,000 per capita. Management reports that property tax collections have improved since last year and certificates available for tax sale were 11% less than projected. Nearly all available tax certificates have also been sold.

Outlook
The negative outlook is based on the county's weakened economic and financial indicators. The county's economic recovery has been stalled and we believe the battered local economy will continue to drag down key operating revenues. In addition, the county's proposed fiscal 2012 budget remains structurally imbalanced as the employee concessions have not been finalized. Should the county continue to reduce its available reserve levels, the rating could be lowered. On the other hand, should finances improve in conjunction with stronger-than-projected economic base growth, the outlook could be revised to stable or positive depending on the depth of the improvements.

Related Criteria And Research


USPF Criteria: GO Debt, Oct. 12, 2006 USPF Criteria: Non Ad Valorem Bonds, Oct. 20, 2006 Ratings Detail (As Of August 4, 2011)
Miami Dade Cnty cap acquis non ad valorem (wrap of insured) (AMBAC & ASSURED GTY) (SEC MKT) Unenhanced Rating Miami Dade Cnty cap asset acquis spl oblig bnds Long Term Rating Miami Dade Cnty cap asset acquis spl oblig bnds Long Term Rating A+/Negative Affirmed A+/Negative Affirmed A+(SPUR)/Negative Affirmed

Standard & Poors | RatingsDirect on the Global Credit Portal | August 4, 2011

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Summary: Miami Dade County, Florida; Appropriations; General Obligation; Joint Criteria; Miscellaneous Tax; Moral Obligation

Ratings Detail (As Of August 4, 2011) (cont.)


Miami Dade Cnty cap asset acquis spl oblig bnds (Build America Bnds) Long Term Rating A+/Negative Affirmed

Miami Dade Cnty cap asset acquis spl oblig bnds (Scott Carver Homes Proj) Long Term Rating Miami Dade Cnty cap asset acquis spl oblig ser 2010D (AGM) Unenhanced Rating Miami Dade Cnty cap asset (AGM) Unenhanced Rating Miami Dade Cnty non ad valorem (Pro Sport) (ASSURED GTY) Unenhanced Rating Miami Dade Cnty GO Long Term Rating AA-/Negative Affirmed A+(SPUR)/Negative Affirmed A+(SPUR)/Negative Affirmed A+(SPUR)/Negative Affirmed A+/Negative Affirmed

Miami Dade Cnty GO (Building Better Communities Program) (ASSURED GTY) Unenhanced Rating AA-(SPUR)/Negative Affirmed

Miami Dade Cnty (non ad valorem) cap asset acquis spl oblig bnds (ASSURED GTY) Unenhanced Rating A+(SPUR)/Negative Affirmed

Miami Dade Cnty (Bldg Better Comntys Prog) GO (wrap of insured) (FGIC) (MBIA - SEC MKT) Unenhanced Rating Miami Dade Cnty (Jackson Hlth Sys) (ASSURED GTY) Unenhanced Rating Miami Dade Cnty (Juvenile Courthouse Proj) (AMBAC) Long Term Rating Unenhanced Rating Miami Dade Cnty (Pro Sport) misc tax VRDBs Long Term Rating Unenhanced Rating Miami Dade Cnty non ad valorem Unenhanced Rating Miami Dade Cnty non ad valorem (MUNI-CPI) Unenhanced Rating Miami Dade Cnty pub facs ser 2005 A&B Unenhanced Rating Miami Dade Cnty various taxes Unenhanced Rating Miami Dade Cnty GO Unenhanced Rating Miami Dade Cnty (Pks Prog) GO AA-(SPUR)/Negative Affirmed A+(SPUR)/Negative Affirmed A(SPUR)/Negative Affirmed A+(SPUR)/Negative Affirmed A+(SPUR)/Negative Affirmed AAA/A-1+ A+(SPUR)/Negative Affirmed Affirmed AAA/A-1+ A+(SPUR)/Negative Affirmed Affirmed A(SPUR)/Negative Affirmed AA-(SPUR)/Negative Affirmed

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Summary: Miami Dade County, Florida; Appropriations; General Obligation; Joint Criteria; Miscellaneous Tax; Moral Obligation

Ratings Detail (As Of August 4, 2011) (cont.)


Unenhanced Rating
Many issues are enhanced by bond insurance.

AA-(SPUR)/Negative

Affirmed

Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.

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