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Financial advisor: Deerfield Beach retains strong credit profile and has capacity to fund capital projects
Summary
Davenport financial adviser Ted Cole told commissioners the city holds double‑A level ratings, low debt ratios (debt to assessed value about 0.57%) and debt‑service near 6% of budget, indicating capacity to issue additional covenant (non‑referendum) debt for CIP if the commission chooses.
On June 30 the city’s outside financial adviser, Ted Cole of Davenport, told the Deerfield Beach commission that the city’s debt profile and ratings support reasonable access to capital markets for the city’s five‑year capital plan.
Cole said the city sits in the double‑A rating category with Fitch and S&P, placing the city near the top tier of rated municipalities: "You all are a double A plus, one notch away from AAA," he said, and summarized that strong ratings typically translate into lower borrowing costs and broader investor demand.
As of the last fiscal close the city carried roughly $72–73 million in tax‑supported debt. Cole showed the city’s debt‑to‑assessed‑value ratio at about 0.57%—well under the city policy cap of 2%—and debt service at roughly 6–6.5% of the operating budget. Both metrics signal room to add debt without breaching conservative thresholds, he said, though council members must pair capacity with affordability when deciding how to fund capital projects.
Cole walked commissioners through debt‑type choices and the legal tests for covenant to budget and appropriate bonds (non‑ad valorem debt): that debt’s repayment must be supported by a specified pool of non‑tax revenues at a prescribed coverage multiple. Davenport’s staff ran that calculation on the city’s current numbers and found a substantial cushion relative to the minimum coverage test.
He also cautioned that pending state‑level proposals on property‑tax structure could affect institutional framework inputs that rating agencies review. "Depending on how all of that plays out," Cole said, "we would expect that that institutional framework part of the rating process will get reviewed and this is very much on the radar screen of the rating agencies."
Commissioners asked about year‑to‑year principal/interest payment changes and how new debt would affect near‑term budgets; Cole recommended linking CIP priorities to a funding plan that spells out whether projects are cash‑funded, debt‑funded and what repayment timelines would look like.
Next steps: staff and Davenport will use these inputs while finalizing a CIP funding plan and any recommended debt issuances for commission review later in the summer and fall.
