March 11 (Bloomberg) -- Florida is selling $46.9 million in debt as soon as this week to help finance a $939 million project to replace septic tanks and cesspits polluting the turquoise waters of the Keys, home of the nation’s only living coral barrier reef.
The tax-supported deal will help address a threat to a fishing industry generating $557 million a year, according to the state Economic Opportunity Department. Ben Watkins, Florida’s bond finance director, said he expects an interest rate of 3 percent or less on the bonds, which will mature as late as 2032.
Bond revenue will be shared by Monroe County, which includes the Keys, and Islamorada, the northernmost municipality in the 200-mile (320-kilometer) archipelago. They’re contributing an additional $210 million to the project. At least $264 million has already been spent, state records show.
“This has been a very long journey,” Monroe County Mayor George Neugent said. “It’s a very monumental time.”
Florida and its localities are paying an average interest rate of 2.48 percent on tax-exempt debt maturing in 10 years, according to data compiled by Bloomberg. The extra yield over top-rated securities is close to the smallest since 2011.
The bonds will be repaid with so-called documentary stamp taxes on mortgages, deeds and other documents transferring property. Moody’s Investors Service gave the issue its fifth-highest grade of A1, citing “extreme volatility” of collections driven by construction and home sales.
Florida received $1.26 billion from the tax in the 12 months ending June 30. It was the second year of growth after four of decline. Collections may reach $1.52 billion this year, according to the state Office of Economic and Demographic Research.
Studies in the 1990s from Florida Atlantic University marine scientist Brian Lapoint showed that leaky septic systems in the Keys contributed to algae blooms threatening John Pennekamp Coral Reef State Park. In 2008, state lawmakers included the Keys sewer system among projects that could be funded by bonds. Monroe County is asking the state to finance another $50 million this year.
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