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CNBC's Nightly Business Report tackles Miami's finances but doesn't tell whole story

@ChuckRabin

CNBC's national Nightly Business Report, which aired locally WPBT2 on Wednesday, focused on Miami as part of its series called "Mission Critical: Fixing America's Cities."

The show claimed, despite the city finally getting its financial books in order, that local taxpayers remained on the hook for hundreds of millions of dollars due to bad bond deals. The three-minute piece at the end of the show said local Miami taxpayers were saddled "with a massive amount of debt" and later referred to that debt as "more than a billion dollars."

That's misleading.

Specifically, the show cited the Miami Marlins' stadium deal, and interviewed stadium critic and local auto magnate Norman Braman, who lost a court battle to stop the ballpark construction.

While it's true the city and Miami-Dade County sold bonds for almost 80 percent of the $642 billion construction cost -- a number that will swell to over $2 billion by the time the bonds are paid off in 40 years -- it's not accurate to say local taxpayers will be saddled with debt for decades to pay off those bonds.

Sure, the tax money that will pay the bond debt could have been used for other purposes, like convention centers or certain types of parks, but the stadium bond debt will be covered by tourists using local area hotels. It won't affect a homeowner's property tax bill unless there isn't enough money in the hotel bed-tax booty to cover the yearly nut.

County financial managers promised at the time of the deal that there would be plenty of hotel bed-tax money to cover the bond debt.

The show also mentioned how the U.S. Securities & Exchange Commission sued the city and former budget director Michael Boudreaux this past summer for misleading bond investors.

That too is true. But Boudreaux is accused of transferring money for capital projects to prop up the city's general fund to make its finances look more inviting to investors. And the accusations against him have nothing to do with the stadium.

What he is accused of doing, though egregious and a gross injustice to bond investors, isn't costing homeowners more on their property tax bill. Its worst effect is to stop planned construction projects that hadn't been built anyway. 

The reality is Miami's budget is healthier than it has been in five years, and its reserves -- which dipped from over $130 million to about $10 million as the city tried to cover extensive pension costs -- is now back up to about $70 million.

View the segment below, beginning at the 21:40 mark.

 

--CHARLES RABIN

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