Miami-Dade Commissioner Dennis Moss, who voted for the stadium, acknowledged it was far from a great deal for the county.
“No, I didn’t go through it [the contract] page by page. I don’t think anyone went through it page by page,” said Moss. “But what I did do was rely on the administration to lay out the deal.”
To be fair, it is still possible the Marlins will need to spend a portion of the $29.1 million they had not spent as of the end of December, before the books are closed on stadium construction.
Responding to questions by email, Carolina Perrina de Diego, the team’s director of business communications, said the Marlins have closed out 51 of the 65 contracts the team signed with contractors to build the ballpark. Some of the remaining contracts may still go to arbitration.
“We expect to be very close to the finish line by April 2013,” Perrina said. Any money the team comes in under budget “will be assigned to the capital reserve fund for future capital projects.”
While the $29 million the Marlins could save represents a small portion of the stadium’s $515 million construction budget, a lower tab could have made a big difference long-term for Miami-Dade taxpayers. A combination of a horrible credit market and Miami-Dade’s strained finances left the county to create a borrowing package that brought sky-high interest costs when commissioners approved the deal in the grim summer of 2009.
“The market was a hard market in 2009,’’ said Frank Hinton, head of Miami-Dade’s bond division.
One bond package in particular illustrates how shaving millions off the construction cost could have amounted to enormous savings.
When Miami-Dade sold a series of bonds to raise $91 million for the stadium construction in 2009, Wall Street financiers exacted repayment terms will have Miami-Dade paying more than $1 billion in interest on the bonds through 2048.
In all, the $91 million bond sale will cost $1.18 billion to repay, and cannot be refinanced, Hinton said.
Though the bonds are backed by Miami-Dade hotel taxes, lending terms require the county to dip into certain sales and property taxes if the lodging revenue ever falls short.
While interest payments will hit $110 million a year by 2042, inflation should render those figures far less eye-popping than they seem today. Still, the $91 million bonds stand out for their high repayment costs. Those bonds only account for about 20 percent of the money the county borrowed for the stadium, but they account for 55 percent of the full $2.4 billion that the county must pay to bondholders on stadium debt during the next four decades.
Jose Galan, the county’s project manager for ballpark construction, agreed that Miami-Dade could have borrowed money on better terms had the contract not called for it to contribute funding upfront. The Marlins paid their share at the end, as revenue poured in from advertising and suite sales and the global credit market was on the mend.
But Galan also noted that financial hindsight is 20/20, and it wasn’t known in 2009 if the credit market would be even worse in the coming years. He also believes the Marlins took the greater risk by agreeing to pay for any cost overruns. Meanwhile, Miami-Dade had a fixed construction budget to fund and did not have to worry about the expenses that come with delays or increases on, say, the price of steel.
“We’d much rather be able to say, ‘I know what my total expense is going to be,’’’ Galan said.
Miami Herald staff writer Douglas Hanks contributed to this report.