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Larry Spring has overseen the sale of hundreds of millions of dollars of government bonds during his career. But his roughest day was mid-June when the city of Miami first sold its Forever Bond to investors.

"It was a tough day," Miami's Chief Financial Officer reflected several weeks later. "I've been affiliated with the city for 20 years and it was actually my worst day in the market ever."

The city was borrowing its first Miami Forever Bond. That is the name of a borrowing plan approved by voters in 2017. The plan calls for borrowing $400 million to spend on five areas: floodwater protection, roads, parks, public safety and affordable housing.

The city started spending the money a year after the vote. But it didn’t actually borrow the money until this summer when the city went looking for investors to lend it its first $179 million dollars. That was in June.

These bonds are tax exempt, as most municipal bonds are. The income investors earn on these types of IOUs is not taxed. These so-called Series A tax-exempt Miami Forever Bonds will be paid back over the next 10 to 25 years.

When Spring and the city went to market for these bonds, investors were not in a buying mood. It forced Miami to increase the interest rate it was offering buyers.

"We open the market around 9 to 9:30," Spring said. Usually an hour later, there are enough buyers for all the IOUs being sold.

But not on that day in mid-June. An hour after opening the market for the new Miami Forever Bonds, there were still some unsold bonds.

"We actually had to do a price adjustment in the middle of pricing," Spring said. The city had to boost the interest rate on the bonds to entice buyers. Eventually, when the city offered to pay its lenders 4.4%, it was able to sell all of the bonds that day.

"I'm used to getting somewhere between three to five times oversubscribed for an issue," Spring said. Oversubscribed means there are more buyers than there are bonds for sale. That’s a good position to be in for a borrower like the city of Miami. It can lead to a lower interest rate for the borrower.

"In this case, I had to take what I got," he said.

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The city also sold a smaller batch of bonds that are not tax exempt that same day in June. Investors have to pay taxes on the interest derived from these Series B bonds because of how the borrowed money is used. These bonds usually come with a higher interest rate to make up for the taxes faced by investors.

When Spring and the city went back to the bond market a few weeks later, buyers were in a different mood. There were plenty of buyers interested in each bond and that demand helped the city save on its interest rate. Miami sold $75 million more of its Forever Bond, at a much lower interest rate: 4.2%. These IOUs sold after mid-June are named the Series C bonds.

"What a difference a day makes," said Spring.

The difference between the interest rate on the bonds sold in mid-June and those sold a few weeks later may not sound like a lot but it may add up to millions of taxpayer dollars in extra interest payments over the length of the bond.

Economy over image

Why the poor showing in mid-June compared to a few weeks later? "I think it was just a liquidity day. It had nothing to do with brand or anything," Spring said.

The troubles Miami has been experiencing with several of its current or former top officials has not cost the city economically.

Commissioner Joe Carollo has been ordered to pay millions of dollars to two business owners who accused him of trying to ruin their businesses as political retaliation. A former commission faces criminal corruption charges. The mayor has been under fire for outside jobs and hobnobbing with donors. The city manager used public money to buy furniture from a company owned by his in-laws. And the city attorney was removed after several controversies including her family’s role in the guardianship home-buying program, as uncovered by WLRN's investigation "Unguarded."

Those issues don't show up on the city's financial statements.

"In terms of governance, we’re really apolitical and looking at risks to the city itself," said Victoria Gomez, vice president at credit ratings agency Moody’s.

"Less noise politically is better, but we're really focused on the city and what it's producing. How the finances look. [Is it] maintaining reasonable debt loads? Is the economy continuing to be a strength?" she said. "That's really the focus."

Moody's isn't concerned about the drama inside City Hall. It rated Miami’s Forever Bond AA-2.

"It's a very strong rating," said Tom Jacobs, senior vice president at Moody’s. "I think it reflects good management and a pretty booming economy."

The risks to the city’s credit rating by Moody’s include a souring financial picture for city government and climate risks that impact the city’s economy. The risks do not include any of the conflict heard during the commission meetings.

The unemployment rate has been inching higher in recent months but remains near historic lows. The inflation rate has been cooling. And Miami-Dade is home to the fastest rising home price in the nation, according to real estate firm CoreLogic. That all underpins the local tax base, which is what buyers of the Miami Forever Bond are betting on to be able to pay them back.

"I think with all of that noise in the background, they're doing what they need to do," Jacobs said.

The city’s first interest payments on its Forever Bonds will be about $6.8 million. It is due on New Year’s Day.