In a groundbreaking move, Long Beach, California, is set to introduce $88 million in marina revenue refunding bonds next week. This initiative coincides with the city hosting the prestigious Congressional Cup, an iconic yacht sailing race. The bonds represent a rare opportunity in the municipal market, as Long Beach may be the sole issuer of municipal revenue bonds backed by a marina system. Both Fitch Ratings and S&P Global Ratings have provided positive assessments, reflecting confidence in the city's financial management and the marina's robust performance.
A Detailed Look at Long Beach's Marina Bond Initiative
On the horizon of a vibrant autumn, Long Beach is preparing to issue its marina revenue bonds on Tuesday. The city, renowned for its maritime attractions, boasts three marinas—Rainbow, Long Beach Shoreline, and Alamitos Bay—with a combined total of 3,337 boat slips. These facilities are strategically located near affluent boating communities and popular destinations like Catalina Island. Under the leadership of Jesse Ortega, Long Beach’s assistant treasurer and debt manager, the bond issuance aims to refinance previous obligations from 2015 while enhancing the marina infrastructure.
Morgan Stanley and RBC Capital Markets are spearheading the bond sale, with support from Cabrera Capital Markets. Legal counsel is provided by Kutak Rock and Stradling Yocca Carlson & Rauth. The refinancing effort is expected to yield substantial savings, amounting to $6.1 million in present value and approximately $532,000 annually. Additionally, the funds will bolster the marina system's financial standing without necessitating further debt issuance. Notably, enhancements will focus on landside projects, including restroom upgrades and beautification efforts ahead of the 2028 Olympics, where the city will host several events such as sailing and beach volleyball.
Both rating agencies underscored the marina system's strengths, citing consistently high occupancy rates exceeding 90% over the past decade and a robust waitlist that has surged by 217%. Fitch upgraded its rating to BBB-plus, highlighting improved financial metrics and reduced leverage. Meanwhile, S&P assigned an A rating, emphasizing the system's competitive position within Southern California's bustling marina landscape.
From a broader perspective, Long Beach's strategic location adjacent to Orange County and just 20 miles south of Los Angeles positions it as a premier destination for both recreational sailors and investors alike. The city's commitment to maintaining calm waters through its extensive breakwater wall further enhances its appeal.
Investor interest is anticipated to be strong, driven by the scarcity of comparable municipal marina bonds and Long Beach's reputation for conservative fiscal management. Mark Young, a KNN managing director, noted the overwhelming support received during last year's sewer bond issuance, predicting similar enthusiasm for these marina bonds.
Perspective and Implications
From a journalist's standpoint, this initiative underscores the potential for niche municipal investments to thrive when backed by solid operational performance and strategic planning. Long Beach's decision to reinvest savings into infrastructure improvements exemplifies prudent financial stewardship. Moreover, the marina system's resilience, evident through its ability to maintain high occupancy levels despite economic downturns, speaks volumes about its enduring appeal. For readers and potential investors, this development highlights the importance of diversifying portfolios with unique assets that offer stability and growth potential. It also serves as a testament to the power of leveraging local resources to drive economic vitality and community engagement.
