Florida ranks No. 1 -- in municipal bond defaults
The good news is Florida is No. 1 -- by far -- in a new economic development ranking. The bad news is being No. 1 means Florida has defaulted on more municipal bonds -- by far -- than any other state in the past decade.
According to the Distressed Debt Securities newsletter of Miami Lakes, Fla., of the 126 municipal bonds that are in default in 2009, 70 were sold in Florida. Ohio, which has defaulted on eight muni bonds, ranks second in the nation followed by Illinois with five.
Hello, Florida financial watchdogs. Is anybody home, conscious and doing their jobs any more?
A Bloomberg News story by veteran reporter Joe Mysak says Florida's appalling default rate can be blamed in general on the collapse of the real estate market. But specifically, Florida's problem lies with co-called Community Development Districts, which sell bonds to pay for infrastructure to support -- what else? -- new real estate developments.
Local districts that defaulted on bonds include Riverwood Estates near Zephyrhills and Heritage Isles in New Tampa.
Florida has 600 such districts, and 105 have gone into default on a total of $3.2 billion in bonds.Bloomberg asked how the so-called dirt district defaults in Florida compared with similar meltdowns in Colorado in the 1980s, Texas in the late 1980s and early 1990s and California in the 1990s. Responded Richard Lehmann, publisher of the distressed debt newsletter: "It’s worse than all three combined."
This is the same Richard Lehmann who waved the warning flag last October in a Forbes story called "The Coming Bond Default Wave."
-- Robert Trigaux, Times Business Columnist