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MIAMI-Commercial real estate investors are expected to react favorably to a recent decision by Moody’s Investors Service to upgrade Miami-Dade County’s general obligation bonds.

In explaining the reasons for the upgrade, the New York-based securities ratings service cited the county’s well-performing economy, albeit softer now than a year or so ago, and better management controls over public finances.

This is the kind of report that provides investors with a clearer picture when it comes to considering local commercial real estate investment opportunities, Lewis Goodkin, a Miami-based real estate consultant, tells GlobeSt.com.

“The biggest negative has not been any shortcomings in the local economy as it’s been the shortcomings in the local political environment,” says the president of Goodkin Consulting, a PricewaterhouseCoopers strategic partner. “Those kinds of situations have led to everything from mismanagement, to issues of corruption, to simply issues of foolishness. As this area continues to stabilize, it’ll combine with the established economic muscle to enhance further development.”

Such stability is necessary even in a strong economy, Goodkin notes. “You could have a very strong economy and a nervous development community,” he says. “Right now, local government is working well with the local development community, and that’s very much a positive. That situation should continue.”

In the ratings report, Moody’s took particular interest in the fact the county has produced operating surpluses in five of the last six years out of a annual budget that averages more than $3 billion. Besides doubling the unreserved general fund balance, the county also has marginally reduced the operating tax rate to about 87.9% of the statutory limit.

While it could inspire investor confidence, John Incorvaia, a Moody’s investment analyst, says the ratings upgrade has one immediate impact on the county’s public finances.

“It’ll lower the interest they pay on the bonds,” Incorvaia says. “They’re still limited to the total amount they can issue, and they still have to adhere to acceptable ratios on debt to overall operations. But under normal circumstances, it should cost them a little less to issue general obligation debt.”

The Moody’s report also spoke optimistically about the local economy’s future because of its diversification. While tourism still ranks as the region’s No. 1 industry, the report also cites the increasing influence of international trade and further diversification from growth in other industries.

“It’s a big economy, with a lot of facets,” Incorvaia says. “Yes, there is a dependence on tourism and international trade, but there also is diversification from banking, manufacturing and the entertainment industries, which also helps the economy along. When some sectors slow, other sectors are out there contributing to the growth.”

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