Coral Gables finances strengthened in 2025 as construction revenue fell

By Coral Gables Gazette staff

Coral Gables closed fiscal year 2025 in stronger financial shape than it started, growing its net position for a second straight year, meeting its reserve target and reducing its pension liability by nearly $45 million.

But the city’s newly completed Annual Comprehensive Financial Report also shows a softer spot beneath the otherwise positive numbers: revenue tied to permits and impact fees fell by $14.33 million, a drop the report attributed to the timing and size of new construction projects within the city.

The report, prepared by the city’s Finance Department for the fiscal year ended Sept. 30, 2025, was audited by RSM US LLP. The firm issued an unmodified opinion, meaning the financial statements fairly present the city’s financial position in accordance with generally accepted accounting principles.

Net position rises again

The city’s net position — a broad measure of what it owns minus what it owes — rose to $494.92 million as of Sept. 30, up $58.46 million from the prior year. The report says that increase indicates the city’s overall financial position “has continued to improve.”

Governmental funds ended the year with $244.73 million in combined fund balances, up $13.46 million from fiscal year 2024. The General Fund’s unassigned balance was $64.08 million, meeting the city’s policy of holding reserves equal to 25 percent of its operating budget plus debt service requirement for fiscal year 2026.

Including committed, assigned and unassigned amounts, the General Fund had $102.64 million available for future spending, equal to 53.57 percent of total General Fund expenditures.

The city also reported no general obligation debt outstanding. Its annual debt payments on special revenue bonds are funded through non-ad valorem General Fund revenues and operating revenues from the parking, sanitary sewer and stormwater utility funds.

Coral Gables also retained AAA bond ratings from all three major rating agencies — S&P Global Ratings, Moody’s Investors Service and Fitch Ratings — a distinction the report says is held by only three cities in Florida and by Coral Gables alone in Miami-Dade County. Fitch cited the city’s financial reserves, budget flexibility and management practices as part of its rating rationale.

Pension liability keeps shrinking

The city’s net pension liability fell by $44.78 million during the year, from $181.09 million to $136.30 million. The plan’s fiduciary net position rose to $507.57 million, covering 78.83 percent of the city’s total pension liability.

The improvement builds on a policy adopted in 2015 to pay down the city’s unfunded pension liability faster than required. Under that policy, Coral Gables contributed an additional $9.55 million toward the liability in October 2024, bringing cumulative extra pension payments to $55.35 million since fiscal year 2016.

The pension numbers remain sensitive to investment assumptions. The report used a 7.15 percent discount rate, down from 7.20 percent the prior year. At that rate, the net pension liability was $136.30 million; at a rate one percentage point lower, the liability would rise to $201.20 million.

Construction-related revenue falls

The clearest weak spot in the report was charges for services in governmental activities, which fell by $15.92 million from the prior year.

Most of that decline came from development-related revenue. The report attributed $14.33 million of the drop to lower permit revenue and impact-fee assessments, citing the timing and size of new construction projects in the city. A separate $2.05 million decrease came from a roughly 32 percent reduction in the annual solid waste collection fee.

The decline did not prevent the city from ending the year with stronger overall results. Tax revenue rose by $10.53 million, including a $9.82 million increase in ad valorem taxes collected during the year, driven by higher property values.

Taxable values reached $26.0 billion for fiscal year 2025, up 8 percent from the prior year. The city held its property-tax millage rate at 5.559 for a 10th consecutive year.

Capital spending grows

The city’s adopted fiscal year 2026 budget includes $52 million for its capital improvement program, up from $41.5 million in fiscal year 2025.

The largest categories include $15 million for utility repairs and improvements, $9.3 million for transportation and roadway improvements, $8.3 million for historic facility repairs and restorations, $6.3 million for parks and recreation improvements and $4 million for public safety improvements.

The report also notes several major financial and infrastructure priorities, including the new Minorca Garage, public-safety technology, stormwater and sea-level-rise planning, electric vehicles and future Mobility Hub-related work.

What the report means

The annual report gives Coral Gables a favorable year-end financial picture: stronger reserves, higher net position, lower pension liability and continued top-tier credit ratings.

But it also shows the city’s exposure to development-related revenue swings. Even in a strong year, permit revenue and impact-fee assessments fell sharply, underscoring that construction-related money can move faster than the broader tax base.

That matters as the city enters a budget cycle shaped by major capital needs, downtown construction planning and a possible statewide homestead-exemption expansion that city officials say could reduce future property-tax revenue.

The full Annual Comprehensive Financial Report runs 155 pages and covers the city’s government-wide finances, General Fund and other major funds, pension obligations, retiree healthcare obligations, debt, capital assets and statistical trends. The report was prepared under Finance Director Diana Gomez and submitted for consideration for another Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting, an award Coral Gables has received for 41 consecutive years.