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Poor bond market delays bay area public works project

Local governments are delaying long-planned improvements or shuffling revenue because of the global economic crisis.

"To call the whole bond market, even the fixed rate bond market, challenging is an understatement right now," said Tampa finance director Bonnie Wise. "There's very, very few, if any, deals getting done."

Pasco County has delayed a $185-million bond issue since mid September because of the market downturn. The money is needed for sewer improvements.

Pasco budget director Mike Nurrenbrock said the scarcity of buyers in the municipal bond market has caused the county to hold off, despite a favorable rating. With few buyers, interest rates rise, driving up the county's cost.

"When the market went bad, we deferred, and we are still deferring on a day-to-day basis," Nurrenbrock said. "It certainly hasn't gotten any better. The difficulty with the entire marketplace is there is no one buying municipal bonds."

St. Petersburg is in a similar bind. The city has delayed a $40-million bond issue that was supposed to help pay for utility improvements spanning 10 years.

"Since the market is now frozen up, we have been told by our financial advisers that we can't sell them right now," said finance director Jeff Spies.

Spies said the city will most likely end up dipping into reserve funds until the bond market recovers. If that doesn't happen soon, some projects might be delayed, but Spies said it was early too tell which projects would suffer.

A new pipeline intended to solve water pressure problems in South Tampa also could be in jeopardy. Plans called for paying for the project with a $55-million bond early next year.

Without financing, Wise said, she'll have to come up with some other way to pay for the construction, and not only because the city needs to upgrade its aging water pipes.

"If we can get some of these projects going, get people working, whether it's us or contractors, that's helpful to the local economy," she said.

Meanwhile, even some borrowed money that Tampa does have available has become too expensive to use.

The city received a $93-million line of credit, similar to a home equity loan, called commercial paper through the Florida Association of Counties three years ago. The money will be used for transportation, water and stormwater projects. So far, the city has used about $6-million of the loan; the rest is still available.

But Wise said she is hesitant to dip into it because interest rates are so volatile.

Wise had hoped to use commercial paper to pay for a renovation of Curtis Hixon Park in downtown Tampa, turning downtown streets from one-way to two-way and remaking Ashley Drive.

The park, a pet project of Mayor Pam Iorio's, will be built with property tax revenue, but the roadway changes have been delayed indefinitely.

But not every government is hurting.

Claretha Harris, chief deputy director in the finance division of the Pinellas County clerk of the Circuit Court, said conditions in the financial markets had changed considerably since the county last issued debt in July.

Fortunately, the county hasn't had to issue any bonds recently, she said, and doesn't plan to in the near future.

"We don't have the need right now," she said.

Poor bond market delays bay area public works project 10/13/08 [Last modified: Monday, October 13, 2008 10:50pm]
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