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Financial instability could delay local building projects

Posted September 24, 2008
Updated September 25, 2008

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— Unstable financial markets have forced Raleigh and Wake County to hold off on selling bonds for major construction projects.

Although officials said there is no immediate impact from the delay, continued market turmoil could jeopardize timetables and budgets for the projects.

Two years ago, Wake County voters approved selling $1billion in bonds for school construction. Last fall, voters also passed proposals to sell $92 million in bonds to expand Wake Technical Community College and another $45 million for new and renovated libraries.

County officials planned to go to the bond market last week to raise more than $400 million from some of those bond issues, but they had to back off because of the volatile market. They tried again Tuesday but still couldn't get the low interest rate they sought – even with the county's AAA bond rating.

"We're looking at delaying that, and our strategy is right now to continue to look at the market and see where it goes," Deputy County Manager Joe Durham said.

The county also plans to borrow to build a $214 million justice center in downtown Raleigh to replace the county courthouse.

Durham said the instability on Wall Street has no immediate impact on public building plans, but that could change if interest rates don't improve soon.

"You're looking at things that cause you to perhaps delay some of those projects. It could cause you to scale back," he said. "It's very serious, and it does impact what we do locally."

Raleigh City Manager Russell Allen recently returned from New York, where he met with bond-rating agencies. The city plans to sell $500 million in certificates of participation – bonds that don't require voter approval – to pay for the $226 million Clarence Lightner Public Safety Center and a remote operations center that would move sanitation trucks and other equipment out of downtown.

"I've been in the public business for 30 years, and I've never seen financial markets as volatile as they are now," Allen said, adding that he doesn't see any immediate threat to local construction projects.

City Councilman Philip Isley voted against the municipal projects. He said Wednesday that the city should take advantage of the market instability to take a second look at the bond proposals.

"I think even more so we've got to take a look at whether we commit this source or this amount of debt on projects we might be able to put off a year or two," Isley said.

The timing is better for Durham city officials, who said they don't have any borrowing or bond plans until next year.

But the North Carolina Turnpike Authority wants to raise $600 million through bonds in the next few weeks. The money would help build the Triangle Expressway, and authority officials said they hope the market turns around so the project isn't delayed.


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  • bama211 Sep 25, 2008

    Well, unless you want more fuel added to the fire of raising our taxes, I say wait for the market to clear and then return and see what we've got to work with. I agree with this proposal. BUT, don't be shy and slow to return to the table. Things are moving at lightening speed right now in the markets, and commitments being issued by those willing to lend are on very very short fuses. You've got to have ALL of your ducks in a row now prior to seeking capital. Now is NOT the time to receive term offers and think about it, or shop it to other sources. YOu get a good offer, you take it immediately. We're no longer in a "borrowers" market. We're in a "lenders" market. Those who think otherwise, aren't paying attention, don't know how this works, or lack the experience required to negotiate correctly. It sounds like to me, Isley is correct to sit tight and wait. But remember, RDU is the #1 MSA in the country right now. We've got strength, we've got attention, we've got demand.

  • discowhale Sep 25, 2008

    Could the only possible thing to say about this situation be, "...DUH!"

    If money is tight, it's tight for everyone, including the pointed heads that run the city and county.

  • Fun Sep 25, 2008

    good...stops the growth of government and spending

  • atc2 Sep 25, 2008

    Hopefully during the next election, Isley is voted out of city council. This guy is nothing but a road block and problem to our city (lack of progress is written all over this errogant guy)

  • CestLaVie Sep 25, 2008

    "... we might be able to put off a year or two," Isley said."

    You mean put off like Wake County did with the school bond construction from TWO years ago, and the bond referendum from LAST FALL that they are just getting around to seeking bonds for? Oh, I see...hurry up.......and wait.

  • bs101fly Sep 24, 2008

    GREAT! Who the heck will that hurt???
    The Tim Mintons, Meekers and Russell Allens.


  • davidgnews Sep 24, 2008

    Great - bring it on. I mean, bring it down!