Financial instability could delay local building projects
Posted September 24, 2008 5:19 p.m. EDT
Updated September 25, 2008 6:23 p.m. EDT
Raleigh, N.C. — 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.