Local officials did not report any delayed or canceled projects because of the economic downturn.
Temple
According to Traci Barnard, director of finance for the city of Temple, the new fire stations approved by voters in November are the only capital improvement projects not funded yet in the city. But, she said, cash for that project would not be needed until a time when the financial picture will hopefully be clearer.
“We won’t need proceeds until we’re ready to award contracts, which we think will be early in the summer of 2009,” She said. “I think by then, hopefully, the markets will have settled and we will know what’s going on.”
She said if bond funding was needed soon, cities could face problems.
“If we needed to go to the markets this week, next week or the next, I would be concerned about our rate and the ability to get bidders to bid on the bonds,” she said.
“We went to market this spring and summer and got good rates,” Ms. Barnard said. “All of our projects are under way and going strong.
She said the city has $106.7 million budgeted for capital improvement projects and $66.2 million of that amount is either committed or expended.
Ms. Barnard said the city does not try to play the market when funding projects with bonds.
“The rule of thumb I go by is, you don’t try to time the market when you’re going to issue bonds,” she said. “You pay attention to the bonds and whatever conditions exist in the market and you try to take advantage of the best that’s there. You issue bonds when you need bonds for projects.”
As an example, she said you don’t buy a television just because it’s on sale. “When you need a TV you go buy a TV and you look for the best price.”
She said the city’s cash of about $122.8 million is invested in TexPool, TexSTAR and Texas Class funds.
In September, Comptroller Susan Combs cut TexPool’s ties with Lehman Brothers Inc., which is owned by Lehman Brothers Holdings Inc., which filed for Chapter 11 bankruptcy. The firm was only involved in marketing and client services, not investment management.
Belton
Belton’s interest income from its investment plan will not be affected by the current capital crisis caused by a national credit crunch and the recent stock market plunge, according to the city.
The city’s cash is invested in TexPool and TexSTAR, said Cristy Daniell, assistant city manager of finance. She said the investment tools are designed for cities, counties and educational institutions.
Belton keeps cash not needed for immediate day-to-day operations invested in the pools so that the funds are not lying idle, Ms. Daniell said. But the interest income stream is not something the city depends on in its budget.
In the 2007-08 fiscal year, Belton earned a total of $185,000 in interest income. The budget for 2008-09 calls for the same.
Ms. Daniell said cities are not allowed to invest in the stock market - so the recent downturn in the Dow Jones has had no direct effect on Belton.
“We have seen the interest rate drop recently (yield on investment),” she said. “However, we’ve seen the rate on T-Bills drop too.”
She said rates were not high to begin with. On Sept. 1, TexPool started at 2.3 percent yield. It went as high as 2.74 percent, but by the end of the month was down to 2.15 percent.
The quote for TexPool on Thursday was 2.2175 percent. TexSTAR was 2.0612 percent.
High interest rates to borrow money will affect cities that have bonding projects on the table.
“But we are not in the credit market right now,” Ms. Daniell said.
Belton did its most recent bond issue during the summer before the capital markets cracked. The funds - as much as $2 million on tap - will provide the infrastructure of sewer, water and streets at the site of a proposed new middle school for Belton ISD.
“We had great timing on that one,” Ms. Daniell said. “We closed it Sept. 11 at a rate of 4.13 percent.
“Some cities may be forestalling their debt issues,” she said. “But we are not in that situation.”
Temple ISD
TISD executive director of finance Charles Mikeska said the district wouldn’t be impacted by the downward turn in the economy because all of its bonds from a 2007 election have been sold.
“The money is already in hand,” Mikeska said. “We’re not planning on experiencing any ramifications from the current economic conditions.”
Mikeska said if the Temple ISD were to hold the same $19.9 million bond election under the current conditions, the district might experience problems selling its bonds off. “We would probably be trying harder to sell (the bonds),” Mikeska said.
