C.C. Elebash misstates the facts in his March 28 PNJ viewpoint, “Start slow with park infrastructure “:
“The CRA would now have negative cash flow if its bonds had been sold in 2007.”
This is simply not true. I guess Elebash assumes that the City Council would not have allocated the CRA funds to pay debt….so he is half truthful.
The 2007-2008 budget for the CRA included these programs:
Comm. Redevelopment Plan Implementation-$1,122,700
Neighborhood Redevelopment-$439,300
Streetscape Improvements-$1,171,500
Capital Projects-$2,050,100
Urban Infill Housing- $97,600
Allocated Overhead-$219,300
TOTAL BUDGET: $5,100,500
The City Council would have reallocated the funds to cover the CMP bond notes. There was enough money available to do that as you can see.
Let’s talk about the bond payments. In 2007 municipal bond rates were between 3%-4%. So if the City had 30 year straight-line bonds at 3.5% – the monthly payments would have been $179,617.88. The total amount paid in bond payments for the would have been $2,155,414.56 for 2007-08 budget — an amount that could have handled by reallocating expenditures.
However, city bonds don’t have to be straight-line. The City probably would have negotiated paying interest only for the first few years until the construction was complete. That would have gotten the 2007 payments down to $1.4 million.
Here is the amortization schedule for the bonds – 30 years – cmp-note-schedule.