Long Run Thinking
September 22, 2010 12:24 AM
We went out to do our borrowing for 2010 yesterday, and we got the best interest rates in memory, perhaps of all time. The rate for our largest piece of borrowing, $44 million, came in at just .837%. That's not a misprint. It came in below 1%. Other rates for different borrowing packages came in higher but none more than 3.25%.
This underscores a point I've been making for some time. Now is the time to make significant progress in infrastructure investments like roads, parks, libraries and more. Most of these projects will have to be done at some point in the future anyway, but it's very unlikely we'll ever be able to borrow at these rates again. That means the total cost of those projects will be higher if we wait. In addition, we're getting good construction bids, and people need the jobs now more than ever.
We got these great rates in part because we have the highest credit rating possible for municipalities, Aaa. It's right to be concerned about too much debt, and we do need to show some restraint. In fact, I trimmed borrowing requests from city agencies by almost $20 million this year. But for so many projects that will need to be done in the future, the future is now. That's good long-run thinking.