When the state of Connecticut sought a routine refunding of $500 million in bonds a couple of weeks ago, it found that Wall Street's credit crisis had hit home.
Only about $90 million of the state's bonds were bought, raising all sorts of questions about how the state can cope with billions in projects that are planned or underway.
Bristol's comptroller, Glenn Klocko, said that if the state can't sell its bonds and other towns, including AAA-rated Avon, can't find buyers either, then it's time to consider a freeze on all capital projects.
"Those who are looking to bond are going to have serious problems," Klocko said.
Klocko said the credit crisis that has contributed to tumbling stock values and corporate panic is going to have an impact on Bristol, too.
He said, for instance, that if the $130 million school project had to be financed now, "it would be a no go."
Klocko said that Bristol wouldn't be able to bond for its share of the cost and the state would likely pull out of it anyway, since it's on the hook for 74 percent of the tab.
"You can't do it now," Klocko said. "The bets are off. The numbers are very shaky."
Klocko said the financial situation is unprecedented since the Great Depression, with nobody having the cash to buy bonds.
"It's the worst ever. It's extremely tough," Klocko said.
With such uncertain markets, he said he intends to recommend to the City Council and the Board of Finance to hit the brakes on everything they can.
"It's not the time to fool with new projects," Klocko said.
The city has about $25 million in borrowing that it intended to roll into a bond sale next year. For now, it's simply borrowing the cash from its own reserves, including the $5.3 million it used to buy the downtown mall several years ago.
Klocko said that the city can't finance any more projects itself. It would have to sell bonds if anything new arose, even an emergency allocation to fix a bridge or other type of crisis.
"We no longer have the capacity" to handle any more significant spending needs, the comptroller said.
The chaos in the markets may have an immediate impact on the school plan because the city is negotiating the final purchase of the former Crowley dealership on Pine Street and is eyeing an empty lot off Matthews Street. Each would house a 900-student school.
But if officials are not confident that they'll be reimbursed at the promised 74 percent rate by the state, those purchases may not happen, because the city might prefer not to risk getting stuck with land it can't use.
Delaying the purchases might well kill the project since there's a tight timetable already.
"It's not the time to fool with new projects, including schools," Klocko said.
Calls to the state treasurer's office have not been returned yet today, but Reuters quoted an anonymous person in the Connecticut government today who said the state got only about $88 million in retail orders during a presale period and had slashed its sale to $100 million overall.
That means about $400 million in expected transportation infrastructure work around the state won'tt have any financing in place and, presumably, may not happen until bonds can be sold. It's not clear if that would have any impact on Bristol.
Most of the municipalities around the country that have sold bonds in recent weeks have seen the interest rates they pay soar, which can have a drastic effect on the cost of projects.
State Rep. Frank Nicastro, a Bristol Democrat who is also on the City Council, said he warned months ago that the economic crisis would worsen.
He said that the city can have terrific school buildings, but if it's taxes are too high, there won't be any children to attend them.
More later.
Copyright 2008. All rights reserved.
Contact Steve Collins at scollins@bristolpress.com
33 comments:
Hello, that's right, it's not time to build new schools! That's the first article I've read about the building program that makes sense. Taxpayers are hurting and it's time to restrain the Confederacy of Greed.
Finally! Something positive to come out of this financial mess. Now is not the time to spend money we don't have. If anything we need to cut back so as to provide some relief to the taxpayers.
That's he best news I've heard in a long time. Wipe this whole thing off the table and deal with what we already have! If we need to use portable classrooms for more room or whatever, for a while, then so be it. There are other solutions to wasting so much money and spending it when we can't afford it.
If new schools come up on the ballot, I am voting NO!! Any major projects that aren't necessary...NO
Steve, Thanks for telling us about this. I've wondered how long it would take before the crisis would have a real impact in Bristol. Now I know.
Steve: Any possible impact on Rt.72 project?
Now we, the opposition to this project, have a chance to organize instead of having this pushed down our throats (or up a different orafice) by Mr. Strifer and his band of liberal, edu-crat, lackey morons.
Thank you Freddie and Fannie!
$130 million proposed, plus additional infrastructure, plus additional busing costs in order to build 2 new schools.
$98 - 100 million to renovate the old ones.
Net result- $30 million EXTRA blown away.
THAT fact alone should have been ENOUGH to stop this spending spree, and to have new leadership at the BOE and school administration.
Very, very hard times coming.
Taxpayers can't take it anymore.
No new tax increases.
Time for tax relief!
CUT this project.
Just Great!
Overtax the people to keep the Fund Balance high, refuse to use the way over funded pension fund for other employee benefits (and to keep taxes down), all to have a high Bond Rating for Mr. Klocko.
But don't use the high bond rating to borrow to do necessary projects.
Go figure!
BEFORE the city considers cutting the project, they ought to talk to the state to see just what their status is relative to bonds.
The Feds won't let everything stop, nor will the state. Otherwise we would never recover.
Governments find ways to pay, and remember, bonding payments don't start year one.
This is just a flimsy excuse thrown up by Mize, Ward, and Nicastro who have been against these schools from the start. The city won't be borrowing this money until more than a year from now, when the Wall Street mess will be ancient history. Try again, Artie Party.
"This is just a flimsy excuse thrown up by Mize, Ward, and Nicastro..."
--Well I guess one person's "flimsy" excuse is another's GREAT excuse.
---JUST SAY NO!!!!!
The only way new schools would be built is if we got the bonding which has not been determined yet so Klocko is only stating the obvious. Why are you people so stupid? Duh? Of course we're not going to spend the money if we don't have it!
By the way, if we don't get schools, you can really kiss the chance to attract decent citizens to this city good bye! And by the way, this project was NOT shoved down your throats! It's been in the works for a few years. If you're too stupid or too lazy to find out what's going on in your city until it's plastered all over the Press time and time again, then that's your problem! Crying about it at the 11th hour is typical Bristolite behavior and I, for one, am sick and tired of it. why don't you try getting rid of a project before we've spent thousands of dollars instead of screaming about it afer the fact.
Also, I believe the majority want and realize we need these schools. They actually have some insight into what will happen to this city if our children are left in antiquated, dangerous schools.
To the poster with regard to the overfunded pension ... Look at the stock market, stupid! Do you really think it's overfunded now? That's why we shouldn't touch it, because I'm sure it's lost a ton of value over the past few weeks. The money might not be there for the employees let alone for the city to use. Perhaps we can dip into your pension or your savings, because right now I'm feeling a little strapped. Don't touch something that's not yours to touch!!!!!!!!!!!!!!!
I totally agree with the last poster. You are right on the money! Thank God someone actually is onto these people. It's just a convenient excuse to not do anything because God forbid that Artie actually does something to help this city and actually stops listening to Mize and Klocko and his cronies who think THEY run the city!
The Pension fund is still significantly overfunded.
Ward should ask Klocko and Barnes for a clear explanation of teh status.
Even down 10%, we are still in good shape: keep in mind the determination of overfunding is based on everyone drawing out everything due them NOW.
The interesting thing about this article is the mention that only 90 million dollars in bonds have been purchased. There is a lot more on the table than that. If investors won't buy the bonds then the worse case scenario is taxpayers paying them off.
Basically, this mess still has a long way to go before we get to the other side.
10:26: It hasn't been shoved down our throats? When was the vote? Yes, it's been discussed for awhile, but that only means it's been shoved down our throats s-l-o-w-l-y.
What new schools will attract are opportunists who move here just for new school buildings, while they spend their money wherever they came from. They will have no loyalties to Bristol or its businesses. And it will cost us more in tax dollars to educate their kids.
The prudent thing to do is to look high and low in our schools for whatever these "dangerous" things are, and if we find any, fix them. Done.
"The city won't be borrowing this money until more than a year from now, when the Wall Street mess will be ancient history"
Wow, can I borrow your crystal ball when you're done with it?
"The prudent thing to do is to look high and low in our schools for whatever these "dangerous" things are, and if we find any, fix them. Done."
Oh, how simple! Okee-dokee 2:32, let's start with the parking lot at Bingham School....
Bonding isn't done until costs are fixed: short term borrowing gets the project done.Then you bond.
Good schools attract people that buy better houses, bigger cars, give more to various organizations, as oopposed to some of the people in teh West End and on Federal Hill, who cost us much more than they provide in tax revenue.
Please explain " can be axed if necessary"
Either it is necessary or it isn't.
And Mize, we can't afford ANY increased spending. PERIOD!!!
Tim,
I suspect (not 100% certain) that the money for Rt 72 as already in hand. The real impact will be on projects or work that has yet to see a spade hit the ground.
Of course, if I am wrong then work will continue until they run out of money. If 72 is left unfinished we can use it for racing.
"...but that only means it's been shoved down our throats s-l-o-w-l-y."
What you people conveniently overlook is the FACT that every pro K-8 Board of Education candidate won, and every anti K-8 candidate lost. The voters spoke, and they said they want K-8. So stop claiming that it's being shoved down our throats. It ain't so.
"Good schools attract people that buy better houses, bigger cars, give more to various organizations, as oopposed to some of the people in teh West End and on Federal Hill, who cost us much more than they provide in tax revenue"
---More nonsense...I guess you missed the fact that Hartford is the 2nd highest spender per pupil in the state. I guess you missed the fat that Yale, Harvard and Avon Old Farms teach in classrooms that are 100 years old or more.
---And by the way, Federal Hill is one of the nicest places to live in Bristol. Better then some tacky rasied ranch in the woods on Cow-chip-ens Hill or in the south west corner (the four sewer-less corners).
11:01
Then why are there so many complaints about the activity on MAin street, High Street, Prospect Street, Summer Street, etc.etc.etc???
You tell me.
Also, the schools you mentioned have built new buildings and continue to build and upgrade. ALL of their students do not get educated all the time in 100 year old buildings that have not been upgraded, but ALL, yes ALL the students that attend Bingham are going to a 100 year old plus school.
Please make your comparisions menaingful.
So, let's renovate Bingham. Pave the parking lot and do whatever else needs doing. In Europe they use buildings for hundreds of years. It's too bad we're such a throw-away, instant gratification society. Our planet would be healthier if we fixed what we have and made it last longer. Well, at least maybe this financial mess will be good for the environment.
"So, let's renovate Bingham. Pave the parking lot and do whatever else needs doing"
The pavement in the parking lot isn't the problem. You obviously have never had a child attend Bingham. It's getting in and out of the parking lot that's a HUGE problem and there was at least one child who was hit by a car trying to navigate the treacherous intersection between route 6 and the parking lot. It's a problem that can't be fixed.
If it's a traffic safety problem, it should be taken to the proper authority. The crossing guard, parents, and teachers should all be out there.
If you want the problem fixed, there's ways to do it. If you'd rather leave the problem and showcase it as a reason to build new schools, how will you deal with another child getting hit?
"it should be taken to the proper authority. The crossing guard, parents, and teachers should all be out there"
It has been. The crossing guard, parents and teachers ARE always there, and the problem still exists. It's just a really nasty (and dangerous) spot to enter and exit the parking lot. There is no easy fix. The lot is just one of the many, many problems at Bingham. A lot of things have changed in 100 years.
Things do change a lot...one of them is building quality. You can spend all the taxpayer money you want, but you will never be able to build a school (or any other building) as solid as Bingham or the other older schools.
We're better off saving money, renovating AND taking care of the traffic problem.
No wonder we seem to be getting nowhere: we continually address the sympton, not the illness.
And a solid structure doesn't guarantee solid educational opportunities.
"one of them is building quality"
if you think Bingham is a "quality" building, you've obviously NEVER been inside. Old does not necessarily mean "quality."
Actually, I have been in Bingham. It's a good, solid building that needs renovation. Any additional educational opportunities can be offered in a renovated school just as well as a new school. And we'll have more money to provide MORE opportunities to our kids. If we can't build new because of Wall Street, and the school system decides to concentrate more on programs, our kids will win!
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