BUFFALO
Control board will allow city to do its own borrowing
By Brian Meyer
NEWS STAFF REPORTER
Updated: 05/09/08 6:43 AM
Buffalo’s control board will let the city borrow money on its own even though the move will cost taxpayers as much as $500,000 extra over two decades.
Control board members and city officials insisted the long-term benefits of letting Buffalo return to Wall Street on its own outweigh the $25,000 in higher borrowing costs each year. They added that if the move shortens the life of the oversight panel, future savings could dwarf these added costs.
In a move trumpeted by city officials as further evidence of Buffalo’s improving fiscal health, the city will do its own borrowing for the first time since one year after the state imposed the control board. The last time the city sold bonds without relying on the board’s higher credit rating was in 2004.
Buffalo’s oversight panel Thursday authorized the city to sell its own bonds for up to $33 million. The list of projects includes $9 million in upgrades to some schools. Bertha H. Mitchell, the control board’s executive director, said it will cost Buffalo an additional $400,000 to $500,000 over the life of the bonds to borrow independently. The bonds’ life spans range from 16 years to more than 20 years.
City Comptroller Andrew A. San- Filippo said he hasn’t analyzed the board’s cost projections, but he called the added expense negligible when one considers the benefits of restoring Buffalo’s borrowing power.
“As we move to independence, the need for a hard control board then begins to diminish,“ SanFilippo said.
He pointed to “historic budget surpluses” as signs that Buffalo is fiscally sound.
“It’s time for us to move forward in the credit markets and show the world that we’re standing on our own two feet,” SanFilippo said.
He noted that the city foots the tab for the control board’s $1 million operating budget, money that Buffalo could spend on other things if it didn’t have to finance the costs of running a hard control board. If letting Buffalo return to the borrowing market on its own speeds up efforts to make the control board into an advisory- only panel, SanFilippo said, Buffalo’s savings would be substantial.
County Executive Chris Collins, a member of Buffalo’s control board, enthusiastically supported the move to let the city borrow on its own. Collins suggested that Erie County’s control board should borrow a page from the city’s “financially sophisticated” oversight panel and let the county proceed with its own borrowing.
Control board Chairman Paul J. Kolkmeyer and Vice Chairwoman Alair Townsend said they had no reservations about restoring Buffalo’s borrowing powers.
Kolkmeyer opened Thursday’s meeting by stating Buffalo’s fiscal condition is “much improved.
While the former banker gave credit to city officials for what he described as efficient management, he cited two other key factors: increased state aid and Buffalo’s adherence to control board-imposed spending rules.
