New loan will fund lifeguard towers
The city is moving ahead with a plan to borrow $103 million to address a backlog of street and facility improvement projects that includes new lifeguard stations at the Children’s Pool and La Jolla Shores, Mayor Jerry Sanders announced Thursday.
The private financing deal, through Bank of America, will be used to resurface 78 miles of city streets, repair sidewalks, replace storm drains and improve fire stations, libraries and parks.
“The proceeds from this private placement will enable us to address a long list of backlogged repair and maintenance projects that have left many of our roads and buildings in disrepair,” Sanders said.
Sanders announced the borrowing plan at the crumbling intersection of Seventh and Island avenues in downtown’s East Village.
“We expect to receive the funds this week and will begin work over the next several months,” the mayor said.
It is the same private loan that the City Council approved last April.
Shortly after, however, the deal was put on hold by then-City Attorney Michael Aguirre, who said incurring that level of debt would be illegal unless authorized by a public vote.
Jay Goldstone, the city’s chief operating officer, said San Diego’s new city attorney, Jan Goldsmith, has now signed off on the loan.
Goldstone said the financing plan, which uses city facilities as a form of collateral to secure the loan, has been used by municipalities around th state for decades and is perfectly legal.
The loan will carry a 3.89 percent interest-only rate through 2010, but city officials intend to refinance it this summer through long-term public bonds which carry a lower interest rate.
By using private means to secure the money now, Sanders said the city will be able to proceed quickly on infrastructure improvements.
It would take about 10 months to secure a public bond placement, he said.
“This gives us a chance to jump-start it. Get it moving right now with lower construction costs and a low-interest payment,’' Sanders said.
The mayor said there is a backlog of about $900 million to $1 billion in deferred maintenance projects throughout San Diego.
Among the hundreds of projects slated to be funded from the loan include new roofs on more than a dozen municipal buildings; design work for new fire stations; parking lot resurfacing in Mission Bay and Balboa Park; and new windows at the San Diego Police Department Headquarters.