Pittsburgh council gives initial approval to $55 million in bonds for capital projects

With Pittsburgh poised to float more than $55 million in new bonds for its 2021 capital improvement projects, city council members Wednesday heard from the city’s finance director about interest rates reaching historic lows. Council member discussed the potential to borrow even more to pay for affordable housing projects.

The expected interest rate when the bonds are issued in March will be slightly less than the 2.5% rate for the city’s 2020 bond issue of about $50 million. “This is a good time for us to borrow,” said Douglas Anderson, the city’s finance director.

The city is also working to structure repayment of the debt so it will be about $2.7 million each year through 2027, when it will jump to $5.3 million, Anderson said. This is being done as a response to budget issues expected as a result of the coronavirus pandemic.

The money will help fund the city’s 2021 capital budget of about $123 million. Among the projects planned this year include bridge upgrades, street resurfacing landslide remediation and several others.

Council also discussed how it’s allowed to use 10% of the amount borrowed, in this case about $5 million, for emergencies that aren’t budgeted, something Councilman Anthony Coghill said might be particularly important in the midst of a pandemic.

“I do not like to incur debt,” Coghill said.

But the low borrowing rates and the need to fund projects convinced him to support it, he said.

Because the rates are so low, Councilman Ricky Burgess is proposing exploring whether council and the city’s Urban Redevelopment Authority should use the $10 million it budgets for URA housing programs to float another bond that would give those programs a large infusion of cash, which would be repaid by future budget commitments.

Burgess has the support of council members R. Daniel Lavelle and Erika Strassburger for the idea. They agreed to set up a meeting with city financial leaders and advisers to see if they can move forward.

The $10 million spent each year on the URA programs only goes so far and there is a waiting list of projects and people to help. If the city and/or URA could borrow $80 million, more could be done at once, Lavelle said.

Coghill cautioned he didn’t want to go into a “borrowing frenzy,” but no one on council opposed the idea.

The capital bonds were given unanimous initial approval Wednesday.