Pittsburgh City Council will begin consideration today of a $50 million bond issue intended to address the mounting backlog of infrastructure needs identified in a report issued by the city’s financial overseers under Act 47, the state program for distressed municipalities.
The mayor’s office initially introduced a bond package Tuesday, capped at $152.1 million, that included $50 million in new borrowing and $70 million in refinancing of old city bonds. However, Mayor Bill Peduto announced late in the afternoon that he was pulling that ordinance and pushing forward with the $50 million bond issue on its own.
“In order to close on Aug. 28, 2014, and to ensure passage through the Pennsylvania Department of Community and Economic Development approval process, it is essential that we approve the issue as quickly as possible,” the mayor wrote in a letter to council. “Bond issuance and refundings are always complex transactions and I want to ensure adequate time to make sure all concerned parties and the public have adequate time to consider all of the complexities of the refunding.”
Tim McNulty, a spokesman for the mayor, had said earlier in the day that the refinancing aspects of the deal would save the city about $2.4 million a year.
“While we give up savings on refunding temporarily ... we will immediately gain financing for new projects, comply with Act 47 and maintain the ‘debt cliff’ of debt service reduction which is planned to occur in 2018 and 2019,” the mayor wrote.
“And we retain the option to discuss the refinancing/refunding of current debt in the future.”
Mr. McNulty said the administration could have made the change at this morning’s council meeting but wanted to give the council as much notice as possible.
Pittsburgh’s Act 47 recovery plan, published in May, had recommended the city issue $50 million in general obligation bonds in 2015 and 2017 to help address “significant needs for road and bridge repair, building rehabilitation and other critical investments.”
“We’ve got to do it,” said Councilman Ricky Burgess, adding that without borrowing there would be no way to begin to pay for the city’s mounting backlog of road, bridge and other projects.
Two dozen of the city’s 86 bridges are structurally deficient, according to the recovery plan published in May by the Act 47 overseers.
Fifty-six percent of its roads are rated 0 — the worst rating — and 75 percent are in very poor condition. And the city spent an average of only $3 million a year for the past seven years to care for its 187 buildings, including police stations and fire stations.
In an interview after a news conference Tuesday on another subject, Mr. Peduto said the money would be used for those types of long-term investments in equipment and infrastructure.
“It’s a drop in the bucket to what we really need in order to be able to stop a 10-year-decline in the overall infrastructure, but it’s absolutely necessary to maintain what presently is there,” he said.
Robert Zullo: email@example.com, 412-263-3909 or on Twitter @rczullo.