In the tea party era, one of the most frequently parroted political refrains is that governments shouldn’t borrow money they don’t have.
But for the man who chaired the Prairie Village’s finance committee in 2009 when it went forward with $8 million in new bonds, the city’s decision to incur debt was the smart move — and the right thing to do by the citizens.
As the City Council last week went through the routine business of approving change orders to a series of contracts for work funded by the 2009 bond issue, Charles Clark, who has represented Ward 5 since 2006, took a moment to congratulate his colleagues for what he considers wise financial stewardship.
Clark, a retired construction businessman with degrees from Harvard and the University of Michigan Law School, said that by issuing the bonds, the city was able to take advantage of historically low interest rates and construction costs to complete needed road maintenance work. Ultimately, the bond money funded projects including repairs to Nall Avenue, 83rd Street, Somerset Drive and 79th Street, among others.
Clark notes that the costs of delaying repairs to the city’s 139 miles of roads, in particular, can be an expensive proposition. Roads that are allowed to fall into serious disrepair cost four to five times as much to replace as those that are maintained more regularly.
“It’s the kind of thing you can’t put off — things we knew we were going to have to do within five or six years,” he said. “One of, if not the, most important obligations we have as a City Council is maintaining the infrastructure our predecessors gave us. I feel very strongly about that. It’s an issue of stewardship.”
The city ultimately borrowed the money at an interest rate of 1.78 percent — the lowest in US history. Moreover, construction and materials bids were coming in up to 40 percent below what they’d been the year before, meaning the ultimate price to the taxpayer was far below what it would have been had the work been carried out before the recession.
The debt was originally scheduled to be retired in five years, but, facing a tight budget situation, the city refinanced the debt during its last budget process — a move which with Clark disagreed. The debt will now be retired in 2019.
But, Clark says, the use of bonds in this situation was a perfect example of how to use financing to the advantage of taxpayers.
“You don’t borrow just to borrow,” he said. “You borrow with a purpose.”