Posted on Sunday, 28th March 2010 by Laura Hernandez
Journal editorial
To read the Wall Street Journal editorial, click on this link.
The Wall Street Journal’s editorial page took note of Evansville’s arena project Wednesday, saying its being financed by “federal largesse.”
In an opinion piece called “Another Wall Street Bonus,” the newspaper takes issue with a financing mechanism called Build America Bonds, which have advantages over the usual tax-exempt bonds cities and states can issue to borrow money for projects. Evansville officials plan to use Build America Bonds as a way of raising money for the arena being built Downtown.
In the editorial, The Wall Street Journal said the bonds have encouraged cities and states to overborrow. Last year, the newspaper reported, local governments issued about $58 billion worth of the bonds, about twice the amount expected.
“Evansville, Indiana is financing a $127 million sport stadium thanks to the federal largesse,” the editorial states.
Mayor Jonathan Weinzapfel said he took the criticism as being directed at the Build America Bond program, not the arena project. He said the editorial’s purpose is to dissuade federal leaders from extending the program three years beyond 2010.
“They simply use the arena as an example of a project built with Build America Bonds,” he said. “None of their rational applies to Evansville.”
John Kish, the arena project manager, said the arena project would be going forward even without Build America Bonds. City officials had first planned to issue regular municipal bonds but later turned to Build America Bonds after seeing the savings that would result.
In the program, the federal government pledges to refund to the city 35 percent of the interest paid to holders of the bonds. The refunds are expected to help Evansville save about $66 million over the 30-year duration of the bonds.
Kish also noted that The Wall Street Journal criticizes cities and states for using Build America Bonds to pay for recurring expenses, such as employees’ salaries and benefits. Evansville, in contrast, plans to issue the bonds to pay for construction.
“We are doing exactly what the Build America Bond was intended to do,” Kish said. “We are proceeding with a good solid project in the face of uncertain credit markets.”
Similar Posts:
- North Port is spending while city is bleeding
- Fowler leaving for Iowa, says she was squeezed out of CVB
- Wyden: Exempt Oregon from healthcare reform
- Evansville Visitors Bureau board rebuts director’s statement
- Nation’s second-biggest cinema company buying Kerasotes
Posted in Business News | Comments (0)