CFO Gandhi Warns About Over-Borrowing
Chief Financial Officer Natwar M. Gandhi released his annual debt letter to Mayor Fenty and the D.C. Council today, heightening previous alarms that the city is at risk of borrowing too much money for its economic development projects.
Gandhi issued a similar letter a year ago and is again calling on city leaders to approve legislation that would cap the city's spending on debt service at 12 percent of its overall expenditures. The city is currently at 9.7 percent and will reach 11.8 percent by 2010, Gandhi said. Anything more, he warned, and it could be difficult for the city to expect Wall Street to upgrade its bond ratings because the analysts would be concerned that, with so much money tied up in debt service, the District government would have too little cash to pay for critical everyday services.
The question for Fenty and the council is what Gandhi's letter means for future growth and proposed projects such as Poplar Point, the 110-acre swath of parkland in Ward 8 scheduled for a massive mixed-use development that could include a soccer stadium. Or how about the Southwest Waterfront re-development that could require up to $200 million of city investments or the 67-acre Hill East site near RFK Stadium that Fenty recently said would be redeveloped? Gandhi said that if the city might have to make some tough choices.
In previous years, Gandhi's alarms have fallen on deaf ears.
Some council members have said the finance chief's numbers are too conservative and will constrain the city's ability to bring development to neglected corridors.
Today, City Administrator Dan Tangherlini told D.C. Wire that although he respected Gandhi's position, he was not ready to push for a legislative cap. Tangherlini said the administration wanted to have flexibility to respond to unforseen disasters, such as the fires that destroyed the Georgetown Library and Eastern Market last year. He also noted that the right kind of development can bring additional revenues, thereby growing the city and keeping the debt ratio low.
Gandhi, though, said the situation is more urgent this year because the national economic slowdown has finally caught up with D.C. "Gone are the days when the CFO came every quarter and said he's found another $50 million," Gandhi said.
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