Bond battle: Wilmington mayor wants to borrow $43M for infrastructure; treasurer calls it 'risky'

Wilmington's mayor wants to borrow $43 million, to be paid back over 20 years, to improve parks, playgrounds, sidewalks, fire stations, sewer systems and other infrastructure -- a plan the city treasurer called "premature and risky."

Mayor Mike Purzycki's office announced on Tuesday that he plans to issue bonds next month, which will fund dozens of government projects that were approved in the Fiscal Year 2016 capital budget.

While city programs and services are typically funded by taxes and fees, Puzycki said the bond market offers an opportunity to conquer projects the city couldn't do otherwise.

"Governments ... routinely issue bonds to have funding available for large infrastructure projects and capital purchases that are too expensive or are of a longer duration to be funded through normal revenue-raising options," he said. "Wilmington will seek the best rate possible on this bond sale to minimize the repayment of the proceeds."

Purzycki wants Wilmington to borrow over $19 million for projects already approved in the general fund including new fire apparatus; building improvements to the city’s fire stations and police headquarters; park, playground and athletic field improvements; public art projects; street paving; and sidewalk and curb construction.

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The money would also match funding required to receive state dollars for various transportation and traffic projects, the mayor said.

Purzycki also wants to borrow $24 million for projects approved in the city’s water and sewer fund including improvements to the city’s water filtration plants, pumping stations, and wastewater treatment plant; funding for Wilmington’s Urban Forestry Management Program; and enhancements to the stormwater mitigation system.

The announcement, which the mayor's office considers routine, apparently offended City Treasurer Velda Jones-Potter, who claimed in a press release on Wednesday that the administration was circumventing her, the city council and the public.

She called Purzycki's announcement "irresponsible."

"It has not been vetted by city council or subjected to public scrutiny," she said. "My office is still outlining financing strategies for the city’s capital budget. The mayor’s statement shows disregard for legislative authority.”

Jones-Potter claimed in her release that "no one governing body has autonomy to issue debt on behalf of the city – not even the mayor."

Purzycki and Council President Hanifa Shabazz issued a rebuttal press release Wednesday afternoon to state that Jones-Potter is wrong.

They said the bond issuance was approved when the Fiscal Year 2016 capital budget was discussed and vote on by the city council in 2015.

Jones-Potter did not respond to a request for comment but added in her press release that she cautioned the administration about the "high costs and compliance risks associated with excessive borrowing."

“I cannot advise authorizing a debt issuance of this magnitude for new money while unspent proceeds from 1998 remain in the City coffers, not to mention the $22 million unspent from the $43 Million bond issue of 2015," she said. "We must stop the practice of borrowing more than we demonstrate a discipline or capacity to expend and do a better job prioritizing city needs.”

In response, the message from Purzycki and Shabazz to Jones-Potter was clear: stay in your lane.

Jones-Potter's statements are "inaccurate" and "misleading the public," the two officials said.

The mayor and council president also said Jones-Potter overstepped her duties by interfering with the Fiscal Year 2016 capital budget and dismissed her claims that the bond issuance is excessive, unnecessary or harmful to city finances.

Purzycki and Shabazz, who was a member of the council when the Fiscal Year 2016 capital budget was discussed and approved, said it is not within the purview of the treasurer's office to dictate to the legislative or executive branches what they can and cannot fund.

“The treasurer’s job is to execute the bond issuance as directed by the two branches of government,” Purzycki said.

He disputed Jones-Potter’s claim that there are millions of unspent dollars from previous bond issuances available.

"Funding from previous bond issuances have either been committed to originally approved projects or are being reprogrammed," he said. "It is just misleading to have citizens think we are not using these proceeds wisely.”

Asked to address the message from the mayor and council president, Jones-Potter did not respond.

The city typically goes to the bond market every two years to borrow money for approved capital projects, the mayor's office said. The repayment of borrowed money is reflected in the city’s annual debt service.

The city’s previous authorized capital bond issuances include a combined $81 million for fiscal years 2006 and 2008, up to $60 million for fiscal year 2012, and up to $50 million for fiscal year 2014, according to the mayor's office.

Council Finance Chair Bud Freel did not immediately respond to a request for comment.

Purzycki said Jones-Potter does not have the authority to tell him or the council that "we can’t improve our drinking water system, repave our streets, improve our district parks, repair our police headquarters or purchase life-saving fire apparatus.

"I have the city’s best interests at heart as does the council president," he said, "and I hope we’ll be able to find a way to work together with the treasurer.”

Contact Christina Jedra at (302) 324-2837, cjedra@delawareonline.com or on Twitter @ChristinaJedra.