As negotiations dragged on over the City of Raleigh’s purchase of the 308-acre Dorothea Dix hospital property near downtown, most residents presumed that if the deal went through, the city would pay for the property in the usual way, with a voter-approved bond issue. That’s the way large outlays of money by municipalities usually are done.
But in looking at a different way to pay, the Raleigh City Council has done the right thing. The city’s chief financial officer, Perry James, recommended that the city get a direct “private placement” loan from a bank. That could happen by July. A referendum on a bond issue couldn’t happen until October. The city staff thinks a loan would cost less because the repayment period would be half that of the typical bond-repayment period.
And waiting for that referendum could prove more costly if, for example, the Federal Reserve took action in its guidance of the nation’s economy that resulted in an increase in interest rates. As it stands, the city also would not have any trouble doing business with the banks, several of which, the city’s staff reports, are ready to loan the money.
Council members will get public input, and some of it, from anti-tax, anti-everything conservative groups, may be negative. But the Dix deal is a good one, and the city’s finances are strong enough to easily justify the option of taking out a loan on the property and getting the deal done, finally, with the state.