Markets are volatile, the economy is depressed and Durham County expects its tax revenue to come in below expectations.
So, a financial advisor told the county commissioners this morning, the moment is ripe for almost $250 million worth of construction.
"This could be one of the best times for building we have seen in a very long time," said Doug Carter of DEC Associates, the firm that advises Durham County on handling its money.
The reasons are twofold:
* Interest rates on short-term debt — say, two-year bonds — are very low, presently about 1.25 percent, meaning that Durham County can borrow money at minimal expense;
* Construction costs are down, due to decreased demand for materials, and in the weak economy competition for building contracts is intense, driving bids down. "The contracting community is hungry," Carter said. "They want our business."
Quick and several county staff members presented an update on the financial outlook for capital projects during the commissioners' work session today. In addition to a $143 million new courthouse and $102 million Human Services Complex, the county plans to renovate one library and build another, renovate the Lakewood YMCA for Durham Public Schools and continue improvements at Durham County Stadium.
Typically, capital projects are financed with longer-term bonds, but those are difficult to sell now and command relatively high interest rates because of uncertainty in financial markets. However, Carter said he expects markets to stabilize and long-term rates fall by the time short-term debt would come due, giving the county a chance to refinance at a favorable cost.
Wake County and the cities of Raleigh and Charlotte have already used short-term debt to finance capital projects.
County Manager Mike Ruffin said that bids for the Human Services Complex are due to be opened Jan. 15.
"So this is the perfect and opportune time," he said. "Interest rate environment for a triple-A [bond-rated county such as Durham] could not be better."
He also said the building projects would create "hundreds" of jobs, giving a boost to the local economy.