Although facing a grave fiscal crisis, Baltimore's government is seeking voter approval for $35 million in loans to pay for further development downtown and in its neighborhoods.
"These bonds are an effort to make sure the development of the city will continue," said Clinton R. Coleman, a spokesman for Mayor Kurt L. Schmoke. "We've got to look to the future and continue to make improvements in our schools and in our neighborhoods."
In all, voters will be given a chance to approve any of nine separate ballot questions on loans ranging from $1 million to $8.5 million. The city would borrow the money through the sale of general obligation bonds, which are backed by the city's taxing powers.
Voters will be the ultimate loan officers for the city, to the extent that Baltimore is powerless to sell the bonds without voter approval.
If approved, the bonds would be the first sold since an extensive study of the city's borrowing practices resulted in the adoption of a city debt policy in August 1990.
The debt policy, which sets limits on the amount of money the city can borrow for capital projects in any single year, has been touted by Mr. Schmoke as part of an overall fiscal strategy intended to assure bond sellers on Wall Street and government leaders in Annapolis that the city is in control of its spending.
The loans would pay for such big-ticket projects as a new fire station in South Baltimore, a replacement for the 92-year-old peaked-roofed Northern District police headquarters on Keswick Road, and renovations to schools and senior citizen centers all over town.
Fire officials, who are recommending the closing of fire stations elsewhere in the city because of a $3.5 million pinch in the agency's budget, say the new station is cost efficient because it would consolidate two old firehouses slated for elimination.
City leaders say the $35 million borrowing plan is needed for projects that are not covered by the city's $1.79 billion operating budget, which pays salaries and other daily costs of keeping Baltimore running.
The mayor is also asking voters to approve two measures that would give the city more flexibility in its borrowing practices, including the power to restructure existing bonds under more favorable interest rates or repayment conditions than existed when the bonds were sold.
The bonds up for approval on the Tuesday ballot already come with language that would allow the city to cash them in any time interest rates dropped to more favorable levels.
In all, the city is paying interest on $313 million in general obligation bonds sold over the past 25 years,
including some bonds carrying interest rates as high as 11 percent. But the city does not have the power to refinance those bonds. City finance officials say the sought-for flexibility would reduce the amount of money the city pays each year in debt service.
This year's ballot features "mini" bonds, which would allow the city to issue notes in denominations as small as $500. Officials say that will allow people who might never have been able to afford to buy municipal bonds -- which typically are issued in $5,000 denominations -- to invest in the city's future.
"One of the advantages of the mini is it stimulates local interest in the city," said William R. Brown Jr., the city finance director, who was a finance officer for Prince George's County when it began selling minis about five years ago. "It gets people more interested in the projects the city is building because they have some of their money in it."
Lawrence B. Daley, a former Baltimore treasurer who last year helped revise the city's borrowing policies, said the existing rules governing the city's ability to sell bonds are now considered so rigid by modern bond trading practices as to actually inhibit their sale.
"This prevents the city from taking advantages of changes that have occurred," he said of the City Charter restrictions on bond sales. "If you can tailor the bond to what the market is looking for, you can save money."
Baltimore bond questions
The following Baltimore bond issues will appear on the ballot in Tuesday's general election:
* QUESTION A. Community Development Loan, $8 million. Finances the community development loan fund, which will provide money both for neighborhood revitalization and for improvements to public areas near the Inner Harbor. Included in that amount is $3.6 million to supplement federal neighborhood development grants, $1.5 million for public improvements around Piers 5 and 6 and $200,000 to support the so-called Nehemiah II, a project to build 28 single-family homes for low- and moderate-income families in Cherry Hill.
* QUESTION B. Residential and Commercial Financing Loan, $4 million. Augments private funds to help create affordable housing through the Community Development Financing Corp.
* QUESTION C. Neighborhood Senior Centers Loan, $1 million. For weatherproofing, handicapped-accessible facilities, climate control systems and other improvements to senior centers.