TIJUANA – The city government has not suspended trash collection, laid off staff or stopped presenting huge free concerts – for now.
But just like countless governments north of the border, the city has amassed debt in the hundreds of millions of dollars that it will have to pay off in the next twenty years.
During a Wednesday breakfast, officials in Mayor Carlos Bustamante's administration revealed how the city had refinanced its debts.
The officials said they inherited $166.8 million debt from the previous government, headed by Jorge Ramos. In its first nine months in office, the current administration has obtained variable-rate loans and restructured previous ones, pushing the city's debt to $204.8 million.
That amount will have to be paid off in the next 20 years, mainly from property taxes and from yearly outlays from the federal government.
The city had to refinance its debt because the payments required by the three existing loans did not leave enough operating funds, said Rufo Ibarra, who heads the Planning and Finance department.
"We would not have had enough money to provide basic city services," he said.
He said the loans the previous administration took out had an average interest rate of 10 per cent, and that scheduled loan payments exceeded 100 percent the funds the city received from the federal government.
While Ibarra explained these numbers on a screen in the President's Room in a city building, about 100 people (news media, council members and city managers) had a breakfast of fruit salad, juice, coffee, beef tips, potatoes and beans on tablecloth-covered tables topped with floral arrangements, all paid for by taxpayers.
According the current city government, the previous administration left three debts: $45.6 million borrowed from a Japanese bank that was used to build bridges and other public works Mayor Ramos inherited from the previous government; $117.6 million for a repaving program that was used to reconstruct more than 40 boulevards; and $2 million that were used to buy trash trucks.
The financing for the massive repaving project had been obtained directly from the company that provided the cement, Cemex, and not from a bank, Ibarra said.
The Bustamante administration restructured the city's debts, but had to pay penalties that totaled $17.8 million, Ibarra said.
The expenses also included $17.6 million to be spent on the repaving project, $2.5 million for a reserve fund, about $2 million in operating costs, $2.3 million for a specialized loan insurance and
$720,000 in loan fees.
The expenses totaled $43.1 million that were added to the previous administration's total debt of $166.8 million.
According to the city's finance director, the process of refinancing the city's loans began in December and city leaders selected the best two offers from 10 banks. The city's creditors are Banobras, which loaned $146.8 million; and Banorte, which loaned $58 million.
Ibarra accused the previous administration, of the opposition PAN party, of doing everything possible to paralyze the incoming PRI government by leaving it to make massive loan payments starting at the beginning of the year for the street project.
He maintained that the current administration was able to refinance the debt, allowing the city to move ahead, and even preventing future governments from facing a similar crisis. Whether that turns out to be true remains to be seen. At the end of Ibarra's presentation, the only table that applauded was where the city leaders were sitting.
Omar.millan@sandiegored.com
