This past election, Denver voters passed a school bond initiative worth almost half a billion dollars, the only locality to pass its bond initiative. There's a reason places De-Bruce, but there's also a reason that it's a terrible idea to do so. Now Dave Ballmer of Douglas County is probably one of the smartest guys in the State House, and he's pointed out that if you can borrow low, it's better to do that and lock in a low interest rate for the long-term.
The problem is that right now may not be the best time to borrow low.
At the moment, Denver's not exactly swimming in debt, but it also doesn't have a huge amount of flexibility there. According to the 2008 Approved Budget, the city will spend $361 million in debt service, most of which ($274 million) is for DIA bonds. That's from total net expenditures of about $2.1 billion, for just under 17% of spending. That's more than was on the books for capital expenditures - $272 million.
However, Denver's already facing a $7 million shortfall this year. That may not sound like much, but it will assuredly be larger next year. Denver will have to float that debt, which by definition is general obligation debt and not revenue bonds.
We have some idea of what the market might pay. The Bond Buyer Muni Index which measures the prices paid for municipal bonds. It's off 19% from its high 2 years ago, and the average yield is now 6.16%, well up from its 52-week low of 4.72%. But consider this: yesterday the NY/NJ Port Authority got no takers at auction.
Hell of a time to take on another $500,000,000 in debt, huh?