Frates on San Diego Pledging Assets for Loans

An article appeared recently on San Diego-based KPBS’s website about the city’s ability to borrow money. San Diego now has to pledge important assets like police stations, golf courses, and Qualcomm Stadium in order to get loans. Dr. Frates was quoted on the subject:

But Shea says the big question is what will the city do next if it has no viable assets left to pledge. The options, according to Steve Frates of the government think tank The Rose Institute, remain cutting expenses and raising taxes.

Frates: But that is not apparently politically viable in San Diego.

Frates says it is uncommon for cities to use their police department headquarters as collateral for loans.

Frates: A well-run city in good financial shape would not need to do that. They would have a sufficient balance sheet in terms of their assets. A sufficient cash flow to finance their bonds out of their revenues. Apparently in San Diego’s case the financial market is telling us that San Diego’s financial posture isn’t particularly robust.

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