The City issues bonds to finance projects that will benefit the City for decades, allowing the cost to be spread across the useful life of the project. It would take many years to accumulate enough funding to pay for these projects as we go and during that time the cost of construction would likely continue to increase. Additionally, if the City continues to lower its property tax rate as it has historically done, the City will not be able to pay cash for these projects.
Historically, construction inflation has far outpaced interest costs. Additionally, the construction costs are not fixed as the interest rate of the bonds will be. The City’s high credit rating results in low interest rates which allow the projects to be financed economically over an appropriate period of 20 years.