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BFSA presents bond comparison, offers 10-year deficit note as one option
Summary
The Buffalo Fiscal Stability Authority told the finance committee it compared a 10-year deficit bond and a longer parking-authority financing for the city's proposed ramp work, showing similar present values and leaving the policy choice to elected officials.
The Buffalo Fiscal Stability Authority on Tuesday laid out two financing options for the city's parking-ramp work: a shorter-term 10-year deficit bond and a longer-term parking-authority transaction tied to a sale or lease of ramp assets. Fred Floss, BFSA secretary, told the Committee on Finance the office used a 4% discount rate to convert cash flows to present values so the two paths would be comparable.
Floss said the analysis modeled $46 million in debt (the "original ask") but that bond covenants may limit available BFSA bonding to about $26 million for the parking ramps. "First, municipal law says that we can only borrow for 10 years," Floss said, explaining why a 10-year structure appeared in the memo. He added that a 10-year note would mature around 2036, near the scheduled sunset of the control board, and that if the control board no longer existed the city could rebond those obligations.
The BFSA presented present-value results showing close totals: roughly $43–44 million for a 30-year structure versus about $42.1 million for a 10-year note. "The 10-year bond is cheaper because you're paying it back faster," Floss said, noting the trade-off that a longer bond reduces annual debt service but increases total interest paid.
Council members pressed BFSA on whether its prior recommendations contributed to the city's fiscal position and whether the council should rely on BFSA advice. "We have recommended probably for the last 10 years that you incrementally raise your property taxes," Floss responded, saying the authority provides advice rather than making policy. Council member Wyatt asked why the committee should trust the analysis; Floss pointed to BFSA's in-house CPAs and outside financial managers and said the methodology reflected standard municipal practice.
Administration staff told members their outside advisers were leaning toward a roughly 20-year structure for the parking-authority transaction and that different underwriters produce materially different outcomes. The deputy mayor said the administration's interest was protecting recurring revenue (roughly $5 million annually) and preserving city assets.
The committee took no final vote on financing policy but moved the item through the agenda for additional review and asked BFSA and administration to provide follow-up data and alternatives for the council to consider.
