BAGUIO City is pushing for the issuance of bonds to finance the city’s projects as an alternative to the more common public-private-partnership (PPP) method currently being employed in a variety of big ticket development projects in the city.
Currently, Baguio City finances its big development projects such as its parking projects to tackle its 11,000 slot parking backlog, the proposed public market rehabilitation project, and even its socialized housing projects by PPP.
Other projects, such as the planned P2.9 billion rehabilitation of the city’s sewage treatment plant and sewage network, are financed via loans.
According to Councilor Levy Lloyd Orcales, who authored the ordinance providing guidelines for the issuance of bonds to finance city projects, the bonds will provide a safe alternative funding method and cut reliance on PPP, debt and local financing, and grants from third parties.
It also allows Baguio residents to directly participate in the development of their city, Orcales said.
“The issuance of bonds is a secure financial mechanism that welcomes every bondholder and resident to develop a sense of responsibility towards certain development projects of the city,” Orcales said.
Under the proposed ordinance, Baguio’s Local Finance Committee shall be tasked to determine the competitive rates, select underwriters, prioritize development or investment projects, duration of the bond, maturity and coupon rates, and the payment of incurred obligations to private investors.
The ordinance also stipulates that the city government shall identify specific projects to be financed by the proposed bonds through consultations with various sectors and inform the public of the intended use of the process of the bonds. The identification of these projects shall be based on the Annual Investment Program of the city where the location, cash flows, and nature of the project are clearly identified.
The issuance of bonds by the city government shall be subject to the rules of the Philippine Dealing and Exchange Corporation (PDEx) as to its liquidity mechanism.
“This collaboration and people’s support to development projects of the city is tantamount to good governance as exercised both by the city government and Baguio residents,” Orcales said.
Currently, the ordinance has been passed on first reading and is now subject to review.