SOUTH BEND -- An economic climate with low interest rates is a
double-edged sword for city budgets.
On one hand, cities save on interest payments when they borrow money.
On the other hand, they earn less interest income on investments.
Interest income for South Bend's city government has fallen from about
$7 million in 2007 -- when the effective interest rate was 5.5 percent
-- to about $630,000 last year, when the rate was less than four-tenths
of a percent.
City Controller Mark Neal, new to the job since Mayor Pete Buttigieg
was sworn into office Jan. 1, presented the city's annual investment
report Monday to the South Bend Common Council.
"The environment that we're in is penalizing savers and helping
borrowers," the controller told council members.
Neal noted after the meeting that the city's finances are both helped
and hurt by low interest rates. "On a net basis," he said, "I would
say that we would prefer slightly higher interest rates that would
provide additional interest income to us."
But the decline in interest income isn't cause for alarm, he said.
The city's budget for this year totals $263 million, none of which
relies on interest income. Also, reserves for every city fund remained
above targets during every month in 2011.
"Because it is at the margin," Neal said, "the reduction in interest
income is not preventing the city from doing the things that have been
established as part of the annual budget."
The following is a list of the city's interest income from each of the
past 10 years, as summarized in the annual investment report.
nþ2002: $1,296,410
nþ2003: $861,968
nþ2004: $1,357,297
nþ2005: $3,392,461
nþ2006: $5,132,272
nþ2007: $7,010,895
nþ2008: $6,281,325
nþ2009: $1,348,127
nþ2010: $802,734
nþ2011: $628,889
Council OKs zoning for The Triangle
The city's Common Council approved a zoning designation
Monday that will allow dozens of homes to be built in a new
subdivision between Eddy Street Commons and Indiana 23 on the city's
northeast side.
Council members voted unanimously to classify The Triangle as a
planned-unit development. More than 30 of the subdivision's 53 lots
already have been sold.
The Northeast Neighborhood Revitalization Organization, a nonprofit
consortium of the University of Notre Dame, local hospitals and city
government, is leading the redevelopment effort.
Construction is scheduled to begin this spring.
"It's fantastic to think that a year from now, we will probably have
people living in The Triangle," said Tim Sexton, the NNRO's board
president.
Staff writer Kevin Allen:
kallen@sbtinfo.com
574-235-6244
jharrell@sbtinfo.com
574-235-6368
