One year ago today Elk Grove's then finance manager boldly predicted lower interest rates for zoo construction financing
Even though there has been little discussion of the proposed $300 million Elk Grove-Sacramento Zoo project at recent Elk Grove City Council meetings, readers may recall a bold prediction made one year ago today.
During a discussion on financing, which could be the city's largest project in its 25-year history, the former Elk Grove finance manager boldly predicted lower interest rates. Low interest rates are key to the city's issuance of $114 million in construction financing bonds.
While qualifying the prediction of future interest rates as difficult, former finance manager Matt Paulin painted a rosy picture for Mayor Bobbie Singh-Allen and her four city councilmen.
"I think they are going to be lower than they are today, how much lower is tough to tell," Paulin stated.
He also added this cautionary note, saying, "But say in the instance that they increase for some reason or reasons, we would have to rethink what that payment is and if it is affordable."
So, how was Paulin's prediction?
Paulin was correct over the course of a year. The charts below show that the rate has decreased by a full point, from 5.33 to 4.33.
So, if interest rates have dropped, making construction feasible and cheaper, why hasn't the city rushed into issuing the bonds?
A reminder of the reason was presented during the April 9 Elk Grove City Council meeting by city government watchdog Lynn Wheat. As she pointed out in her comments, the Sacramento Zoological Society has to climb a metaphorical Mount Everest to reach its $50 million towards construction.
As Wheat noted (watch the queued video), even though the city claims the SZS has raised over $17 million, it has actually collected less than $2 million.
As a reminder, in January, Elk Grove City Councilman Kevin Spease pigeon-holed city manager Jason Berhmann on that matter. As seen in this video, Berhmann affirmed that construction would not start until the city had $50 million in cold, hard cash from the SZS.
Tomorrow, we will examine forecasts of interest rates and the economy in general, given the uncertainty and ever-shifting Trump administration polices and their potential effect on zoo construction.
Today, we will leave with this thought: given that interest rates are lower than they were one year ago and could increase significantly above the levels from April 2024, is it possible that Mayor Bobbie Singh-Allen and her city council will pull a fast one and proceed with bond financing without anything close to SZS's $50 million commitment?
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