Commonwealth Local Government Forum

Belize City municipal bonds fund capital projects

15 October 2017

With the focus of CLGC2017 on finding new and innovative ways to resource local government to deliver quality services for its citizens, we wanted to ask Mayor of Belize City and CLGF Board Member Darrell Bradley more about their exciting initiative. 

 

In 2012, a needs assessment of the country’s second city identified concern by the community about the lack of public spaces; together with a need for improved infrastructure. It was clear to Belize City Council that additional funding would be needed to support such capital projects.

 

Belize City was interested in exploring the use of municipal bonds and decided to look at the financing model used by their neighbours in South Florida. This was an area with which they already enjoyed close cooperation – partly due to tourism with international cruise liners docking in both locations; and also because of the significant diaspora population living in this part of Florida. The next move for the city council was to approach various international funding agencies to assess the liquidity in Belize; this revealed that interest rates were high, savings rates low; and there was a great deal of interest in investment from private sector .

 

The bonds were floated in 2013 and outcomes to date include the creation of two large leisure areas – Battlefield Park and BTL. The funds raised have also been used to renovate the road network in the context of their integrated climate change policy resulting in much needed upgrades along the coastal roads.

 

The bonds are insured through the Central Bank of Belize with yields at intervals of two, five and ten years; at which points the bonds can be refloated, and a new, large-scale project embarked upon at the ten year stage.

 

The new initiative involved a great deal of preparatory work, including a SWOT analysis which revealed a degree of political risk with council terms lasting just three years, but the bonds going on beyond this.

 

Mayor Darrell Bradley explained: "Our investors - banks, pension funds, diaspora companies – are pleased with the initiative. The bonds sold out as soon as they were put on sale. And the benefits extend beyond the money raised. This has led to improved financial planning; better working with the private sector; and closer relationships with our citizens on project selection." He continued: "We are also the first English speaking city in the Caribbean to use municipal bonds and we want to share our experience with other English speaking countries. More importantly, the models come from other countries but the skill sets are all within Belize City."

 

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