On Wednesday, 28 October, the City Council approved the draft resolution on adopting the Long-Term Investment Programme. A heated discussion broke out before the vote. Cezariusz Rudyk, a Civic Platform councillor, addressed the issue of issuing municipal bonds. “The purpose for which these bonds are to be taken out raises our serious doubts,” he stressed. “Civic Platform said clearly that it would monitor what the money was spent on in subsequent budgets. The city is deciding to buy a beautiful sports car, against which one can at most have one’s photograph taken. But it is not a car for our roads.
The city authorities will issue municipal bonds worth PLN 28 million. The funds obtained in this way will be allocated to investments. “Can we afford to spend money just so that our city looks nice?” Rudyk asked during the session. “There is a more important task. The Eastern Railway Station. If the city does not decide now to negotiate with PKP and purchase this site, if we are not vigilant and do not resolve this matter quickly, it may turn out that there will no longer be anything to discuss,” the Civic Platform councillor warned.
According to Cezariusz Rudyk, purchasing the site of the former Eastern Railway Station should be a priority for the city. “There are millions of ideas for using this plot. Meanwhile, we see no interest from the city authorities in this matter,” the councillor said during Wednesday’s meeting. He added that the Municipal Commune could recover the site free of charge for social purposes or purchase it through a non-tender procedure.
“In my opinion, Councillor Rudyk’s speech was demagogic. PKP demanded approximately PLN 7 million for this land,” Eugeniusz Kowalski of Law and Justice summed up. “Moreover, the residents of Ceramiczna Street are waiting for the second stage of reconstruction. Municipal Lower Secondary School No. 2, Preschools Nos. 1, 3 and 6, and the reconstruction of Primary School No. 2. I believe these are very important investments.”
Irena Dul of the Democratic Left Alliance joined the discussion. “I realise that since the mayor promised residents that a swimming pool would be built, he wants to keep that promise,” she said. “I just do not understand why this should come at the residents’ expense. By indebting the city, the mayor is indebting its residents for many, many years [12 exactly—editor’s note].”
Invited to Wednesday’s City Council meeting, Henryk Poławski, an expert from PKO Bank Polski’s Investment Project Financing Department, explained that bonds were an alternative to a loan. What is more, they were cheaper and more convenient than a bank loan.
“We have a year until the elections. Civic Platform’s conduct is the beginning of an election campaign. Councillor Rudyk is presenting us with a plan for the Eastern Railway Station. Journalists take photographs, and then the councillor will be portrayed as the great defender of the Eastern Railway Station site,” Vice-Mayor Wiesław Ogrodnik said ironically. “The sudden rejection of all the investments included in last December’s budget resolution is extraordinary demagoguery,” he added, stressing that negotiations with PKP were still under way.
“By September this year, local governments had issued bonds worth PLN 5.4 billion, while Warsaw alone had issued bonds worth PLN 600 million,” Ogrodnik continued. “Every candidate running in the mayoral elections presents society with a plan for the city’s development. For now, the mayor is implementing his election promises and his policy. And he will continue to pursue his policy, not Civic Platform’s policy.
The Council approved the draft resolution on adopting the Long-Term Investment Programme. Eleven councillors voted in favour. Six councillors—Civic Platform activists and Irena Dul of the Democratic Left Alliance—voted against. Stanisław Andrusieczko of the Democratic Left Alliance abstained.
“The problem concerns just one thing,” Cezariusz Rudyk explained later. “We have to choose priorities. And this is where we differ decidedly from the mayor. We said from the outset that our priority was the Eastern Railway Station, not 14 other fragmented tasks. I am not saying that these investments are unimportant. Let us just consider what should be done first.
More about bonds
In an email to our editorial office, Agnieszka Gergont, spokesperson for the Bolesławiec City Hall, wrote:
The bond issue is intended to finance the planned budget deficit for 2009, related to expenditure on municipal investments included in the Long-Term Investment Programme for 2009–2013.
The current economic situation makes it necessary to seek external sources of investment financing. The capital market offers the City two basic instruments: a commercial loan and municipal bonds.
Municipal bonds essentially serve the function of a loan, but are more advantageous for the City than a traditional commercial bank loan.
Municipal bonds are more advantageous for the City primarily because of their flexibility. This instrument makes it possible to set redemption dates—dates for repaying the principal—that ensure the safety of the budget’s financial liquidity.
Financial analyses showed that an issue worth PLN 28 million would preserve the City’s financial liquidity and guarantee the safe repayment of the entire liability, while also complying with the provisions of the Public Finance Act. [...]
The issue of municipal bonds provides the funds necessary for the City’s continued development.
(information ii)