The City Council, during last Monday’s regular session, approved on first reading a proposed ordinance providing for the guidelines on the issuance of bonds by the city government, identification of development projects for funding and for other purposes.
Under the proposed ordinance authored by Councilor Levy Lloyd Orcales, the offering of bonds by the city government shall create an alternative financing mechanism for the development projects of the city; promote bond investment in the city; reduce the dependence of the local government on bank loans or credit financing; widen the people’s participation in local government projects and initiatives through direct investments as bond holders to revenue generating development projects; improve the investment climate of the city by enhancing private investors support to local projects; allow the local government to accommodate more local development projects, funded by the people and to be operated and constructed by the local government and provide additional investment options to residents or constituents that would allow them to earn incremental interest income.
The ordinance stipulated that it shall only cover the indicative terms and conditions on bond issue taking into account project cost, ability to pay, controlled debt servicing in consonance with government rules and regulations; mechanisms and guidelines in the determination of tenure, pricing denomination, facility size, servicing, and other structures that are necessary for the issuance; selection and engagement of underwriters, financial advisors, trustees, government financial intermediaries, and other third party providers as may be necessary, such as but not limited to registry and paying agent, a transaction council, and a credit rating agency; identification of local development projects to be financed through bond flotation and organizational development of relevant city government offices to enhance local government capacity to administer bond issuance.
In consultations with the sectors concerned, the local government shall identify specific revenue generating or self-liquidating projects that will be financed by the proposed indebtedness where the same shall appraise the public of the intended use of the proceeds of the bonds subject to the approval of the local legislative body, the city shall prioritize funding local development and investment projects as provided but not limited to airports, hospitals and health centers, markets, including satellite and district markets, commercial centers and livelihood complex, factories and industrial infrastructures, waste-to-energy facilities, green infrastructures, parking buildings, tourism promotions and investment related infrastructures, sports facilities, and other economic enterprises by the city.
The city may outsource and engage third parties needed for the management, issuance and servicing of Baguio bonds where an agreement shall be undertaken by the city government based on the agreed upon terms of reference with each of the respective third parties as approved by the local legislative body. Funds for the said matter should be sourced from the annual appropriations of the City Budget Office. All subsisting government rules and regulations pertaining to the consultancy services shall be strictly complied with by the city through the Bids and Awards Committee.