MAYBE it is a blessing in disguise that the building of our city hall was stalled for lack of interested bidders on account of the increasing cost of building materials.

With the suspension of the project, it will be a good opportunity to re-think the idea of borrowing from a bank P350 million for the construction. This is a big ticket item, and some people are asking: With interest and bank charges, how much will be the total cost of this project until the loan is paid? From what source do we service the interest and repayment of this multi-million obligation?

In the meantime, while the transaction is on hold, why not take this opportunity to look at alternative sources of funding to lower interest cost. In other countries, issuing municipal bonds to finance urban infrastructure is increasingly being used.

Our cities are empowered under its charter to contract domestic and foreign borrowings as embodied in the 1991 Local Government Code. Specifically, Sec. 299 of the Code authorizes city governments to float city bonds.

However, it seems that very few local authorities have attempted to exercise this money-generating prerogative that can cost very much less in terms of interest compared to bank loans, and for longer term, if desired.

With more than 100 branches of banks and other financial institutions hosted by the City of Iloilo, raising P350 million is very easy because that will mean only P3.5 million of bonds for each bank to subscribe and pay. Interest may be fixed at low rates of, say, two to three percent per annum, and payable on long term. We know that local banks will just be too happy to help their host city.

The Mayor of Nabunturan town in Compostela Valley province in Mindanao has recently resorted to issuing bonds to raise P90 million to reconstruct the town’s public market razed by fire three years ago. The bond issued was payable up to 10 years, and sold to banks and other private firms. No collateral needed.

We do not believe that certain big companies operating in Iloilo will give us a city hall just for free. In business, there is always a “kapalit.” What will it be?

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