City policy requires departments to have cash on hand to pay the full amount of multiyear construction contracts when those contracts are signed, Galperin said in the audits cover letter. In his report, Galperin recommended that the city devise a legally permissible way to change its procedures so that the city can borrow money closer to when it will be spent.
No savvy investor would borrow money and then leave it sitting dormant in a bank account. And yet, thats exactly what the city has been doing, Galperin said in a statement. Changing our practices and becoming more efficient in how we finance construction projects will translate into savings for taxpayers.
Although the city got good rates on the bonds and earned some interest while themoney sat unspent, the city had to pay investors at an interest rate that outpaced those gains. On average, taxpayers were forced to pay about 1.9% net interest on the unspent funds, the audit said.