In response to an investment policy proposed by city staff, former city commission candidate, Anthony Caggiano, said with interest rates at an all time low the city should take the opportunity to invest in its crumbling infrastructure.
“This is something I want you guys to know in case you don’t know what’s going on,” he told commissioners at a December city meeting. _______________
With near zero-percent interest rates going into 2015 - and not until mid-year would the Federal Reserve consider raising them - Caggiano said the time is now to invest in the city’s decaying infrastructure.
“I contend that with interest rates at a historical low level, and as the Federal Reserve is possiblylooking to raise interest rates modestly over the next year, that we use this historic opportunity to speed up repairs on our infrastructure,” said the Margate resident.
Caggiano provided commissioners with a chart that showed a 1.7% yield on a 10-year triple-A rated bond - in which the city likely will invest. He said with a $17 return per thousand, returns would be slow in coming.
“It’s a pittance. And when the fed starts to raise interest rates, bond values will decrease,” he said. “You have to be very careful if you’re looking to buy bonds at this point.”
As with most cities, idle taxpayer dollars are typically invested and re-invested in safe, long-term instruments, which is reflected in the policy proposed by staff.
“Return on investment is of least importance compared to the safety and liquidity objectives described. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed,” states the policy.
Still, Caggiano points out that even if the city had to borrow money to speed up infrastructure projects it could at near zero interest rates. Failing to do so would mean paying more in the future. Interest rates have been near zero since 2008 and likely will never be better.
“If we don’t take advantage of this opportunity to modernize and upgrade our city, the cost down the road is only going to be much greater,” he said.
With water mains rupturing around the city, crumbling canal seawalls and corroded pipes and sewers, Caggiano said investing in infrastructure would be a quality investment in residents.
“What we should be looking to do with our money is to use it wisely and invest in ourselves. Upgrade our decaying infrastructure now. This is the time to do it. This is not the time to delay. This is time to move forward,” he said.
Commissioners nor staff responded to Caggiano's comments. The investment policy passed unanimously 5-0. ____________________
*Anthony Caggiano processed American and Eurobonds on Wall Street for Kidder Peabody and worked the crude oil pit at the World Trade Center pre-911. As a licensed stocks and commodities broker he held Series 3, 7 and 63 licenses.