An Indianapolis City-County Council committee on Thursday evening unanimously approved Mayor Joe Hogsett’s proposal to take on an additional $120 million in debt over the next three years to pay for infrastructure spending.
The council’s public works committee approved the plan to issue $30 million in debt this year, $40 million in debt next year, and $50 million in 2020. The full council will still need to approve the plan.
The debt, which would be secured by future revenue the city expects to receive from county option vehicle taxes and the increased gas tax, would be on the books for 20 years.
Indianapolis Bond Bank director Sarah Riordan said the city said it would only bond for projects that “make sense for long-term funding."
Those projects primarily are curbs, sidewalks, ADA-accessible ramps, bridge repair and replacement, and street rehabilitation and reconstruction.
The city’s current annual debt service for its Indy Roads bonds is more than $6 million per year. With the new debt, the city will add about $8.4 million annually to that amount.
Ratings agencies like Moody’s and Standard & Poor's will likely “care a lot” about the city’s decision to increase its debt level, IU School of Public and Environmental Affairs associate professor Craig Johnson previously told IBJ, and will eventually “determine if at all it should impact [its] credit rating.”
But Riordan said Thursday evening that she was confident that the city would retain a high credit rating on its transportation-related debt.
“We’re going to make the case for once again receiving a triple AAA rating,” Riordan said. “We think it’s strong.”