Underwater Cities

The California community of Riverside is not in any danger of global warming drowning their city in the immediate future, but they still might end up underwater….

From the  wsjlogo.gif

Banks are setting aside billions of dollars to do something that until now was rarely heard of: making big loans to cities, states, schools and other public borrowers that otherwise might have turned to the bond market.

When Riverside, Calif., was ironing out a bond offering recently to expand its performing-arts center, several banks pitched a radical idea: Why not take out a loan instead? The city scrapped the bond plan and borrowed $25 million from City National Bank in Los Angeles.

“This was a method we’d never even heard of before,” says Scott Catlett, the city’s assistant finance director. He says Riverside now intends to seek a bank loan for a conference center that it had planned to build with bonds.

So, if your whole city is underwater, is it technically considered swimming away from the underwater mortgage?

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