The dark cloud of the financial crisis swirls over Wall Street and Congress, but Durham's economic leaders are optimistic they can weather the storm.
"Certainly Durham is in a heck of a better position than many other places in this country," said City Manager Tom Bonfield. "But also you never want to say there is nothing to worry about."
Bonfield said the city is not concerned about the status of its insurance policy for the Duke lacrosse lawsuits-backed by troubled insurer American International Group, Inc., which received a $85 billion bailout from the government Sept. 16. He noted that the company's insurance sector was relatively safe from the firm's overall struggles. Bonfield also said the city remains hopeful about pursuing downtown redevelopment projects despite the poor economy.
"Most of the developers that I have talked to are all still very positive about their projects," he said.
The city's overall economy is well-equipped to survive the crisis because of its reliance on health care, information technology, life sciences and other research-heavy industries, said Ted Conner, vice president of economic development at the Durham Chamber of Commerce.
"Fortunately, having a lot of institutions like Duke and North Carolina Central University is kind of buttressing the effect of the calamity on Wall Street," he said. "A lot of the corporations undertake their research on a longer-term basis and in more stable sectors."
Conner said he was relatively pleased with Durham's ability to endure the economic turbulence thus far. He added that Durham is not a banking center in the same way as Charlotte and the Triangle's economy had diversified greatly over the past five years from an emphasis on IT companies to include pharmaceuticals like GlaxoSmithKline, Merck & Co. and United Therapeutics.
He noted that employment numbers in Durham have actually improved from previous years.
The city's economic acumen was reflected in July when Durham became one of fewer than 40 cities in the U.S. to receive a "AAA" debt rating-the highest a municipality can receive-from the three major bond rating agencies, according to a city news release. The rating is based on past financial management and allows Durham to borrow money at the lowest available interest rates.
"We are in a very unique and elite group," said Durham County Manager Mike Ruffin. The county also holds the same top credit rating.
He noted, however, that the county failed to gain financing for its latest round of requests. Ruffin said the county could see some cost increases in construction and other areas. He explained that the credit market had tightened so much that the county would likely have to wait and let the current turmoil subside before securing new financing.
"Given what is going on nationally I don't think we have much of a choice," he said. "This credit market is unlike any I've seen in any of my 32 years."
On Capitol Hill Tuesday, legislators scrambled to find a compromise on a proposal that would help struggling financial institutions after the original bill was rejected Monday by the U.S. House of Representatives in a 228-205 vote.
"I do not have any interest in 'bailing out' Wall Street firms and business leaders who have speculated recklessly," Rep. David Price, D-N.C., professor of political science and public policy, said in a statement Tuesday.
Price, who represents Durham, was nevertheless one of only three N.C. representatives who voted in favor of the bill.
"The entire economy is threatened as we teeter on the edge of a 1929-style meltdown," he said in the statement. "The defeat of the bill prolongs and perhaps deepens the crisis."
Conner said he is still considering the complex issues surrounding the bill and weighing its merits.
"All I can ask is for your parents to keep sending you money and telling you to spend it in Durham," he said.
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