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Hobart board approves more than $6.7 million in bonding

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By Kevin Boneske

Staff Writer


HOBART – Resolutions authorizing the borrowing of more than $6.7 million to pay for road work, a developer incentive and refinancing debt were approved last month by the village board.

The resolutions authorize the issuance and sale of $4.425 million in tax-exempt general obligation promissory notes and another $2.34 million in taxable notes with the AA bond rating.

“I think it’s safe to say we got the lowest interest rate in the history of this municipality,” said Village Administrator Aaron Kramer.

Brian Della of PMA Securities made a presentation to the board about the bonding.

Della said the village received five bids for the non-taxable bonds with the lowest bid coming from Robert W. Baird & Co. with a true interest cost of 1.1 percent over 10 years.

He said the tax-exempt bonding was supposed to be issued for $4.485 million, but a bond premium in the winning bid downsized the bond amount by $60,000.

Della said principal on the tax-exempt bonds will be distributed as follows:

• $2.705 million toward the State Highway 29/County VV interchange project and improvements on North Overland Road with debt paid by revenues in Tax Incremental District (TID) No. 1.

• $1.56 million to refinance bonds issued in 2011 with $1.415 million to be paid by the water utility and $150,000 to be paid by the sewer utility.

• $155,000 to refinance bonds issued in 2010 with $85,000 to be paid by the tax levy and $70,000 paid by the sewer utility.

He said the tax-exempt bonds over 10 years would have $409,467 in interest for a net debt service of $4,803,427, while the estimated debt service savings by refinancing the bonds issued in 2010 and 2011 would be $137,039.

Della said five firms also bid on the taxable bonds with Northland Securities submitting the winning bid with a true interest cost of 1.2909 percent over 10 years.

He said $1.62 million of the principal on the taxable bonds would go toward refinancing taxable notes issued in 2017 with the debt service paid by TIF No. 2 revenues, and another $720,000 in principal would be available for a developer incentive payment on a four-story condominium project with the debt service paid by TID No. 1 revenues.

Della said the taxable bonds over 10 years would have $138,198 in interest for a total debt service cost of $2,478,198.

Based on projected revenue and debt service, he said the village should be able to close TID No. 1 around 2031 or 2032 when there is projected to be more of a fund balance than debt service.

Della said TID No. 2 is projected to be able to close earlier than TID No. 1, but the closing date could be extended if the village financed another project.

“In simple terms, it’s really when you’ve got enough cash to pay off all of your debt, the TID should close,” he said. “If you take on any more debt while you still have time to do so, well then that just pushes that (closing date) out a little bit.”

A third bonding resolution passed by the board authorizes the village to redeem taxable bonds a year earlier with a principal amount of $150,000 and an interest rate of 4.1 percent.

The bonds issued in 2014 have a maturity date of March 1, 2023, but the resolution calls for using TID No. 1 and No. 2 revenues to redeem the bonds March 1, 2022.

Hobart

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