Interest rates come back low for Hobart

By Ben Rodgers

Editor

HOBART – The Village of Hobart received good news in regards to interest rates at a special meeting June 23.

The rates are for up to $2.98 million in general obligation bonds and up to $1.25 million in taxable general obligation notes the board authorized May 19.

“Two months ago we were being told ‘Don’t even bother trying to issue these bonds’ because the market was locked up tight,” said Village Administrator Aaron Kramer. “Then the market thawed out and became a better market to issue debt.”

Brian Della, director of public finance for PMA Securities, presented the rates to the village board.

An interest rate of 1.618 percent from Robert W. Baird & Co. Inc., for the $2.98 million bonding allowed for the bonding to be downsized to $2.965 million.

Components of the borrowing include a water loop extension, Blackberry Ridge subdivision, Southwind Estates subdivision and refinancing.

“We are going to be able to do the same projects we thought because of the downsizing,” Kramer said. “But at the end of the day, we’ll be paying less interest because of paying the bond back.”

UMB Bank N.A. had the low bid for the taxable notes at 1.206 percent, which allowed the notes to be downsized to $1.19 million to refinance bonding for TID 1.

Kramer said the refinancing was for bonding from 10 years ago, and the previous interest rate fluctuated from 3 to 5 percent.

The refinancing will result in a savings of $70,000 for the village, he said.

“For all the bids it was very competitive,” he said. “I’ve never seen a bond sale where the winning bid is two-thousandths of a point. That is incredibly competitive.”

Kramer said he is “extremely satisfied” with the rates.

“Honestly, I was looking for something in the 2 percent range,” he said. “When you look at the initial presentation that was made to the board back in May and what we got for interest rates, we overshot the projected cost of interest by $170,000 between the two bonds, so that shows you how interest rates came in lower than projected.”

Kramer said the rates also reaffirmed the village’s bond rating, which is good for the future.

“Our AA rating was reaffirmed by Standard & Poor,” he said. “That bodes well for the overall picture when we go back to the market here in about two or three years for the possible construction of a new fire station.”