ALGONQUIN – The village is going forward with a plan expected to save the town about $600,000 by refinancing general obligation bonds.
Village Board members have endorsed a plan to refinance bonds taken out in 2005 to pay for a $9 million expansion of the sewer plant. The village still owes $6.6 million on the bonds, and refinancing is expected to save about $600,000 in interest over the life of the bonds.
Current rates on the municipal bonds range from 3.9 percent to 4.15 percent, the village said in a news release. Financial advisers estimated the village could receive interest rates that range from 0.75 percent to 2.5 percent, based on the current municipal bond markets.
“For many years, the Village Board has set sound fiscal policy that has put us in a strong financial position,” Village President John Schmitt said in a news release. “Algonquin has a strong credit rating, which allows us to take advantage of the current low market rates, which ultimately save taxpayers money.”
Algonquin’s most recent bond rating from Standard & Poor’s was AA+ with a stable outlook. The village attributes the rating to its financial position and economic base, according to a news release.
The bond rating is similar to a person’s credit score, Assistant to the Village Manager Mike Kumbera said.
The bonds were issued in 2005 to expand the village’s sewer plant “to increase capacity needed for growing residential and commercial demand and to modify various processes to meet future EPA regulatory requirements,” Kumbera wrote in an email.
“The most beneficial public impact is that the money that was going toward interest payments can now be applied to infrastructure improvements that directly impact residents and businesses in Algonquin,” he said. Such improvements include water mains, lift stations, pumps and other work, all of which can lower operating costs, he said.
Bond documents are expected to be ready for a bid by October.
The bonds are being paid back with sales tax and connection fees from new development.
The village plans to pay off the bonds by 2025.
“It will still be the same maturity date; we’re just locking it in at a lower rate,” Kumbera said.