Title/Name/Summary
Sale of Taxable General Obligation Bonds - Ninety 7 Fifty on the Park Project
History
In September 2011, the Village Board approved the financing of the Ninety 7 Fifty on the Park project via the establishment of a line of credit with Fifth Third Bank that would be drawn upon up to a maximum of $30 million, as well as the issuance of up to $65 million in taxable general obligation bonds thru the passage of a Master Bond Ordinance. The current plan is to draw on the line of credit balance up to a balance of approximately $15 - 18 million, and then issue a series of taxable general obligation bonds, in the amount of approximately $20 million, to pay down the line of credit. The Village would then redraw on the line of credit up to a balance of approximately $15 - 18 million, and issue a second series of taxable general obligation bonds, in the amount of approximately $20 million to once again pay down the line of credit. Any excess bond proceeds would be used to fund the project prior to any additional draw on the line of credit. Once all bond proceeds were expended, the Village would continue to draw against the line of credit thru project completion. At project completion, the two series of taxable general obligation bonds, as well as the ending balance on the line of credit, would be repaid by both the Village and Flaherty & Collins according to the terms of the Redevelopment Agreement. The actual timing of each bond issue will depend upon market conditions at the time of proposed issuance. The Village may choose to draw additional amounts on the line of credit (up to the maximum of $30 million) as opposed to issuing bonds if market conditions warrant. In addition, should interest rates climb to the point where interest costs would be less on a taxable general obligation bond issue than available on the line of credit, the Village would issue a third series of bonds to pay off the line of credit in full.
The Ninety 7 Fifty on the Park project is underway and the Village anticipated that it will draw on the line of credit within the next thirty (30) days. In anticipation of reaching a line of credit balance of approximately $15 - 18 million in mid to late summer, the Village is beginning the process of structuring the first bond issue. One of the early decisions that needs to be made is whether the bond sale will be a competitive or negotiated sale. Speer Financial, the Village's financial advisor, has provided the attached document which outlines the differences and pros/cons of the two methods of sale and is here tonight to provide additional detail, as well as to answer any questions the Committee or staff may have with regard to the two methods. The attached document also provides detail on offering a portion of the bonds to local purchasers, such as Village residents.
On March 5, 2012, this item was reviewed by the Finance Committee and referred to the Board without recommendation.
Or
I move to approve to direct staff to prepare documents for a negotiated sale of at least two seperate taxable general obligation bond issues.
Financial Impact
Attached is a cash flow of the ten (10) year financing term. Current market interest rates are factored into the cashflow.
Recommended Action/Motion
I move to approve to direct staff to prepare documents for a competitive sale of at least two separate taxable general obligation bond issues.