Two general obligation bonds were authorized by the village board Monday. The first was a $9.9 million bond to initiate construction of the new public works facility and police station along with upgrades to the sanitary plant. The second for $6.6 million was approved to take advantage of lower interest rates on the 2004 construction of the Village Hall.
The village board Monday authorized the sale of two separate general obligation bonds. The first was a $9.9 million bond to move forward on construction of the new public works facility and police station while paying for EPA-required upgrades to the existing sanitary plant. Another $6.6 million was approved to take advantage of lower interest rates on the 2004 construction of the village hall.
Construction of the two buildings and necessary upgrades at the sanitation plant are part of an overall $27 million capital improvement plan that also includes the extension of Nelson Road between Haven Avenue and Illinois Highway. Last year the New Lenox Village Board voted to increase its sales tax by a 1/2 cent, bringing the total rate to 8.5 percent, and also increase its utility tax 5 percent on gas and electric to help pay for the projects.
The $9.9 million bond sale is planned to take place in early November. Village Administrator Kurt Carroll explained that bonds would be sold in the form of bank qualified loans. The village anticipates saving a minimum of $200,000 by borrowing money in smaller chunks rather than in a lump sum. Next year the village is looking at issuing bonds in the form of a bank loan for roughly the same amount of money. In 2014, Carroll said, the bank loan would be substantially lower, less than $6 million to pay off the building projects.
The board is not obligated to seek bank qualified loans in 2013 or 2014. If construction of the planned Nelson Road project becomes more pressing, then those construction costs would put the village over and above the maximum of $10 million for a bank guarantee loan, said Carroll. If that happens, then a more traditional bond sale would be necessary.
No decision has yet been made on the date in which shovels begin digging up earth between Haven and Illinois Highway.
Carroll explained that the bond market has improved since the economy tanked in 2008. Despite the fact that both the credit rating for the State of Illinois and the Federal government were downgraded by Standard & Poors in August, municipalities have largely maintained their credit worthiness. Admittedly, other states with better credit ratings mean that municipalities there achieve reduced rates.
Still, he said, this is a more affordable plan than seeking the entire cost of the project at one time. The Village of New Lenox is eligible for the bank loans as long as it stays under the $10 million mark.
The bulk of the 2012 bond money, about $8 million, is expected to initiate construction of the buildings. The $9 million public works project, including construction and purchase of the property in the Cherry Hill Industrial Park, is slated to be completed first. Brad Wood, of Chicago-based Northern Builders, told the board he was looking to begin designing the facility immediately.
Meanwhile, the village board authorized to represent the village's interest as it pertains to construction of the new public works facility. For a $40,000 fee, 4M will oversee all aspect of the project from architectural plans to contracted payroll matters.
The new police station is slated for completion in 2014
The $9.9 million police station is planned as a 30,000-square-foot, two-story facility to be constructed next to the New Lenox Public Library within the Village Campus. That building is not expected to be completed until spring of 2014.
Restructured bond set to achieve a lower interest rate.
The $6.6 million bond sale is intended as a way of restructuring the bonds purchased for the construction of the 2004 village hall. Since interest rates have dropped significantly, he added, his suggestion that the village seek a bank guaranteed loan to pay off the village loan. Initially, the village was paying a 4.5 percent rate of interest on those bonds. A restructured bond would result in a maximum of 2.8 percent interest. He expects a savings of at least $500,000 overall.
Read, "Village Explains Capital Improvement Plans."