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|City Council Monitors Bond Issuance
|At Monday night's Galesburg City Council meeting, aldermen heard details regarding the issuance of General Obligation Refunding Bonds.
The ordinance was on first reading, and if the go ahead is given for the issuance, would need to be approved by the same council that approved the ordinance.
The bond issuance would be done as a bank qualified issue. Municipalities get 10-million dollars as tax exempt debt each year as bank qualified.
City Financial Advisor Kevin McKenna says that if the City would issue bonds at non bank qualified, the savings would be cut in half.
"Bonds issued by entities that are small issuers for the year, that doesn't mean the size of the community that just means 10-million or less, they get an extra break and get to deduct some of those carrying costs, that's maybe a third or quarter of a percent on interest rates," says McKenna.
City management will use the funds to save money by refunding the "2007 Series" General Obligation Bonds. The funds received from Series 2007 were used for the construction of the water treatment plant in Oquawka.
The City could reportedly save 375-thousand dollars on the principal amount of "Series 2007" bonds.
For the City's issuance of 9-million dollars in bonds, it would leave about 1-million dollars in tax exempt debt available.
McKenna says there will be significant savings, but the City will always be able to borrow.
"If somebody really came to you with a wonderful economic development project in August and you needed to put in a 4-million dollar road, you can always borrow taxable, and then come January 1st, refinance as tax exempt," says McKenna.
From the discussion, both the council and City administration didn't foresee going over that limit.
Concerns about bond ratings for the issuance of additional debt were quelled. Currently Galesburg has an AA bond rating.
|02 19 13 by Newsroom
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