Buffalo Grove trustees this week approved issuing general obligation bonds to fund $6 million in infrastructure improvements. The money will by used to address long-standing issues with street maintenance.
Finance Director Scott Anderson said the village used its home rule authority to issue the bonds without going to referendum.
Property tax revenue will be levied to pay off the bonds. The additional debt of $6 million would amount to seven-tenths of 1 percent of the total assessed valuation of the village. As it will be paid off over 18 years, the effect on the property tax rate will be small.
Anderson said village staff has had an ongoing dialogue with the village board regarding the annual street maintenance program. He said that pavement standards were starting to slip.
He added that traditional sources of revenue from the state, such as the motor fuel tax, for the street maintenance program have been shrinking.
"The streets are aging," he said. "We're starting to lose a little bit of our maintenance schedule."
Anderson said recent discussions led to the decision by the village that the current tax exempt municipal debt market favored issuing the bonds.
The money will fund improvements on 10 lane miles of streets.
The key, he said, is to avoid the streets degrading to the point where a complete reconstruction would be necessary.
"This would allow the village to slow down significantly the amount of streets that would be moving toward the rebuild category," Anderson said.
Kevin McKenna of consultant Speer Financial said a successful auction was held for the bonds.
"People wanted your bonds," he told the board, noting that the village's AAA bond rating helped smooth the sale significantly. "It was just a wonderful sale."
Morgan Keegan out of Memphis, the best bidder, agreed to accept an interest rate of 2.21 percent for 18 years, he said.