Bond refinancing to give Round lake Area Park District breathing room for improvements
Like some homeowners have found with lower mortgage rates, Round Lake Area Park District officials expect to save a hunk of money by refinancing a nine-year-old bond issue.
Park staff is working with bond advisers on a new rate and buyers for about $7.1 million in bonds originally issued to build the Sports Center Complex and to build an addition to the Robert R. Rolek Community Center.
With an average maturity of about 4.6 percent, the bonds carry more interest than in the current market.
"If we can get it down to half that rate, we could save a lot of money," said Carl Hauser, director of business services. "The present value savings today, hopefully would be about $800,000."
That means annual debt payments would be reduced, freeing up cash for annual park improvements or to address other issues.
While no issues have been identified, the district's pool is 25 years old and there is no way of telling if or when it may need repairs.
"It would allow us to repair the pool without going to referendum, which we've never done," executive director Bob Newport said.
The district was created in 1974.
District officials have been considering such a move for several months but decided it was time to move ahead.
"How far do you wait to push it?" Hauser said of waiting for lower rates. "We have an election coming up. We don't know what might happen."
In a review of its finances, Moody's Investors Service rated the park district Aa3, the same as for the original issue. Aa is the second highest of nine Moody generic bond categories, most of which can be ranked 1, 2, or 3.
That rating reflects a tax base of $2.7 billion, although assessed values declined 14 percent between 2009 and 2001, Moody's reported. The agency also noted the district's stable financial position, despite ongoing losses at its Renwood golf course, and manageable debt burden in its assessment.
Operating funds consistently have posted surpluses but the golf course has been operating at deficits of $150,000 to $300,000 and with a total liability of $1.3 million.
After the bond sale, Moody's estimates the district will have $9.4 million in outstanding bonds that are backed by property taxes and $1.3 million in outstanding debt certificates, which are not.
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