Kane County Board members are poised to erase $2.7 million in debt payments through a major bond refinancing. And though the county does have some big-ticket capital projects on its to-do list, it appears board members won't use the money freed up to tackle any of those initiatives.
The county has about $26.2 million in bonds eligible for refinancing, according to Speer Financial Inc., the county's outside financial adviser consultant. The bonds under consideration all have interest rates in excess of 4.4 percent. Refinancing should drop those rates to less than 2 percent, according to the plan.
The fees and other costs associated with the refinancing will cost taxpayers about $94,000. But the estimated savings that would come from the lower interest rates is about $2.7 million. The refinancing would neither extend nor shorten the maturity dates on the outstanding bonds.
Kane County Board Chairman Chris Lauzen said anyone with a mortgage should be familiar with what county officials are contemplating.
"What we're doing is going to market with our existing mortgage to see if we can get a better interest rate," Lauzen said. "I'm very excited about this."
The debt on the bonds being considered is paid through a mix of general fund money and income tax revenue. Less debt to pay over the long term puts three options on the table.
Officials could reduce the amount of the tax levy that is used for debt payments. The county could also receive the savings from the refinancing over time. Or, officials could take the upfront savings from the refinancing and use it to fund projects.
Some of the big capital projects on the to-do list include a multimillion-dollar revamping of the technology used by the county's legal system and an expansion of the judicial center.
The use of the money is a policy decision for the full county board. Lauzen said spreading the savings over time is really the only way the county will have enough money to address all its financial obligations. He mentioned the county's compounding pension obligations as well as the need to avoid a repeat of giving union employees annual raises while nonunion employees get nothing for several years.
"We're going to have lots of pressure on this board," Lauzen said.
The full county board must still vote on the bond refinancing. If approved, bidding on the bonds would occur Feb. 25. The county won't know the exact new interest rates on the bonds, and the corresponding savings, until after the bids.