Buffalo Grove extends, expands line of credit

Faced with the cost of removing trees affected with emerald ash borer, the Village of Buffalo Grove in 2012 took out a $6 million taxable line of credit with PNC Bank.

This week, the village board amended the original ordinance to extend that line of credit, which was expected to mature next month, for another three years and to increase it to $8 million.

Village Finance Director Scott Anderson said the original line of credit was taken out to address the need to replace approximately 7,500 ash trees. The project, he said, is expected to be complete by 2016, at an estimated cost of about $4.5 million.

This time, he said, the line of credit will provide flexibility and cash flow as the village addresses unbudgeted infrastructure repairs, specifically in the water system.

In addition, it will give the village the ability to respond to the need for road repairs in the event that the state continues to freeze the distribution of Motor Fuel Tax funds. The village has not received MFT funds from the state for about three months as the result of the state's budget impasse.

Village Manager Dane Bragg said the village looked at whether it would be beneficial to convert the existing line of credit to bonded debt, but found the move would carry higher interest costs, plus transaction costs.

Anderson noted that the outstanding general obligation debt at the end of the year is expected to be $10.5 million.

"We're way low compared to other comparable communities," he said.