Kane County finds savings in Longmeadow Parkway bond sale

Despite fears of a lackluster municipal bond market and rising interest rates, Kane County officials sold $27.8 million worth of bonds to finance the Longmeadow Parkway toll bridge at a better-than-expected cost.

The bonds sold about 0.9 percentage points lower than what the county board authorized.

Joe Onzick, the county's chief financial officer, attributed the success of the sale to the county's AA+ credit rating and the decision to back the bonds with tollway collections and a fallback of RTA sales tax dollars.

Without the backing of the sales tax money, Onzick said the resulting higher interest costs would have added about $21.4 million in interest payments over the 30-year life of the bonds. As it stands, the county will already have $19 million in interest payments.

"That's a huge savings," Onzick said.

The savings may help temper any ill feelings about the late decision to back the bonds with sales tax money. For more than 20 years, county officials said there would be no risk to Kane County tax dollars in building the toll bridge. It was only after learning the county's lack of experience in operating a toll bridge would lead to higher borrowing costs that officials came up with the plan to support the bonds with sales taxes.

"Hopefully the backing is never triggered, and the tolls will be 1.3 to 1.4 times what your debt service is," said David Phillips, the outside financial adviser who oversaw the bond sale for the county. "Without the backing, you would have had to have $900,000 in additional toll revenues to cover the balance. Now you'll be able to have a little bit more leeway on toll levels that are necessary for the bridge to be successful."

Longmeadow Parkway opponents have vowed to never use the toll bridge, predicting its failure. County board members want to set the toll as low as possible to encourage the use of the bridge over the Fox River at the far north end of the county. They have not yet taken a vote to set the toll amount.

This month, the county board approved a $25 million contract to build the bridge. That's $8 million less than estimated, which will also help keep toll costs low.

There were significant costs just to issue the bonds. The underwriting alone cost $340,000. Most of that will go to Citibank. Phillips' firm will receive nearly $28,000. Chapman & Cutler, the county's bond counsel, will receive $18,000. And the bond rating agency, Standard & Poor's, gets $23,500.