Elburn moves forward with bond issuance for village hall expansion

Elburn Police Deputy Chief Erich Schlachta shows the cramped police department space. The department’s referendum for a new station was voted down in the April 4 Consolidated Election.

Elburn is in the final stages of issuing $6 million in general obligation bonds to finance the expansion of village hall, providing additional space for village administration and the police department.

As part of the process involved in issuing the bonds, the village underwent a credit analysis. Officials were “pleasantly surprised” to learn that Standard & Poors Global gave the village a credit rating of AA+, just one notch below the highest possible rating of AAA.

Andrew Kim, director of public finance for PMA Securities and the village’s consultant on the bond issuance, attended the village board meeting June 3 to walk the board through the next steps toward issuing the bonds for sale.

Kim said that given the size of the bond, the size of the community and the size of the village budget, he did not expect the rating to come in as high as it did. He said S&P “seemed very impressed with how well the village is run, both at the administration level as well as the board level, in setting leadership [and] policy, as well as a vision and direction for the village.”

“They grilled us pretty good on the phone call about our finances, our planning,” Village President Jeff Walter said. “We talked about all the planning efforts we‘ve put in place with the board over the last five to six years. They seemed pretty impressed.”

“This [rating] allows the village to access the capital markets from a position of strength,” Kim said. “The higher the credit rating, the lower the interest rate you’ll demand on the global market.”

The term of the bond issuance is set for 20 years, with an equal payment per year of about $470,000.

“We’re expecting strong underwriters’ interest on the day of the sale of the bonds given the credit rating,” Kim said. “The winning underwriters will then sell the bonds to their investors.

“The sale will take place on July 9, when the interest rates will be locked in,” Kim said. “On July 30, the funds will hit the village’s bank account.”