By TESA CULLI
MT. VERNON —
The city council approved issuing $9.08 million in bonds, which will be used for capital infrastructure projects in the city.
The bonds will be issued using $3.4 million in Recovery Zone Economic Development Bonds and $5.6 million in Build America Bonds, both part of the American Recovery and Reinvestment Act. The 20-year bonds will have a portion of the interest rate reimbursed to the city by the federal government. However, to get an interest rate of 3.39 percent, the city had to purchase bond insurance to attain a AAA bond rating.
“The Illinois rating affected the bond rating and the interest rate,” Tim King of Kings Financial Consulting told the council on Monday night. “It’s been affecting all municipalities.”
The bond rating for the state was lowered this spring, and King said the ratings for municipalities were worse at that time.
“I was surprised the city received an A-plus rating and not the AAA rating,” King said. “The city has little or no debt, strong cash reserves and is showing level and increasing cash reserves. Normally, that would have earned a AAA rating.”
To bring the rating — and the interest rate for the bonds — lower, the city opted to purchase the insurance at $73,562, which will be paid from city funds.
“I just wonder if we can send an invoice to the state of Illinois for that $73,000,” Councilman Todd Piper cynically joked. “I guess not.”
Things that affected the bond rating included items which the city has no control over: Low per capita household income and higher than average unemployment.
The total expenses to issue the bonds is $178,805, or 2.01 percent of the bond issue. Average annual payments, which will be made the sales tax revenues set aside by ordinance in the capital fund, will be $610,554 through Nov. 1, 2030. The bonds are callable in 2020, King said, meaning the city could pay the bonds early at that time or re-issue the bonds at a lower rate if available.
The funds will be available for use on capital projects on Sept. 2.
In other business, the council:
— Approved a bid from Rollie Excavating for the demolition of properties at 1023 Welkins, 223 Opdyke Ave., 430 S. 18th St., 905 S. 22nd St., 231 Opdyke Ave., 1411 S. 12th St., 711 Bell St. and 517 S. 21st St., of $15,300;
— Approved a request to go out for bids for a side-arm mower;
— Changed the zoning of property at 609 Salem Road belonging to William and Mary Zinzilieta from class B2 to R2;
— Approved a three year contract with Central States Fireworks, Inc., to provide fireworks at the Salute to Freedom for $20,000 a year with the number of shells to increase each year of the contract by 5 percent; and
— Approved the appointment of Jefferson County State’s Attorney Nicole Villani to the Minority Affairs and Human Relations Commission.