County approves bond issue
Published 12:00 am Monday, April 18, 2005
By Thursday afternoon the money from two bond issues Marengo County recently entered into were in the bank and the future of Marengo County was looking a little brighter. The county received two bond issues including a General Obligation bond issue for $5million and a State Gasoline Bond Issue for $1.7 million.
The issues weren’t the only good news for the county. The General Obligation Bond had an insurance requirement and on their quest to insure the bond the commission discovered they had an AAA credit rating, which is the highest level that can be achieved.
Marengo County Commissioner Ken Tucker said this was especially big because of the money it would save the county in the long run.
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“That AAA rating will save us hundreds of thousands of dollars in interest costs,” Tucker said. “We could not have gotten the lowest rate on our interest without that.”
The average interest cost over a 15-year period is 3.95 percent and the county was able to set their rate at around 3.7 percent. This will allow them to pay the money back faster. So where will the money come from? The county already has a plan in place to pay the money back from their 48 percent share of the one-cent sales tax.
The commission also remained loyal to their county businesses as local banks were all given an opportunity to participate.
While the interest rates are low there is always an unlikely chance they could be lowered. If rates were ever to drop lower than their current state Tucker said they had the option of lowering them one time during the agreement.
“We can also reduce the interest during the life of the loan one time should that opportunity present itself,” Tucker said. “I don’t think that it will because I think this is as low as it is going to be, but we have got that option.”
The commission will have three years to spend the money and has the opportunity to pay off early if it is a good business decision to do so.
The county also stands to show some profit off the money as it is in an interest bearing account. Tucker said the timing of the issues could not have been better.
“The timing is excellent,” Tucker said. “The long-term interest rates have remained. If we did today what we have recently done we could not have gotten an interest rate as low as we did. The timing was really good.”
While most of the money is to be used for the courthouse project is can be used for any capital improvement project. The funds that are left over will likely be used for road and bridge improvement and other projects.
As for the State Gas Tax Bond issue, the money will be paid back from the state gas tax fund not from the one-cent sales tax. Tucker said this money would be used for debt reduction.
“What this one is going to be used for the road and bridge department has about $1million of high interest debt and they will use this money to pay that off.”
Tucker said a few new additions were likely on the agenda as well.
“We also want to purchase new equipment,” Tucker said. “We need a backhoe, bush hog, side cutter, a dozer, a flatbed truck and we to replace some in the fleet of vehicles. If we have any left we would also like to do some paving in each district.”
Paving currently costs about $2 million for 10 miles
Tucker said their main intent is to use the money as best they can.
“We are trying to use the money as wisely as we can to positively impact the people of the county.”