Amount of Borrowing
The cost for the Fire House and Municipal Complex project is estimated to be $18,200,000. There are opportunities that would reduce the amount of borrowing and, thus, reduce the direct impact on village taxpayers.
For example, the Village Board could appropriate excess fund balance on hand. During the public meetings in June and July 2023, there were discussions about appropriating up to $3.5 million of available fund balance to reduce the size of the borrowing.
In addition, the Village has a strong record of receiving grant funding. The project has numerous elements that are fundable by outside agencies. Of course, none of those grant funds are guaranteed, but if received, could also reduce the size of the borrowing.
For a review of the various options for financing and the related taxpayer impacts, please review the Options for Size of Borrowing.
However, for purposes of disclosure leading up to the referendum, the Village Board has chosen to show financing calculations based upon borrowing the full estimated cost, assuming no appropriation of fund balance or other outside funding.
The project will be funded with tax-exempt municipal bonds with a life of 25 years. The initial years of the project (2024-2026) will likely be funded with short-term, one-year notes with permanent long-term financing put in place upon completion of the project. However, this plan can be altered depending on debt market conditions.
In June 2023, the Village’s financial advisor used an assumed long-term market rate of 4.57% in order to arrive at an annual cost of $690 for the average taxpayer with a home assessed at $1,200,000.
In light of the recent increases in long-term interest rates, our financial advisors were asked to re-assess the interest rate market and re-calculate the bond amortization based on a new rate. That rate is now 5.18%. This rapid rate increase primarily occurred in late September and early October. Based on the new amortization, the average annual amount for the average taxpayer is $765 or $19,131 over the 25 year life of the bond.