Village borrowing yields lower-than-expected rates

The Belgium Village Board on Monday approved borrowing $2.945 million for capital projects at a 3.86% interest rate through Baird.

Four bids were received on the promissory notes. Three were within six basis points and all four were below what was expected, municipal advisor Joe Murray of Ehlers Public Finance Advisors told the board.

The projected rate was 4.22%, he said.

The 3.86% rate saves the village about $35,000 in interest over the term of the loan.

The maturity date is projected to be 2046.

The other three bids were 3.88% from Northland Securities of Minneapolis, 3.91% from Bok Financial Securities in Milwaukee and 4.05% from Hilltop Securities in Dallas.

A premium bid was also submitted in which the underwriter receives compensation from investors instead of taking money up front through the underwriters’ discount, Murray said. The firm didn’t take the discount, so the village may apply $52,500 of surplus to a capital project. It may not use the money for its operating budget.

The tax impact is a 16-cent increase, moving the mill rate from $1.58 to $1.74 per $1,000 of assessed value rather than the projected 17-cent increase, Murray said.

The loan will pay for the reconstruction of sewer and water mains on East Lane, West Lane, Antoine Drive and part of Park Street between East and West Lane, in addition to water main loop work done last year.

Borrowing all the money in one bond saves on closing costs.