 Those present at the meeting included Chuck
Ruben, chairman; Dave Hepler; Bob Farmer; Jan Schumacher; Terry
Carlton; and Sally Litterly. The representative from First Midstate
was David Pistorius.Logan County previously worked with First
Midstate in 2005 in order to pay for the development of the Sysco
building. That bond is still outstanding.
Pistorius began his presentation by stating that he would be
working with Chapman and Cutler LLP, financial attorneys from
Chicago.
"Really, there's not a lot of options available to you (the
county)," said Pistorius, who presented the board with some basic
information concerning First Midstate business practices. Part of
this information was the process involved in working with bonds.
Should the county do a bond issue, it would have to work with an
underwriter (such as First Midstate) to find buyers for the bonds.
The county would also have to work with attorneys to ensure
legality. Should there be no buyers found, the county will not be
charged for services.
"The biggest buyers of bonds are banking institutions," said
Pistorius. As a result, First Midstate often attempts to sell bonds
to local banks. The banks receive a tax write-off for buying bonds.
Banks will also make bonds available to customers in a secondary
marketplace.
Pistorius explained the two types of bonds available to the
county:
-
The first type is
a general obligation bond. These bonds have a tax levy and a
maximum limit equal to 5.75 percent of their assessed value. The
board would have to go to a referendum in order to issue this
type of bond. The board does not have the time for this type of
bond, as it is too late to add it to the next election.
-
The second type is an alternate revenue
bond. This bond has no tax levy, and the board would have to
pledge current revenues to pay the money back. The revenue
stream used to pay the bond back could be any source other than
new property taxes. The board would also have to prove as part
of a feasibility report that they have an extra 25 percent
beyond the borrowed value. Finally, if the bond is issued, the
county would have to abate the tax every year until it is paid
off.
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Due to time constraints, the board would have to do an alternate
revenue bond. Pistorius elaborated on the three steps in such a
bond.
-
The first step is
to adopt an ordinance of intent. The ordinance has to circulate
in a newspaper, and a 30-day petition period begins. If 7.5
percent of registered voters sign a petition, the process can be
stopped until the next referendum. The authority to issue bonds
lasts for three years if it is not stopped.
-
The second step is
to conduct a public hearing. A notice has to be in circulation
at least a week before the hearing.
-
The final step is to adopt a bond
ordinance. Bonds are sold a week to 10 days before the ordinance
is adopted. Funds are received around two weeks after the
adoption.
It was also mentioned that the board could attempt to combine
this bond with one for a capital project, such as any sort of
building repair, in order to get a cheaper interest rate. However,
there are no pressing capital projects at this time.
After Pistorius' explanation of those options and what the bond
could be used for, a motion was passed to have Pistorius come to the
full board meeting on Sept. 13 to explain the options again. First
Midstate is a family-owned business out of Bloomington and has been
in operation for 60 years. The business specializes in municipal
bonds. Pistorius also mentioned that First Midstate often works with
schools and has worked with around half of the schools in the state.
[By DEREK HURLEY] |
