Similar to homeowners refinancing a mortgage, Glenview will refinance $10 million of debt to save almost $500,000 over the next four years.
Village trustees Monday unanimously approved issuing $10 million in new bonds, half a day after Glenview State Bank offered the winning bid among five competitors with an interest rate of 0.8695 percent.
The new bonds’ proceeds will be used to pay off bonds issued in 2006 to fund infrastructure improvements in The Glen and surrounding areas. Those bonds had an interest rate of 3.75 percent from 2015 through 2018, officials said.
The difference will save $497,821 during that four-year period, said John Miller, a municipal adviser with the village’s bond adviser, Ehlers and Associates Inc.
“I think it’s a very good result,” Miller said.
“Sounds like a pretty good deal, doesn’t it?” Trustee Scott Britton said.
“Yes,” Miller said.
Miller said Glenview State Bank’s rate bested J.P. Morgan Chase, which offered to charge 1.2992 percent, Northbrook Bank & Trust (1.3584 percent), Capital One Public Funding LLC (1.6904 percent) and Firstmerit Bank of Akron, Ohio (1.7284 percent).
Federal law prevents municipalities from issuing more in a refinancing issue than the original amount, so to keep the new bond amount at $10 million, the village was required to make an “equity contribution” — similar to homeowners paying out-of-pocket costs during mortgage refinancing — of $110,542, officials said.
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That included $88,542 for interest on the original bonds for June 1 through Aug. 26, and $22,000 to cover the costs of issuing the new bonds, officials said.
Amy Ahner, the village’s director of administrative services, said about $4 million of the 2006 bonds’ proceeds was spent on various projects, including the Navy bypass sewer serving The Glen and nearby neighborhoods, reconstruction of Lehigh Avenue; repaving of Patriot Boulevard, and West Lake and Chestnut avenues; and The Glen’s pending streetscape rehabilitation, scheduled for 2016.
Trustee Paul Detlefs asked whether in light of the village’s previous financial relations with Glenview State Bank, bank officials attached any conditions to their bid. “I want to make sure this is apples to apples” with no strings attached, he said.
Ahner said no conditions were attached. The village’s request for proposals, issued two weeks ago to 11 banks, included an opportunity for bidders to add clauses to the proposed sale; none did, she added.
Trustees also agreed unanimously to waive the first reading of the issuance, so the bond sale can close on July 30. Ordinances normally require two votes for approval — a first informal reading and, if that is approved, a second and final reading at the next scheduled Village Board meeting. In this case, the next meeting is Aug. 4.
Trustee Michael Jenny, a director in the Chicago office of the investment bank Houlihan Lokey, recused himself from the discussion and vote and left the Village Board meeting.
Jenny said Houlihan Lokey requires him to recuse himself from any securities-related vote to avoid any conflicts or the appearance of any conflicts of interest. “As the issuance of bonds is relevant in that context, I decided to recuse,” he said via email on Tuesday.
This bond refinancing almost certainly won’t be Glenview’s last, officials said.
Administrative services manager Debi Lubbat said village officials are watching the calendar and bond market for the possible refinancing of $26.7 million in 2009 bonds used to pay for construction of the Glenview Public Library’s current building.
Those are eligible for refinancing after Dec. 1, 2018.
Of that amount, $21.6 million remains to be paid as of this month, Lubbat said.
Jon Davis is a freelance reporter for Pioneer Press.