Evansville bond bank accepts financial report, debates loan interest policy

The Evansville bond bank board voted to accept its financial report and spent much of the meeting discussing the bank’s investment strategy and the interest rate charged on loans to local units of government.

Robert Gunter, who introduced himself as being with the controller’s office, told the board the entity keeps about $1.5 million available for sudden projects and that roughly $3,300,000 has been loaned out to date. He highlighted a $2,500,000 note tied to the Fifth and Main project, which he said settled in May and is expected to generate a sizable payment before its 2025 due date. “We have one and a half million in the bank just for projects that come up suddenly,” Gunter said.

Gunter said the board recently reinvested roughly $1,300,000 into certificates of deposit and moved money from money-market accounts into local banks, describing a laddered strategy so that investments mature every other month. He said the board still holds about $4,300,000 in the Hoosier Fund and Trust Indiana Fund. “We’ve made a push to rather than holding these in a money market account … invest it in local banks,” he said.

The board formally accepted the financial report after a motion and second. Unidentified members moved and seconded the motion; the chair called for the ayes and recorded no opposition.

Members then debated whether to keep the long-used 1.5% fixed loan rate or to tie new loans to the federal funds rate. Gunter said the current 1.5% rate “has been that way for a long time” and proposed that new loans might be tied to the federal funds rate at the time of loan issuance, rather than changing existing loans. One board member argued that loans between government units should not carry risk-based interest and the time value of money should be considered; another noted that having a local lending tool can allow faster action on time-sensitive economic development projects.

No formal change to the interest-rate policy was made. Board members asked Gunter to research the rates charged by the state bond bank and to bring recommendations back for future consideration.

The board also confirmed that the Evansville Regional Economic Partnership’s compensation — described in the meeting as $375,000 per year for local economic development functions — is paid through the bond bank body. Gunter said short-term project candidates the board may consider include an HVAC replacement at Swander and the purchase of a fire truck; both were discussed as potential future loan requests.

The board set its next meeting for Wednesday, Oct. 23 at 10:30 a.m. and adjourned without further action on interest-rate policy.