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Evansville bond bank debates raising 1.5% loan rate to preserve purchasing power
Summary
Board members discussed whether to change the bond bank's long-standing 1.5% loan rate, with some urging a modest increase tied to an index and others preferring a set internal rate or market-based bids; no formal rate change was adopted at the meeting.
Members of the Evansville Local Public Improvement Bond Bank debated whether to change the bank's long-standing loan interest rate, which has historically been 1.5%.
Several board members said the current rate is well below market and recommended increasing it modestly to preserve the fund's purchasing power. One member suggested setting a new internal rate tied to an index such as the personal consumption expenditure (PCE) measure plus a spread. Others cautioned that the bank's lending process differs from a commercial bank's and that the Indiana Bond Bank's bid process can make rates a moving target, so they preferred setting a fixed internal rate to avoid being locked into too-low terms.
Robert Gunter (Speaker 1) told the board staff would solicit local bank quotes when a loan request arises; several members said they would consider adjusting the rate at the time a request is made. There was no formal vote to change the established 1.5% rate during the meeting; members discussed using special meetings if an urgent loan request requires quicker action.
The discussion also referenced possible near-term loan needs — including equipment for public safety and park projects — and the existence of alternative funding sources such as casino-related payments that the city expects over three years.
The board left the question open for staff to bring options when an application arises or to call a special meeting if action is needed before the next regular meeting.
