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Lake Forest reports favorable bond auction for new police station; interest savings forecast
Summary
City officials reported the $20 million general-obligation bond auction for a new police station produced strong investor interest and a lower-than-modeled true interest cost, cutting projected debt service by about $651,000; debt service will be paid by property taxes.
Lake Forest officials told the City Council on Jan. 20 that the auction for $20 million in general-obligation bonds to finance a new police station drew robust investor interest and yielded interest-cost savings.
Finance Director Katie Skibby said the sale, held that morning, attracted 12 bidders and 51 bids. A winning bidder paid a $2,100,000 premium that lowered the net issuance and produced a true interest cost of 3.263%. Skibby said that reduction compared with the city’s previous modeled rate of 3.57% will reduce overall debt service by about $651,000. The bonds will be repaid through property taxes.
City Manager Wishaw reminded the council the city had budget flexibility because it included roughly $6 million in cash for the project when the council approved the bond issuance in October. Council members asked how the results compared with the last issuance; Skibby said the prior issuance had a true interest cost of 2.73% but covered a shorter (10-year) term, while the current bonds are structured for 15 years, which typically carries higher rates.
Skibby said the sale was run online and described the bidding as “very competitive” compared with recent municipal sales. She said staff is available to answer further questions about timing and the debt-service schedule.
The council did not take a vote on the bond results at the meeting; the report was provided for informational purposes.
