SPARTA—The Monroe County Board of Supervisors listened to a presentation of a financing plan for the new nursing home at Tuesday’s regular monthly meeting.
The preliminary financing plan was created in a two-phase approach with two bonds, a larger, $9.5 million bond to possibly be approved at the Jan. 24 county board meeting and a smaller $6.5 million bond to be finalized by December 2018.
Bradley D. Viegut, managing director with Baird Financial Advisors, said the plan was created with several goals in mind.
One was to lower the exposure to increasing interest rates, Viegut said. He advised the county to lock in the bulk of the financing sooner rather than later for a larger portion of the project to avoid increased cost of the total financing if interest rates were to rise.
“Overall, interest rates remain at very low levels,” he said. “Summer of 2016 we hit historic lows for municipal bond interest rates, today we’re just a little bit off of those or about anywhere from half a percentage point to three quarters of a percentage point higher, but in a long-term, historic context we’re still in a very low interest rate environment.”
Another goal was to issue as much debt that is “bank-qualified” as possible. Bank qualified is an issue of no more than $10 million of tax-exempt bonds in a calendar year, which carries a lower interest rate.
A third goal was to have flexibility to reduce the total borrowing if the project comes in under budget.
The final goal was to maintain level annual payments with no fluctuations.
“So what we’re doing is taking the longest end of the borrowing and getting that locked up first, come back later with that $6.5 million piece and ... the principal payments begin right away,” he said. “When we look at the total in payment ... you’ll see that the annual payment is level at approximately $1,090,000 throughout the entire repayment period.
He said the rationale is to “lock in the long end first because if interest rates increase, the longer term of debt is going to have greater impact on the total cost because it’s outstanding for a longer period of time. So that goes toward that goal of mitigating the risk of interest rates increasing.”
The plan would not lead to an additional tax levy, Viegut said.
“Right now the Rolling Hills is supported with a $1.4 million tax levy,” he said. “It’s anticipated that this payment would fall within what you’re currently levying and, therefore, you wouldn’t see an additional increase of $1.1 million; it would be part of ... what you’re already budgeting.”
In other business:
- The board approved a resolution authorizing up to $25,000 in additional funds to be used for continued mediation.