RURAL BOND BANK TAKES ROOT By GEORGE H. RYAN, Lieutenant Governor Chairman, Rural Affairs Council

Last year, I announced the formation of the Illinois Rural Bond Bank — an organization that will save local governments in 96 counties in Illinois millions of dollars over the next several years.

Before the Bond Bank was created, smaller communities had to pay higher interest rates because they weren't borrowing large enough sums of money for public works projects.

Because it's easier for a Peoria or a Chicago to market its larger bonds, the nation's bond markets tend to cater to the larger cities and counties. That leaves small towns and rural counties to pay unreasonable interest rates.

But now, through the Bond Bank, smaller units of government can pool their bonds — and have the state sell them on the national securities market. The result: a substantial savings to the small-town and rural taxpayer.

I am gratified that his program has received a great deal of support, bi-partisan support, from the General Assembly and Governor Thompson. Representatives Dick Mautino, (D-Spring Valley); Ted Leverenz, (D-Maywood); and Tom McCracken, (R-Westmont); and Senators Penny Severns, (D-Decatur); Jack Schaffer, (R-Crystal Lake); and Dick Luft, (D-Pekin), sponsored the original legislation. And Governor Thompson signed an appropriations bill last month to fully fund the Bond Bank.

Included in the program's appropriation was $4.8 million for a Debt Reserve Fund — the state's vote of confidence in rural Illinois.

The Debt Reserve fund is particularly important because it serves as state's backing for this project. It also ensures that the bonds issued by the Rural Bond Bank receive high ratings from services such as Standard and Poors and Moody's Investor Services.

A good rating, of course, makes the bonds more attractive to investors. That, in turn, saves the taxpayers money.

None of this works, however, unless local governments take advantage of the program. The rate of interest is tied to the rate of participation. The higher the participation, the larger the bonds and the lower financing cost.

To help acquaint eligible local units of government (including municipalities, school districts, counties, towns) with the program, we held "how-to" workshops throughout Illinois explaining the Bond Bank and offering advice on issuing bonds.

We are fast reaching the stage where our initial projects will be selected. But applications will be taken on an ongoing basis. If your government organization is interested, more information on the Rural Bond Bank can be had by calling: 217-524-2663. •

Page 20 / Illinois Municipal Review / September 1990