RURAL BOND RANK HELPS LOCAL GOVERNMENTS

By LIEUTENANT GOVERNOR BOB KUSTRA, Chairman

Lieutenant Governor Bob Kustra announced that the Illinois Rural Bond Bank completed its sixth pooled bond issue, totaling $2,750,000 for seven units of local government.

"I am proud that the Rural Bond Bank continues to provide such important financial support to Illinois' rural communities," said Kustra, who chairs the Rural Bond Bank. "To date, the Rural Bond Bank has produced a savings of more than $2 million for 45 local governments working to improve schools, roads, sewers and complete other projects that make those communities more attractive for economic development."

The local governments participating in the Spring 1993 bond issue are:

• Easton Rural Fire Protection District (Mason County) $200,000 for construction of a new fire station;

• Ewing-Northern School District (Franklin/Jefferson Counties) $250,000 for construction of four additional classrooms;

• City of Gillespie (Macoupin County) $700,000 for improvements to the existing public water system;

• City of Girard (Macoupin County) $600,000 for refinancing of existing sewer system bonds;

• North Clay School District (Clay/Effingham Counties) $200,000 for construction of health, life and safety improvements in school buildings;

• City of East Moline (Rock Island County) $230,000 for replacement of water and sewer mains; and

• Raccoon School District (Marion County) $350,000 for construction of six classrooms and two restrooms at the district's existing school building.

The Rural Bond Bank, which finances infrastructure improvements for local governments, has now completed six pooled bond issues in the last 29 months totaling $28,105,000.

"Our goal is to reduce costs and obtain lower interest rates for the local governments we serve," said Kustra. "We're pleased that the interest rates of this pooled bond issue were quite low, ranging from 3 to 6 percent, and we encourage all local governments to take advantage of the cost savings available through the Rural Bond Bank."

How Local Governments Can Save Money By Using
The Illinois Rural Bond Bank

The Rural Bond Bank obtains funds for local governments at lower interest rates and at reduced costs because:

• The Rural Bond Bank is an agency of the State of Illinois. As such, it borrows funds for local governments with a high credit rating from Standard and Poor's.

• Bond issuance expenses are shared by all participants in a Bond Bank pooled financing, resulting in significant savings as compared to stand-alone financing.

• Costs of issuance charges to each local government are limited or "capped" at 2 1/2%.

• The Rural Bond Bank borrows in larger amounts

June 1993 / Illinois Municipal Review / Page 27

than individual local governments, thus gaining reduced costs and lower total interest rates.

• The Rural Bond Bank has streamlined and simplified its application forms and procedures to make it easier for local governments to complete financings.

• All possible savings are passed through to the local governments.

• The Rural Bond Bank purchases and holds each local government's bonds. The Rural Bond Bank does not resell the bonds it has purchased.

• Rural Bond Bank Bonds are exempt from BOTH Federal and Illinois income taxes. This means that local governments will receive a lower interest rate when the bonds are sold. If a local government issues bonds on its own, the bonds are not exempt from Illinois income taxes.

• Rural Bond Bank Bonds are readily marketable on a statewide basis, therefore producing further interest rate savings to local governments whose individual bonds might not be well known in the credit markets.

• The Rural Bond Bank has established a schedule of at least two dates each year — May and December — when pooled bond issues will occur. This helps local governments plan and complete their project financing. Additionally, the Rural Bond Bank may conduct financings at other times to meet the special needs of local governments.

• Local governments enjoy the benefits and assistance of the Bond Bank Financial Team — all nationally recognized experts (financial advisor, bond counsel, and underwriter) who assist each local government in securing the most suitable financing at the lowest interest rates available.

• The Commissioners of the Rural Bond Bank have extensive experience with local governments. They have structured the Bond Bank to operate efficiently and effectively to serve local government needs for predictable, economical financing.

• The professional staff of the Rural Bond Bank provides objective advice and assistance to local governments on the most efficient financing available.

Before any bond issue, check with the Illinois Rural Bond Bank, 427 East Monroe, Suite 202, Springfield, IL 62701, Ph: 217/524-2663, Fax: 217/524-0477. An agency of the State of Illinois. •

Page 28 / Illinois Municipal Review / June 1993