In November the referendum to repair the Tech Arts, Music, Performing Arts, McGee Theatre, and the Cafeteria was passed.
This gave New Trier the opportunity to sell $89 million in municipal bonds. Cheryl Witham, the Assistant Superintendent for Finance and Operations, is the head of the project.
On Janurary 13, the bidding for the municipal bonds for the 89 million dollar referendum was completed. Citigroup bid the most for highly valuable bonds, followed by Hutchinson, Morgan, Robert Baird, Wells Fargo, and Bank of America.
Witham said, “New Trier placed a referendum question on the November ballot which was approved by the voters. The ballot question asked voters if they would approve an $89 million dollar building bond issue.”
The project is $100 million, so New Trier will spend a portion of its own money as well, but a majority of the project will be funded through the sales of these bonds. Citigroup will pay $88 million up front to New Trier for the construction to begin. Then over the next 20 years property taxes in New Trier Township will rise and then steadily go down in order to pay Citigroup back.
“The taxes are going from high to low because we are taking advantage of lower interest rates die to the yield. The interest rate in the June of 2014 was 3.7%, and in January of 2015 it was 2.8%. New Trier will save $11 million because of this,” Witham said.
Now Citigroup is looking to sell the bonds on the secondary market. It is irrelevant to New Trier who buys these bonds on the secondary market. Citigroup is doing this to make money from the transaction with New Trier. An investor has incentive to invest in these bonds because New Trier is a very financially safe institution, and the fact that municipal bonds are very safe to invest in. The money always gets paid back to the bank by the tax payers and the interest rates are strong.
“New Trier has a rating of AAA by Moody’s and by Standard and Poor, which is excellent. Because of this the bidding for the bonds was very competitive. The companies knew that New Trier was financially set,” said Witham.
She claimed that New Trier was financially set because of the financial support New Trier has from the community.
In 2010, there was a referendum went to voters but was not passed. According to Witham, it did not pass because residents of the township thought that New Trier asked for too big of a project, which would require more construction, and more money. It was also a difficult time in the economy to ask for the tax money and to complete the construction.
This project is expected to be completed in 2017.