CHICAGO — Illinois’ triple-A rated Lake County Forest Preserve District Thursday will competitively sell $40 million of taxable general obligation Build America Bonds.
The borrowing is the latest installment in $185 million authorized by voters in 2008 to finance land acquisition and capital projects. Officials said they can now purchase more land than originally expected due to the real estate slump.
Lake County is an affluent area located just north of Chicago’s Cook County along Lake Michigan. Its Forest Preserve District is the second-largest in Illinois, behind Cook.
The district enjoys a $90.5 billion tax base that has grown an average of 7.5% annually over the last five years, according to credit analysts.
Speer Financial Inc. is the district’s financial adviser. Chapman and Cutler LLP is bond counsel.
Moody’s Investors Service and Standard & Poor’s assigned triple-A ratings to the debt and the district’s outstanding $307 million of bonds.
Roughly $2.2 million of the $40 million borrowing matures in 2011, with the rest of the debt maturing in 2019 through 2034. The district is restricted to a 25-year final maturity on BABs and to a 20-year maturity on its traditional GOs. However, the GO curb is about to be pushed out to 25 years under legislation passed by the Illinois General Assembly this year and awaiting Gov. Pat Quinn’s signature.
Roughly 80%, or $148 million, of proceeds from the $185 million voter-authorized borrowing is marked for land acquisition, with the remaining 20% to finance capital projects.
When crafting the bond referendum, officials expected to be able to purchase 2,500 to 3,000 acres with the $148 million, said Andrew Kimmel, the district’s deputy executive director. The district currently has nearly 28,000 acres.
But officials now expect to be able to purchase more land than expected due to relatively low land prices amid a weak real estate market.
“With the decline in property prices in recent years we hope we’ll be able to acquire more,” Kimmel said. “We also have many more landowners willing to talk to us that previously were not interested in selling. In some cases they may have had their own residential development projects and decided they didn’t want to pursue it and to sell the land instead.”
In 2009, the district paid an average of $41,500 per acre, compared to $52,000 per acre in 2007, Kimmel said. Prices are now rebounding slightly, with the district so far this year paying $42,800 per acre on average. Kimmel added that prices vary widely across the county.
It is the third bond sale under the $185 million referendum. The district issued $35 million in February 2009 followed by $35 million early this year. Voters approved the referendum by a 66% majority.
“Lake County voters over the last 20 years have been very supportive of bond referenda for land acquisition and the kind of preservation improvements that these funds are for,” Kimmel said. “This is part of a longer-term program underway.”
Moody’s noted that the district has reported “sizable” operating surpluses for the last seven years, with reserves in fiscal 2009 totaling $19.1 million, or 87% of general fund revenues. Its debt burden is low at 0.3% and its pension liabilities are 90% funded.