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County saves millions on Criminal Justice Center bonds

In order to reduce jail overcrowding, Winnebago County financed the construction and operation of the Criminal Justice Center using funds provided from the one-cent Public Safety Sales Tax approved by referendum in 2002.

The County collected the sales tax during construction of the jail and paid some of the bills as they came due, paying $38M in extra payments prior to selling the bonds used to finance the Justice Center.

Even though the County saved nearly $8M in construction costs through budgeting, bidding and modification of specifications, the remaining bond principal of $147M would have resulted in a total debt service of $231.8M over 20 years.

The County administration, having effectively made a $38M down payment on the jail during construction, the principal amount borrowed was reduced to $109M, decreasing the total debt service to $171.8M due by 2024 - a savings of $22M in interest.

Currently, the bond issues remaining for the construction of the Criminal Justice Center total approximately $57.8M in principal and interest to be paid by December 31, 2024.

With interest rates at 40 year lows, Chairman Scott Christiansen and the Chief Financial Officer, Steve Chapman, working with Speer Financial, Inc. negotiated new bond rates with Wells Fargo Securities and PNC Capital Markets LLC in Chicago, without adding to the terms of the original bonds – the bonds will still be paid by 2024.

The bond refunding is a process where the County sells new bonds, Series 2013A to replace the bonds sold in 2005 and 2006. Since the 2005 and 2006 bonds have a call dates in mid-to-late 2015, the money raised by the new Series 2013 bonds is invested in U.S. Treasuries until the prepayment dates.

The new 2013A bonds were refinanced at a rate of 2.2469% resulting in a total payment, in principal and interest, of approximately $53.8M due by 2024 - a savings of an additional $4,008,331 dollars over the next 12 years.

Additional bonds were also refinanced – one at an interest rate of 1.8173% for a savings of $328,869 and another at 2.5125% for a savings of $404,336. Total savings to the County taxpayers amounted to $4,741,536 over the next 12 years.

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