McHenry Co. considers $4.5 million loan for land purchases

Published: 10/29/2008 12:02 AM

McHenry County will borrow up to $4.5 million, if market conditions are right, to buy two pieces of land surrounding the county government center in Woodstock for future expansion.

Under a plan endorsed Tuesday by a key county board committee, County Board Chairman Ken Koehler, County Administrator Peter Austin and the chairman of the county board's finance committee will be able to borrow the money at any time over the next six months if interest rates fall to a level at which the officials are comfortable.

If rates never fall far enough, the county will pay for the land with money from its $40 million cash reserve.

The measure is scheduled to go before the full county board Nov. 6 for final approval.

The money primarily would fund the recently completed purchase of 30 acres along Route 47 in Woodstock, just north of the county administration building.

The land, known as the Klehm property, was bought for $3.78 million last month as part of a proposed county campus that would include a proposed public safety building or a health department facility.

Remaining funds would pay for the possible purchase of the Cardunal Savings Bank building south of the county courthouse in Woodstock.

County officials say the measure gives them flexibility to borrow money if rates fall to where interest paid on the loan is less than interest earned on the $40 million reserve.

Besides providing savings, that would keep the reserve fund flush with enough money to cover nearly six months of county expenses, an important factor when it comes to planning projects, financial models and bond ratings.

"In the past we've been able to borrow money (for less) than what we've been earning on interest," Austin said. "Because of our strong reserve, we can time the market and act proactively."