Politics & Government

Channahon OKs Cooperation with Will Kankakee Regional Development Authority

Partnership permits say in what projects can use village's bonding authority.

The Ridge Point Logistics Center in Will County used them, as did the CenterPoint Intermodal Center in Joliet.

Both were surface transportation projects and, under state law, were allowed to use private activity bonding authority. That means that the projects were able to borrow money at a lower rate by using the bonding authority of municipalities.

Monday night, Channahon trustees retained a say in how their $1.26 million in bonding was used. They voted to cooperate with the Will Kankakee Regional Development Authority.

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"Rather than losing it, they tranferred it to WKRDA as a safety deposit box," said Andrew Hamilton, the WKRDA executive director.

Because Channahon is a home rule community, its private activity bonding authority is included with other municipalities that either are above 25,000 in population or, who by voters choice, have become home rule.

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These communities have until May 1 to decide whether they want to cooperate with an entity like WKRDA or to transfer their bonding authority to the state. By cooperating with WKRDA, Channahon keeps control of the money to choose the businesses and projects that can take advantage of the bonding authority.

If Channahon does not identify an eligible project by around October, WKRDA will ask to use the money regionally.

"If [Channahon officials] have not found a use for it by October, we ask would they mind if they use it in a neighboring community," Hamilton said.

Channahon Village Manager Jamie Bowden explained how the bonding authority works:

"Entities like [WKRDA] are looking for vehicles to provide affordable financing for businesses that are expanding. They come to us. We only have a per capita of 1.2 million to borrow.

"They put together an amount that’s maybe 10 million; They come to a business looking to expand and say they can use bonds instead of borrowing."

Hamilton explained it in this manner.

If a mutual fund were to buy an investment that pays them a 6 percent interest rate and it earned a 6 percent interest rate, but they had to pay 2 percent in federal interest, they would end up with 4 percent. If you buy a federal tax-free rate bond at 4 percent, they end up the same.

For a business, that means a tax exemption as well.

"The business may borrow the money but it’s borrowing the money at a tax-exempt rate," he said. "The state allows us the authority to be the vehicle for a private business to get tax exempt bonds.

"The concept is what is good for the region is good for Channahon."

Channahon authority not affected

Giving the private bonding authority to WKRDA does not limit what Channahon can use for municipal business.

"That doesn’t count against our bonding authority because we’re not issuing the debt," Bowden said.


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