VALPARAISO | Porter County Treasurer Mike Bucko did not follow through on a request to loan up to $15.5 million to neighboring Lake County, but he has purchased other municipal debt throughout the region using proceeds from the sale of the county hospital.
Deals that are still on the books include $34.5 million in combined bonds for the Hammond and Lake Central schools and for Hammond waste water treatment, Bucko said.
The purchases, which Bucko said earns the county about twice as much interest as any annual investment alternatives, is to be paid back by year's end.
Another $12.4 million in bonds purchased from the Hammond redevelopment district are to be paid back through August 2017, Bucko said.
Portage economic development bonds totaling $1.5 million were purchased, along with $610,000 in Portage stormwater management bonds, he said. The first group of bonds is to be paid back through 2018 and the second by 2015.
These deals are in addition to combined debt purchases last year of $35 million from the Crown Point, Lake Central and Hammond schools. Those loans have been paid back.
Bucko, who generated some concern in the fall when it was revealed he was considering buying $15.5 million of debt from Lake County government, has defended the overall effort as generating more interest for Porter County than other investment alternatives, while also saving municipalities money over other loan options.
Bucko is in a unique position to explore investment options, because the county is sitting on about $170 million in principal and interest from the 2007 sale of the former county hospital and $10 million from its share of the privatization of the Indiana Toll Road by the state. The county can loan out no more than 25 percent of its overall portfolio, which amounts to about $61 million, he said.
Porter County commissioners agreed in April 2011 to clear the way for the county to be able to loan money to school districts, libraries and other taxing units.
Bucko said the loans must comply with strict regulations set by the state that guarantee the recipient has the resources to pay back the money. These regulations require that the applicant has not defaulted on a loan for the 20 years prior and works with a financial specialist, he said. The borrowing period is capped at five years.
Bucko said strict guidelines on tapping into the hospital proceeds don't apply to the loan program because it is an investment move and not an expenditure.
Those requirements demand unanimous support of the three-member Board of Commissioners and seven members of the County Council to spend any of the hospital principal. Majority support alone is needed to spend interest money.