The Park Rapids City Council awarded a bond sale Tuesday, May 9 to fund street and utility improvements already underway on Fair Avenue.
Jessica Green with Northland Securities gave a sale-day report regarding bond series 2023A. She said the sale went well, thanks in part to a timely dip in interest rates.
Green noted the final par amount of $2,755,000 came in under the pre-sale estimate of $2,925,000 due to a premium on the bonds.
“What that means is that cash is received up front, so that investors can, essentially, get a higher coupon, or stated interest rate on the bonds,” said Green. “So, we are able to reduce the bond size, so you are essentially paying less in principal but more in interest overall.”
Green also reported that the all-inclusive cost of the bonds was 3.71%, 30 basis points lower than the anticipated 4.01%, and average true interest costs ended up at 3.6%, compared to the 3.89% estimated in the city’s finance plan.
“What that means overall for the city is that you’re going to have about $92,000 less in total debt service,” said Green.
Besides the bonds, the city is also applying a $1.25 million Local Road Improvement Plan grant to the street portion of the project, as well as city utility funds, American Rescue Plan funds and the $163,173 cash premium on the bond sale.
Green anticipated about $250,000 in annual debt service costs over the 15-year term of the bonds, about $6,000 less than the finance plan projected.
Council member Liz Stone made a motion to approve the resolution awarding the bond sale as presented and creating a new debt service fund for the project. The motion passed unanimously, absent council member Bob Wills.
Stone also made a motion to approve a contract with Blue Rose Capital Advisors, LLC, for a bond sale pricing fairness opinion, paying them $1,600. According to City Administrator Angel Weasner, two bids were received for the contract, with Blue Rose as the lowest responsible bidder vs. Government Capital Securities Corp.
Later in the meeting, Public Works Superintendent Scott Burlingame reported that the Fair Avenue project is going well.
“The sewer main is in, and we’re working on the water main now,” he said. “Most of the tree removals have been done.”
Robin Fish is a staff reporter at the Park Rapids Enterprise. Contact him at [email protected] or 218-252-3053.