The Coon Rapids City Council June 20 awarded the sale of $10 million in general obligation bonds at a true interest rate of 2.22 percent.
Wells Fargo Bank, National Association, of Charlotte, North Carolina, submitted the lowest interest rate of the seven bidders on the bond issue.
The 2.22 percent interest rate was lower than 2.54 percent that Finance Director Sharon Legg had anticipated at the time the council authorized the bond sale in May.
“This is a good interest rate,” Legg told the council June 20.
Prior to the bond sale, Moody’s, the national bond rating agency, affirmed the city’s bond rating at Aa1, which is the second highest possible, according to Legg.
In its report, Moody’s cited the city’s strong financial operation, average debt level as well as its policy of having at least a 45 percent general fund balance at the end of each year to maintain cash flow, Legg said.
The sale included three different general obligation bonds – improvement, water revenue and park referendum – plus refunding a 2010 bond issue.
The $3.085 million in general obligation improvement bonds will pay a portion of the city’s cost of the four 2017 street reconstruction projects which are now underway, while $1.585 million in water revenue bonds are being sold to pay for replacement of water mains in the street reconstruction areas, according to Legg.
The term of both bonds is 10 years, starting in 2019, with the improvement bond debt coming from the tax levy and the water revenue bonds being paid from the water revenue account, Legg said.
The sale also includes $1.605 million in park referendum bonds approved by voters in November 2013 to pay for projects completed at Delta, Mason, Pheasant Ridge and Woodcrest parks in 2016 as well as the Coon Rapids Boulevard Extension trail project under construction this year, she said.
“This issue will be payable over eight years,” Legg said.
According to Legg, the referendum authorized the issuance of $17.4 million to be payable over 20 years, of which $5.295 million was issued in 2015 and $735,000 in 2016.
The city anticipates $6.6 million in park referendum bonds will be sold in 2018 or 2019, Legg said.
In addition, the bond sale included refunding 2010 general obligation golf revenue bonds to save interest costs and restructure the debt in the short term, she said.
Present value savings in debt service will be more than 4 percent or $185,000 over the life of the bonds, Legg said.
State law requires that refunding bonds result in at least 3 percent in present value savings, according to Legg.