County sells bonds to finance road, repair projects
The loan will still have to be repaid, but St. Croix County's financial advisor said the interest rate on a new $3.36 million debt is even better than expected.
"This is the cheapest money that the county has ever seen," said Springsted Inc. Vice President Joe Murray after bond bids were opened last week.
He said he had expected an interest rate of 2.25 percent, but the rate the county will pay is about 1.76 percent.
The "true interest rate" on the bonds is nearly 3.2 percent, but the federal government will pay 45 percent of the interest on these Recovery Zone Economic Development Bonds.
About half the money will be used for building repairs, security upgrades, equipment, computer software and parking lot repairs. The remaining $1.7 million will be used to help the highway department catch up on its road repair schedule.
The intent of these recovery zone bonds is to stimulate economic development and create jobs.
The debt will be paid off over seven years with payments dovetailed with existing debt payments so taxpayers won't see a spike in costs for debt service, said Finance Director Michelle Pietrick.
Payments will range from $141,660 for the levy year 2010 to $885,769 for the levy year 2016.
The net interest cost on the bonds, which were bought by M&I Marshall & Ilsley Bank, will be $543,400, but Pietrick figured the county's final cost will be $293,500.
She said the county is responsible for the debt and must pay off the bonds on time and then file for reimbursement of the 45 percent of interest costs.
A recent upgrade to the county's bond rating also meant a better interest rate, said Murray. The county's rating is now Aa2, ranking it amount the 17 top-rated counties in the state, he said.
"That's quite an accomplishment in this economy," said Murray, even though the upgrade won't result in a real big cash savings. He estimated the new bond rating will result in a savings of $8,500 over the term of the bonds.
The resolution to issue the bonds was adopted on a 23-5 vote with supervisors Dan Raebel, John Mortensen, David Ostness, Lorin Sather and Steve Hermsen voting no.