Idaho Falls’ new police station could end up costing millions less than was expected thanks to lower-than-budgeted interest rates.
The city is financing the project with $30 million worth of certificates of participation, or tax-exempt bonds government entities can take out to pay for a project. They don’t require a public vote, unlike a traditional bond for a construction project which needs two-thirds voter approval in Idaho. Idaho Falls will repay them over 22 years and had expected to spend $12.4 million on interest at an anticipated 3.25% rate. However, the city sold the certificates quickly and got an interest rate of 1.89% locked in for the life of the certificates, which will bring the amount spent on interest to less than half that, said city spokesman Bud Cranor.
In a news release, city officials credited the lower rate to “favorable market conditions and high investor interest,” and the fact that the city included $2 million in this year’s budget to make the first payment.
“This 1.89% rate represents incredible savings for the taxpayers of Idaho Falls!,” Mayor Rebecca Casper said in a statement. “Being able to move promptly and to strategically schedule the sale of the certificates to coincide with the most favorable bond market conditions really paid off. This is tax money that the citizens of Idaho Falls can know will be spent on other community priorities and not on financing. That feels so good!”
Police operations are currently spread between eight different locations, with the main station being in space downtown the city rents from Bonneville County. City officials have been discussing building a new station for years and got serious about it last year when a citizens’ committee recommended it, buying the former Idaho Falls Livestock Auction property on Northgate Mile for a location and hiring architects to design a new station. Council members approved the station’s funding two weeks ago. The City Council approved the architectural design contract last week.
“The city finance team along with our financial consultants were able to execute an aggressive approach to structuring a funding package and leverage the most favorable market conditions,” said Pam Alexander, the city’s municipal services director. “And while we were keeping our eyes on the market daily, our team’s ability to act in accordance within City Council approval and cut the expected interest rate by nearly half.”
Reporter Nathan Brown can be reached at 208-542-6757. Follow him on Twitter: @NateBrownNews.