A few weeks ago a discussion was held regarding the possible refinancing of the City of Redwood Falls general obligation (GO) bonds from 2008 and 2013.
The 2008A GO improvement bonds were issued to finance the Ponderosa Business Park improvements, and the 2013C bonds funded the West River Street utility reconstruction and trunk sanitary sewer and water main improvements which serve the regional materials handling facility.
Shannon Sweeney of David Drown Associates, Inc. presented the information regarding the refinancing proposal to the Redwood Falls city council at its Sept. 15 meeting, which the council approved.
The two bond issues have a total principal balance owed of $825,000.
R.W. Baird, acting as placement agent, received a proposal for the refinancing from Security Bank & Trust Co. with a net effective interest rate of .9363 percent, which Sweeney called a very solid proposal.
The cost of calling the 2008A and 2013C bonds comes with a total cost of $854,000 and a 2020B GO refunding note in that amount will be utilized.
According to Sweeney, the decision to call the two issues will produce a net present value savings of $57,938. The annual payments of the new bonds will average approximately $6,700 less than the payments that are currently being made on the 2008A and 2013C bonds.
The city will also save approximately another $800 per year. Those savings are coming, as the city is going to be serving as its own paying agent on the new issue.
As with its prior bonds, the city is required to commit to using tax levy as well as sanitary sewer and water revenues to repay the bond issue.
The city will not be able to prepay in the 2020B GO refunding note until February 2027.
The closing for the note is scheduled for Oct. 1, 2020.
In other action , the council:
• Awarded the snow removal bids for work done in the Liquor Lodge and Redwood Falls Public Library parking lots. Rather than awarding a lump sum bid, Jim Doering, public works project coordinator, indicated that city staff determined the better option was to award the bid on a per push basis. The bids for both locations was awarded to Perennial Lawn and Landscaping with a bid of $130 per push for the Liquor Lodge and $210 per push for the library.
• Approved the purchase of a new vacuum truck from MacQueen Equipment at a cost of $437,217 after a $38,000 trade allowance for the existing truck.