Eight bids from 27 banks in 15 states resulted in a lower than expected true interest rate of 2.25 percent.
Those are the key facts from the last general obligation bond issue approved by the Fort Dodge City Council that a financial adviser and local officials point to as proof that the city has a good credit rating.
The council approved that $4,389,000 bond issue on June 11. It will be used to do two things: pay off a bank loan which financed the drilling of a new well and pay for repairs to the water tower on Country Club Drive.
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The Fort Dodge Country Club Drive water tower is shown Friday afternoon in this view toward the west. A recently approved $4.3 million bond issue will pay for repairs to the tower.
''This was a really, really great financing for the city today,'' Mike Maloney, a senior managing consultant for Public Financial Management Inc., of Des Moines, told the council before the bond issue was approved.
He said the lower than expected interest rate will enable the city to save $480,000.
Mayor Matt Bemrich said Friday that the favorable bond results show that complaints about the city government's credit rating during the 2011 council election cycle were wrong.
''We had people saying we had bad credit,'' he said. ''We had people saying the city couldn't borrrow money anymore.''
The city's credit rating is still a concern for Councilman Mark Taylor.
''First off, we have to get a good economic policy in town,'' he said. recently. ''We got a fairly decent rating on the last Moody's report, but it could be better.''
The report he referred is from Moody's Investors Service Inc. of New York City. That firm uses letters and numbers to provide investors with a simple system to gauge the credit worthiness of businesses and governments. The highest rating the agency bestows is AAA.
In its June 2011 report on Fort Dodge, the agency gave the city a rating of Aa3.
That's the fourth best credit rating an entity can have, according to Jeff Nemmers, the city clerk and finance director. He said only 24 Iowa cities have a higher rating.
''Certainly, we're a very high quality, low risk rating as demonstrated by the interest rate we just received,'' he added.
Nemmers said citizens should ''feel comfortable that the city is in a strong financial credit rating status.''
He added that the city's financial strength enables it to attract wide interest from banks when issuing bonds.
However, the Aa3 rating is a notch below the previous Aa2 rating the city had.
The city's rating was lowered due to declining reserves in the general fund which pays for many government operations and an above average debt burden, according to a report from Moody's Investors Service Inc.
Because of changes in the bond market and the strength of a Aa3 rating, the recent bond issue came with a lower interest rate than one in 2008, according to City Manager David Fierke. He said that earlier issue had a 4 percent true interest cost.
Although general obligation bond issues are usually paid off with property tax revenue, the latest one will be paid off with money from water bills.
Under state law, the city can have a maxmum of $50 million in general obligation bond debt. Fierke said he doesn't want the city's debt load to go above 80 percent of that maximum.
The city now has about $38 million in general obligation bond debt. It is being paid off at the rate of $3 million a year.
Fierke said additional bond issues are planned for 2016 and 2019.