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FD council approves $11 million bond issue

Money slotted for multiple city projects

The Fort Dodge city government has borrowed about $11 million at what a financial adviser called a favorable interest rate to pay for a variety of projects and purchases.

The City Council on Monday approved borrowing $11,255,000 in the form of a general obligation corporate purpose bond issue.

The money will be borrowed from Janney Montgomery Scott LLC, of Philadelphia, Pennsylvania, which offered an interest rate of 2.0316 percent.

That interest rate is a half percentage point lower than the bond interest rate offered a year ago, according to Jon Burmeister, managing director of Public Financial Management in Des Moines.

The offer from Janney Montgomery Scott LLC was one of nine proposals the city received for the bond issue.

“You’re drawing a lot of interest from national firms, which is good to see,” Burmeister told the council Monday.

Moody’s Investors Service has given the city a bond rating of Aa3. Burmeister said that’s a good rating that’s based on the city’s ”strong financial management.”

About $6.7 million of the debt will be paid off over 10 years with revenue from that portion of the city’s property tax levy that’s earmarked for retiring general obligation bond debt.

Another roughly $4 million will be paid off with tax increment financing revenue. Tax increment financing occurs when increased property tax revenue from a designated area is set aside to be reinvested in that area. Typically, the city borrows money to do projects in the designated area and then pays off the debt with the increased property tax revenue.

The final roughly $1 million worth of debt will be paid off with storm water utility revenue.

Some of the major items to be paid for with bond issue money include:

• Demolition of the Wahkonsa Annex at First Avenue South and10th Street — $3 million.

• Reconstruction of the intersections of Central Avenue and 15th Street and First Avenue South and 15th Street — $1.5 million.

• Storm sewer upgrades — $1 million.

• Construction of riverfront trails – $815,000.

• Renovation and expansion of the firehouse — $700,000.

• Municipal Building improvements — $700,000.

• Oleson Park improvements — $700,000.

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