By TOM LAVENTURE
Hurley — The Hurley City Council on Tuesday approved a water and sewer bond refinancing that is intended to save the city approximately $2.1 million from current bond rates through 2049.
The city’s current four water and sewer bonds from 2008 and 2009 total $7.5 million with an interest rate of 4.25%. The new 2.42% interest rate was revealed at the meeting.
Mark Deraney, a municipal bond advisor and vice president of AMKO Advisors in Fargo, North Dakota, was present with Harold Lance, an AMKO account executive with the Minneapolis office, who initiated the process in July when the city council passed a resolution authorizing the company to seek underwriters.
As of Tuesday there were two bids for the city’s bonds, Deraney said. Robert W. Baird & Co was the winning bid with a true interest cost weighted average rate of 2.42%, and a second cover bid of 2.55% was submitted by Northland Securities Inc.
These are large companies due to the large bond value in excess of $7 million, he said. In this situation, there are several smaller underwriters who come together through Baird, he said.
Even as the bond market rates are increasing, the bids were estimated to come in around 2.7% at the time the city approved the resolution in July, Deraney said. The two star bond insurance rating that is associated with the bond helped with even more competitive rates than would have been possible with an unrated bond insurer, he said.
The $200,000 bond insurance fee is far outweighed by the net savings with the lower bond rates that resulted, he said. A bond issue is not like a loan but is made up of several serial bonds with some maturing annually, while others mature over 10 years, and eight term bonds that mature between 2033 and 2049.
The call date for the bonds is Sept. 1, 2031. At that point, the city can determine if it would be advantageous to reissue the bonds again.
Council member Thomas Conhartoski said that he and Mayor Jay Aijala have met with the town of Kimball regarding plans to rebuild Rangeview Drive, a road in both communities that is also the only route to the Hurley K-12 School District. He said the talks will continue with Kimball and other groups.
In other business, the city council approved:
—Seven bartender licenses.
—An annual levy exemption resolution for the county library.
—A police union contract and employee wages.
—Trick or treating hours of 3-6 p.m. Sunday, Oct 31.