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Floyd County gets good rate on second part of LEC project bonds

Floyd County gets good rate on second part of LEC project bonds
This drawing shows current plans for the lobby that will connect the new law enforcement center with the existing Floyd County courthouse. Courtesy Prochaska & Associates
By Bob Steenson,

Floyd County supervisors locked in the interest rate and approved issuing more than $7 million in general obligation bonds at their regular meeting Tuesday morning.

The $7.49 million in bonds is the second part of the total $13.5 million authorized by voters in May 2018 to fund construction of a new county law enforcement center with a county jail and sheriff’s offices, as well as significant updates to the courthouse.

The county issued the first part, $6.01 million, late in 2018.

The total of the general obligation bond financing from 2018 and 2020 will be repaid through property taxes, and the tax increase due to the project will be slightly less than what was estimated when the voters were being asked to approve the project.

“The sale went very, very well, and a lot of that is due to the local banks,” said Heidi Kuhl, vice president of public finance at Northland Securities.

“There was a lot of interest,” she said. “Fidelity Bank and Trust, First Security Bank and Trust, First Citizens and CUSB all participated in the sale and bought the bonds. When you have heavy local presence, that also facilitates the lower interest rates and facilitates a great sale.”

Kuhl said offering 5% coupons and a 2033 call date will result in $1.919 million in additional premium funds for the project.

The amount to be received by the county for this bond issue will be the face value of $7.49 million, plus the premium of $1,919,456, for a total of $9,409,456, less the underwriter’s fee of 1.34% on the face value of the bonds, or $101,115, for a total coming to the county of $9,308,341.

The all-inclusive interest cost for the county will be 2.35% for the 19-year life of the bonds, for a total of almost $4 million in interest payments over the 19 years.

The total annual payments by Floyd County for the bonds will require a debt service levy of about $1.04 per $1,000 of taxable valuation, Kuhl said.

The informational campaign that preceded the bond referendum vote in 2018 had projected a property tax rate increase of about $1.08 per $1,000.

The county doesn’t need the additional money yet — the project won’t be finished until early 2021 — but supervisors acted now to take advantage of low interest rates. The funds will be invested and drawing interest until they are needed.

Supervisor Roy Schwickerath said, “We’ve signed contracts to keep this project going, and this is the financial means to make sure that happens.”

He said the county could have waited to see if interest rates drop even further, but there was always the chance they could get higher.

“If they happen to go down, I’ll go, yup, we could have waited three months, but the project is financially sound and we’re moving forward,” he said.

“We’re not here to play the stock market,” said Supervisor Doug Kamm.

Kuhl said the bond issue would close and funds would be in place on Feb. 11.

Also at the meeting Tuesday, the supervisors:

• Held a public hearing then approved a resolution approving the preliminary subdivision plat for RK’s Subdivision, a piece of land owned by Raymond Holzer located at 2648 195th St., Charles City, that he is subdividing into seven lots to sell for residential use. No comments were received at the public hearing.

• Approved adopting new flood insurance rate maps and floodplain management regulations after floodplain boundaries were adjusted last year by the Iowa Department of Natural Resources and the Federal Emergency Management Agency (FEMA).

• Approved the Board of Supervisors acting as the contractor and fiscal agent for a $65,000 grant from the Iowa Department of Human Services to hire the University of Cincinnati Corrections Institute to conduct child abuse prevention training.