Sparta alderman approve $5.2M bond
The Sparta City Council Wednesday approved bonding $5.2 million to finance the new police station and to refinance some of its existing debt at a lower interest rate.
The city secured a 1.72% interest rate, which, for some of the debt refinancing portion of the bonding, replaces a 2.75% interest rate.
Brad Viegut of Robert W. Baird & Co., which handled the bond issue, told the council the timing of the bond issuance was beneficial to the city.
"We've seen a very strong demand for these bonds this morning," he said, noting local lending institutions as well as investors nationwide were bidding on the bonds.
The city is refinancing $1.17 million in debt, including loans on the golf course irrigation system and the athletic center renovation. It had to pull its refinancing of the hockey rink out of the bond issue after it was determined that debt didn't qualify for the type of tax-exempt borrowing the city was seeking.
According to Viegut, the debt refinancing results in a $62,000 present-value savings over the 20-year term of the loan, "but the point is you're not increasing the overall debt burden to the city, you're just managing the cash flow by doing this."
Viegut added that the city was able to maintain its AA- rating from Standard & Poors, which helped it secure the low interest rate. "That is a really good credit quality rating," he said.
The police station bonding amounts to $3.1 million of the bond issue. The new debt on the police station amounts to a $255,000 annual debt payment that will be offset by debt that will be coming off the books in 2021. That debt is for the city's Sand Creek landfill remediation, which amounted to $237,000 a year for the last 20 years.
Co-City Administrator/Treasurer Mark Sund, said under the city’s fiscal plan the police station wasn’t going to be addressed until that landfill debt came off the books.
In September, Sparta aldermen voted to accept a $3.1 million bid from Fowler & Hammer for renovating Lakeview Elementary School into the new Sparta Police Station. Last year, the Sparta School District accepted a $225,000 offer from the city on the school located on Pine Street and Rusk Avenue at the entrance to Memorial Park. The school building was decommissioned this year.
Fowler & Hammer, a La Crosse-area commercial construction general contractor, was the lowest of eight bidders on the project.
The project is on an 11-month construction schedule, placing the estimated completion date in late summer of 2021.
The new facility will replace the city’s antiquated police station on East Oak Street, which the city says has too many deficiencies to meet the department's future needs.