Cottage Grove awards $10 million in general-obligation bonds at about 3.10%; $1 million premium to fund pavement, equipment and water projects

On March 5, 2025, the Cottage Grove City Council voted to award the sale of $10,000,000 in general-obligation bonds, series 2025A, to Baker Group of Oklahoma City after receiving a low bid at 3.097 percent. Finance Director Brenda Malinowski told the council the sale produced “over a million dollars in premium on that bond” and that the city plans to apply the premium toward pavement management and equipment identified in its financial plan, plus the water tower construction and the River Oaks irrigation project.

The move follows a bond-rating call with S&P during which city staff and its financial advisor discussed the issuance; Malinowski said the city’s strong credit profile helped attract a robust competitive field of 10 bidders. “Our low bid was 3.097%,” Malinowski said. “Our presale report was 3.9%,” and the winning bid produced materially better results than expected for the city’s planned sale.

Why it matters: a lower interest rate and a premium on the sale reduce the city’s net borrowing costs and can limit the size of future debt-service levies. When asked how the AAA credit rating affects taxpayers, Malinowski said, “It impacts the taxpayer because we can issue debt, we get lower rates, so that principal and interest payment … are lower.” She added that the city’s 10-year financial management plan and steady fiscal practices were key factors in maintaining the strong rating and market interest.

Council action: Council Member Claussen moved to approve the resolution authorizing issuance and awarding the sale of the bonds; Council Member Garza seconded. The council voted in favor and the motion carried.

Details reported by finance staff during the meeting: - Purpose: pavement management, equipment purchases, water tower construction and River Oaks irrigation work. - Winning bidder: Baker Group (Oklahoma City). - Low bid (winning): 3.097%. - Presale indication: 3.9%. - High bid (of the group): 3.2673%. - Reported premium to the city: more than $1,000,000.

Finance Director Brenda Malinowski and city staff said the city followed its financial management plan in timing the issuance and that market conditions and the city’s credit quality led to competitive bidding. The council approved the resolution by voice vote and moved on to other agenda items.

Council member questions about credit quality and taxpayer impact prompted staff to outline that lower borrowing costs translate into lower principal-and-interest payments over the life of the bonds, which in turn reduce the levy pressure tied to debt service. Malinowski cited the city’s tax base growth and the formal 10-year financial plan as evidence used during the rating review.

The bonds are designated Series 2025A and were described in the approving resolution as general-obligation obligations secured by special assessments, net revenues, tax abatement revenues (if any), and an ad valorem levy for payment of debt service as necessary. The council did not set a separate effective date in the meeting minutes; staff indicated proceeds will be used for the projects listed above and managed consistent with the city’s capital plan.

The council’s action on March 5 completed the award of the sale; staff will proceed with closing and apply the premium to the budgeted projects noted at the meeting.