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Augusta council accepts low bid for $7.885 million bonds; true interest cost 3.89%
Summary
The City of Augusta on Oct. 20 approved awarding a $7,885,000 general-obligation bond issue to the low bidder and passed an ordinance and resolution to authorize the sale. Bond counsel said the true interest cost was 3.89%, producing roughly $1.3 million in interest savings versus earlier estimates over 25 years.
The City of Augusta on Oct. 20 voted to accept the lowest bid and authorize the issuance of $7,885,000 in general-obligation bonds to fund a new public-works complex and water projects.
Kevin Cowan, serving as bond counsel, told the council that four bids were received and the apparent winning bid came from Northland Securities. "The results of the sale today are 3.89%," Cowan said, noting that earlier estimates in September showed a true interest cost in the mid-5 percent range. He said that difference translates to more than $1,300,000 in interest savings over 25 years on the $7,885,000 issue.
Council members then moved to approve three related actions: a motion to accept the low bid, ordinance number 22-51 authorizing the sale and issuance of general-obligation sales bonds (series 2025), and resolution number 2025-25 prescribing the form and details of the bonds. The ordinance was approved by roll-call vote with Burke, Bailey, Richardson, Davis and Brown each answering "Yes." The council also approved the resolution; staff said a closing is scheduled for Nov. 6.
According to staff, proceeds will fund construction of a new public-works facility and water projects that were shifted from a planned KDHE revolving loan to a bond issuance after the loan fell through. Staff said the city's planning and earlier budget work aimed to keep the issuance mill-levy neutral; staff modeling now shows average annual debt payments slightly lower than earlier projections because of the improved interest rate.
Bond counsel described technical details of the issue, including a range of coupon rates across the 25-year maturities (about 2.55% for early maturities to roughly 4.05% at the 25th year) and an option included in the underwriting that allows the bidder to include bond insurance as part of their underwriting discount. Council members did not request further amendments to the documents on the table.
The council's actions: the motion to accept the lowest true-interest-cost bid carried by voice vote; the ordinance authorizing the bonds passed on the roll call; and the prescribing resolution was approved. Closing, if approved, was scheduled for Nov. 6.
