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St. Peter council authorizes parameters to sell up to $9.025 million in bonds for new municipal facility
Summary
The St. Peter City Council approved a parameters resolution authorizing up to $9.025 million in Series 2025A tax‑exempt certificates and a small taxable Series 2025B (maximum $325,000) to finance the municipal facility; the council authorized city officials to execute a bond purchase agreement under the set parameters.
The St. Peter City Council on Sept. 8 approved parameters to sell municipal certificates of participation to finance a new municipal facility, authorizing a tax‑exempt Series 2025A of up to $9,025,000 and a taxable Series 2025B with a maximum principal of $325,000.
Shannon Sweeney of David Drow & Associates told the council the sale will use an annual appropriation pledge rather than the city’s full faith and credit, meaning the council will annually appropriate funds for lease payments rather than pledging a general obligation levy. "We're ready to go to market to sell bonds," Sweeney said, and she estimated market interest near 5% while the parameters resolution sets a maximum interest rate of 5.5% for the tax‑exempt series and 5.35% for the short taxable series.
The taxable Series 2025B is intended to preserve flexibility to sell or develop a portion of the 18 acres adjacent to the new facility; Sweeney said the taxable series carries a shorter term and slightly higher rate but will be paid off in a few years. The resolution authorizes capitalizing roughly $287,000 of interest to phase in the levy over two years and sets the term for the principal financing at 25 years.
Council members asked about the effect of using an annual appropriation pledge on credit rating and borrowing cost. Sweeney said the approach typically yields a credit rating a step or two below the city's general obligation rating and that staff will meet with a rating agency before the sale. She said the city will work with one underwriter (DA Davidson) to market the issue and compare the underwriter's offer to contemporaneous sales to ensure competitiveness.
By roll call the council approved the parameters resolution enabling the sale and authorized the mayor and city administrator to execute a bond purchase agreement and other closing documents within the authorized parameters. The resolution will not return to the council for final sale approval; under the adopted parameters, staff may proceed to market the offering.
The council earlier held a public hearing on the matter and received no public commenters. The city stated that Scholarship America, a nonprofit tenant in a city‑owned property, will be a beneficiary of some tax‑exempt proceeds as outlined in the offering documents.
Next steps: staff expects a credit rating conversation within about 10–12 days and targeted marketing and potential sale late September, contingent on market conditions.
