Detroit Lakes Council approves roughly $16.06M electric revenue bond at 4.26% to fund generation and substation expansion

Detroit Lakes — The city council on a unanimous vote approved the sale of its electric revenue bond series 2025B to the lowest bidder to finance construction of a new generation facility and a substation expansion.

Michaela Hwitt, a consultant with Baker Tilly, told council members the city received nine bids and the lowest true interest cost was about 4.26%, about 40 basis points below the earlier rate estimates. "The final bid award today was a 4.26% true interest cost," Hwitt said during a presentation of the pricing and ratings review.

Staff described the bond as a 20-year issue with an eight-year call provision and said the bonds included a premium that produced a par issuance amount reported in the presentation as roughly $16.06 million. The proceeds will help finance an estimated $17 million in construction costs for the generation and substation expansion, and to fund a debt service reserve required by the revenue bond structure.

City and consultant materials reviewed credit ratings completed for the issue: Fitch assigned a double-A with a negative outlook and Moody’s assigned a double-A3 rating to the utility and a double-A2 to the city for general obligation debt. Hwitt said projected revenues yield roughly four times coverage on debt service for the issue.

Council member discussion was limited; the finance committee had recommended approval. Council then adopted a resolution awarding the sale to the low bidder (identified in the presentation as Janney Montgomery Scott LLC) and authorized execution of related documents.

The council vote finalized the award; staff will complete closing tasks and move forward with the project financing. The project schedule and construction sequence were discussed during the presentation but no additional funding actions were requested at the meeting.

The council's action was recorded as a formal resolution adopting the bond sale as presented.