Fergus Falls council clears bond item for consent agenda; staff to seek bank placement

The Fergus Falls City Council heard details about two street projects and agreed to place a bond‑sale authorization on the consent agenda after staff outlined how the work will be financed.

City staff said the Junius Avenue reconstruction includes pavement plus water, sewer and storm‑water work; Shore View is pavement over a gravel street. Bill Somour explained the finance approach: the utility portions will be paid from cash while the city’s portion and assessments will be financed. "We're going to apply that cash against the project," Somour said.

Michaela Hwitt of Baker Tilly, the city's municipal adviser, told the council the current par amount is "about 805,000" for a general‑obligation permanent improvement bond (Series 2025A) and that debt service would run roughly 15 years, supported by a mix of assessments and a levy. Hwitt said the city intends to solicit proposals from local and national banks and likely place the issue with a bank because of its size, with award recommendations in late July and consideration of an award on Aug. 1.

Councilors asked for specifics on cash-applied funds; staff cited roughly $236,000 from the sewer fund, $325,000 from water, $18,500 from stormwater and about $215,000 in municipal state aid, and said approximately $50,000 in special‑assessment payments are already on hand. Somour estimated an annual levy in the 15‑year scenario at about $51,000 per year.

Members discussed whether financing a larger package (about $1.5 million) would achieve better market rates versus a bank placement; Hwitt said issues above about $1 million typically go to competitive market bids and noted the city would need a rating for larger, competitive sales. Hwitt used a conservative placeholder interest rate a little over 5 percent for planning purposes and emphasized final rates depend on bids.

The council voted to place the financing authorization on the consent agenda for the next full meeting.