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Committee recommends council approve $3.98 million note issuance; bond adviser reports 2.95% presale yield
Summary
The committee recommended that the council adopt Resolution 12 34 20 25 to issue $3,980,000 in general obligation promissory notes and note anticipation notes; a presenter said buyers were secured at about a 2.95% yield and the closing was set for Oct. 1.
The Algoma Finance and Personnel Committee recommended that the common council adopt Resolution 12 34 20 25 authorizing the issuance and sale of $3,980,000 in general obligation promissory notes and note anticipation notes, series 2025A.
Jeff, the presenter, summarized the presale: "We're able to find buyers...to constitute an underwriting at a 2.95% yield," and said the transaction produced a net premium that benefits the city. He explained the difference between coupon/nominal yield and the true interest cost (TIC), noting the TIC is calculated on the day of closing and includes issuance costs. Staff set the anticipated closing date as Oct. 1.
Why it matters: the notes will provide short‑term financing for identified city projects and preserve the city’s ability to reinvest funds while managing debt service. The committee asked technical questions about whether all notes were sold, premium treatment and amortization assumptions; Jeff and staff described how premiums and reinvestment can reduce the long‑term cost of borrowing.
Action and vote: the committee moved the resolution forward and a separate roll call during the full council portion of the session recorded unanimous support for the resolution when it was taken up (motion carried 7–0). The resolution number provided on the agenda is 12 34 20 25; the staff packet lists the note amounts and series as stated.
Next steps: the resolution will go to the common council for final action (the committee recommended adoption); staff will finalize closing documents and present final TIC information at or after the Oct. 1 closing.
Quote: "The TIC is the rate on the day of closing," the presenter said, explaining that issuance costs are included in that figure.
Details not specified: final TIC at closing and the ultimate investor mix will be available only after the Oct. 1 closing and will be recorded in the closing documents.
