City sells bonds to finance wastewater treatment

Luverne’s 1958 wastewater treatment plant is under construction for a $14.3 million upgrade, and on Aug. 27, the city sold bonds to pay for it.
The plant project was divided into two major parts, Phase 2 and Phase 3 (Phase 1 has been completed in the past few years).
Phase 2 improvements will accommodate Premium Iowa Pork when it begins its hog slaughter operation next year in the former IBP plant on the west edge of town.
PIP is paying $6.7 million for this part of the wastewater treatment plant, which will be finished by June of 2020. It is also investing $30 million into retrofitting the old plant for its business and will bring more than 200 jobs to the community.
Phase 3, to be completed by November 2020, will serve current wastewater needs and provide capacity for future growth of the community.
It is expected that the plant will last for the next 50 years and the debt financing will be over a period of 30 years.
 
Competitive negotiated sale of general obligation sewer revenue bonds
The city hired Northland Securities Inc. for $32,250 to handle details associated with the bond sales, which were financed in two issues.
One is a taxable bond for the portion PIP will pay — $6.7 million. PIP will pre-pay $3.45 million for a net taxable bond of $3.3 million. Northland Securities directly purchased the bonds from the city at a true interest cost of 2.05 percent.
This will be amortized over five years with PIP making annual payments on or before Dec. 1 of each year.
Financing through the Minnesota Public Utilities State Credit Enhancement Program lifts the city’s current AA- bond rating to a AAA, saving an estimated $5,000 over the five-year term.
The other bond for the balance of Phase 2 costs ($2.5 million), plus the cost of Phase 3 improvements ($5.1 million), for a total tax-exempt bond of nearly $7.6 million, to be amortized over 30 years.
Northland Securities sold these general obligation sewer revenue bonds by public offering, and Robert W. Baird Inc. provided the low bid with a true interest cost of 2.36 percent.
Financing through the Minnesota Public Utilities will save an estimated $130,000 over 30 years.