City sells bonds for pool funds, seeks bids for hanger

Luverne City Council members at their March 23 meeting adopted a resolution to issue and sell $6,460,000 in general obligation bonds.
Of that, more than 75 percent is to finance the pool expansion and renovation project and the rest is to refinance an existing 2012 bond issue for Highway 75 water and sewer improvements and for the city hall roof replacement.
Bids were received Tuesday morning, and George Eilertson of Northland Securities shared details of the proposals with the council that night.
He praised city finance director Barb Berghorst and staff for a smooth process.
 He said the city’s strong bond rating, an AA-minus, can be attributed to the city’s strong management and budget flexibility tied to available fund balances, which are 37 percent of operating expenditures.
“Of course, the better the rating, it drives down interest rates when you issue debts, so that’s working quite well for the city,” Eilertson said.
At the morning bid letting, there were four financing proposals, and the bid was awarded based on true interest costs.
The four bids were close, between 1.62 percent and 1.64 percent, and FHN Financial from Memphis, Tennessee, was the low bidder.
“True interest cost of 1.626 percent results in a nice bond issue,” Eilertson said. “Locking into a true interest cost of less than 1.7 percent is a nice result there.”
Refinancing the 2012 bonds cut the interest rate in half — about 1 percent, resulting in interest cost savings of roughly $46,000 over the remaining term of the bonds.
Mayor Pat Baustian praised Berghorst, City Administrator John Call and the finance staff for their work on the refinance project.
“It’s a long process and kudos to our staff. It’s no easy task. You all do a great job, and it shows on this. Thank you for a job well done.”
 
Airport hangar
The Luverne Airport Board is planning to build another four-plex hangar that will help to alleviate the backlog of airplane owners in the area that are looking for hangar space.
The airport has had 100-percent hangar occupancy for many years.
According to airport personnel, there’s a waiting list, and frequent active inquiries for hangar space.
The project is estimated to cost roughly $600,000 and engineering is estimated at $57,800.
DGR Engineering Company has completed the plans and specifications for the hangar, and Luverne City Council members took action at their March 23 meeting to move forward with the project.
Council members approved the plans and specifications for the new hangar and decided to advertise for bids.
Federal and state grants will also pay 95 percent of the costs.