City saves $700,000 on bond
Drain improvements on Main Street and the construction of a new pool and recreation complex will move forward with a lower than expected final price tag for the city.
That's because the Eudora City Council took advantage of one of the lowest municipal bond interest rates in 20 years.
"There's good news to share this evening," Piper Jaffray bond agent Greg Vahrenberg said.
Council members approved ordiances Monday for the sale of a bond issue totaling $4.15 million.
Morgan Keegan and Company Inc. won the bid by offering the city a 3.97 percent interest rate.
"What's interesting is that when you take a 3.97 interest rate and compare that back to original projections there is a little over $700,000 in interest savings to the city," Vahrenberg said.
The interest rate works as a double benefit to the city because the council approved bonding the $3.8 million pool project and the $355,000 street project together.
"It's a 20-year bond, so the basics of what he's talking about is that the $700,000 will equate to lower annual payments for the bond," Eudora City Administrator Cheryl Beatty said.
Eudora voters approved a bond referendum in August to build the recreation complex. The bond is to be retired through a half-cent sales tax and between 1 to 3 mills of additional taxing authority.
The street improvements will work in conjunction with a transportation improvement grant awarded to the city through the Kansas Department of Transportation.
"It's all under one fee, and that lowers the cost of both sales," Beatty said.
The benefit of the low interest rate helps the city as a whole, Beatty said.
"The annual payments will be lower than anticipated, which translates to lower taxes to the taxpayer," she said.
The low interest takes an early edge off the average citizen's responsibility for the project. City officials predict the mill rate hikes used to supplement the sales tax in the recreation center project would also be offset by continued commercial development.
The city received a total of 10 bids with interest rates ranging from 4.1 percent to 3.97 percent, Vahrenberg said.
The combined bond issue made the taxpayers doubly lucky.
"The downtown project likely would not have gotten as good an interest rate if we hadn't tacked it on this project," Beatty said.
The sale of the bond and the delivery of the monies to the city will be Oct. 10, Vahrenberg said.
In all, the resolution of the combined bond sale pleased Beatty.
"This worked out beautifully," Beatty said. "It's easier for us to track on the bookkeeping system and all that ---- we just break the numbers out. It was a win-win situation all the way around."