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Bonding Meetings

By Staff | Dec 11, 2007

Palo Alto County residents are encouraged to attend one of several public meetings planned for Wednesday, Dec. 12, at sites throughout Palo Alto County. Bonding for $11.8 million to be used in the construction of county roads will be discussed.

Meetings will be held at 9 a.m. at Immaculate Conception Catholic Church in Graettinger, 10:30 a.m. at the Community Center in Ruthven, noon at the American Legion in Ayrshire, 2 p.m. at the Community Center in Mallard, and 3:30 p.m. at the Community Center in West Bend.

At the first public meeting, held Monday evening, Dec. 3, at the Election Center in Emmetsburg, just over 20 interested area residents were in attendance. Members of the Palo Alto County Board of Supervisors, Palo Alto County Engineer Joel Fantz, and representatives from Piper Jaffray, the county’s financial advisor, were on hand.

“Roads are consumable,” stated Joel Fantz, County Engineer. “All roads are not created equal. We’ve spent just under $200,000 on patching pavement since July 1.”

Fantz explained that in the past five years, construction on county roads has included 25 miles of paved road reconstruction, 13 major bridge projects, and 70 miles of gravel regrades.

“Over the last five years, this amount of construction is more than was done the previous 20 years,” said Fantz, noting that more work has increased in recent years because of the advancing age of the county’s paved roads, most of which were built in the 1940s. “The major truck routes are between 40 and 55 years old.” Fantz added.

Those in attendance learned that approximately 3,000 cars equal the damage that one legally loaded semi truck and trailer inflicts upon roads. With the coming expansion of the Poet ethanol plant, semi truck traffic will increase exponentially.

According to Fantz, bonding is the answer to the deteriorating county roads. For the first time in history, an Iowa county may now issue a general obligation bond without approval by a referendum. Governor Chet Culver signed Iowa Senate File 339 on Apr. 26, 2007, increasing the limits for a county to issue a bond for essential county purposes without holding a public election.

“If we bond now, we can take advantage of the current low borrowing rates,” said Fantz. “That rate would be fixed for the next 20 years.” Presently, borrowing rates are at approximately 4.25 percent. Construction costs will only increase in the future, so any work that can be done now will save money in the future.

The county’s plan is to issue a $5 million bond by the end of the 2007 year. Issuing a $5 million bond in December 2007 would give the Palo Alto County increased flexibility in respect to arbitrage, allowing the county to make more money on the bond than would be payed out in interest.

In addition, if the county waits to bond, the interest rate may not increase, but will most likely climb. According to Piper Jaffray, if the $5 million is spent within three years, Palo Alto County will get to keep all of the interest–nearly $600,000. A second $5 million bond could be issued in June, with the remainder–$1.8 million–issued after that.

On average, residents of Emmetsburg will see their taxes increase by $54.99 each year; and residents of towns other than Emmetsburg will see an increase of $33.92 per year. Taxes for rural residents will go up $37.56 per year; and ag land will increase by $1.26 per acre. Palo Alto County residents would see the increases–due to the bond–for the first time on their September 2008 tax bills.

More information on the $11.8 million bonding project for county roads can be found on Page 9 of today’s Reporter.