Supervisors Approve Sale of Second Road Construction Bonds
Palo Alto County Supervisors accepted a bid for the second series of bonds issued in an ambitious road construction and repair program for the county’s secondary road system. The action came during the weekly meeting of the supervisors on Tuesday, April 8.
Susan Judkins-Josten, Vice-President of Piper, Jaffray & Company of Des Moines, the county’s financial advisor, informed the supervisors that three bids for the $5 million in General Obligation bonds had been received following the offering.
“The winning bidder is UMB Bank, NA, of Kansas City, Missouri,” Judkins-Josten explained. “The true interest rate for the bond will be 3.548698 percent. Plus, they did not require insurance, so the county saved $45 to $50,000 in costs there as well.”
Bids for the $5 million bond were also received from the Bankers’ Bank of Madison, Wisc. working with the Iowa Trust and Savings Bank of Emmetsburg, for a bid true interest rate of 3.697000 percent. Also bidding was Northland Securities of Minneapolis, MN, which submitted an interest rate of 3.586500 percent for the bonds, which will be issued for a 10-year term.
“The bid from United Missouri Bank has the interest actually starting at 2.5 percent for the first year,” Judkins-Josten pointed out. “Overall, the interest rates came in very close to what we projected, and they are very favorable to the county. It would be my recommendation that you accept the bid of United Missouri Bank for the bonds.”
“How does this offering compare to any recent offerings you’ve done?” Supervisor Keith Wirtz asked.
Judkins-Josten replied that a recent school general obligation bond offered on April 7 came in at a higher interest rate for the same period of time. “You folks got a better rate on your bond than they did.”
Palo Alto County Engineer Joel Fantz noted that the county would begin paying on the principle of the bonds in 2009, so that even though the interest cost rises from 2.5 percent to the 3.8 at the end of the bond, the amount of principle will decrease as the interest rises.
Supervisor Ron Graettinger moved to approve the bid of the United Missouri Bank for the bonds and the board voted to approve the sale on a unanimous vote. The bonds will be formally issued on April 22, with final closing set for May 6.