The Ladysmith Common Council voted 5-0, Monday, to approve selling $2.22 million in general obligation bonds with revenue already designated for several different uses.
The projects are:
— Army Reserve Center conversion to City Shop: $1,250,000.
— Replenish general fund balance (reimburse 2019 road costs): $672,000.
— Rebuild intersection of W. Fifth Street and Gates Avenue: $240,000.
— Other street work: $58,000.
The winning bidder on the bonds was the Milwaukee financial services firm, Baird with a 2.5 percent combined interest rate.
Baird’s interest rate will be 4 percent from 2020-2029. After that the rate will fluctuate between 2 and 2.5 percent. The net interest cost to the city is $696,042 over the 20 year life of the repayment.
Five firms bid, including BOK Financial Securities at 2.5 percent, Bernardi Securities at 2.53 percent, Northland Securities at 2.54 percent and Bankers Bank at 2.60 percent. The four firms all had higher net interest costs than Baird.
Sean Lentz, senior municipal adviser for Baird, told the council that five bids is a good number of activity on the bonds. “We are pleased with the results,” he said.
The bonds will replace existing debt that is expiring and falling off the city’s books. It is therefore expected to have no impact on the city’s tax levy.
“The bids were extremely close,” Lentz said.
Future projects in the pipeline
In other road work matters, the city continues to plan for additional street reconstruction in 2021 including sections of Lake Avenue, First Street, E. Second Street, W. Third Street and W. Fourth Street.
These are not part of this week’s bond sale by the city council.
Financial assistance for the above projects is being sought from several programs including Community Development Block Grant for two-thirds of non-assessable costs such as street reconstruction and storm sewer, DNR Clean Water Fund for sanitary sewer main replacement, DNR Safe Drinking Water Loan Program for water main replacement. Tax Incremental District for one-third of non-assessable cost of street reconstruction, stormsewer and 25 percent of sidewalk. Special assessments would, presumably, be used to pay back assessable portion of CWF and SDWLP loans, along with 75 percent of sidewalk and 100 percent of curb and gutter. If the city receives preliminary approval of CWF and SDWLP early in 2020, complete applications will need to be filed by next June 30 for SDWLP, and by next Sept. 30 for CWF. While “principal forgiveness” is possible with CWF both programs are beneficial regardless, with a current interest rate of 0.99 percent.
These largely downtown streets were selected to be done now because Tax Incremental District funding is currently available to assist with the cost. It had been thought that would no longer be available after 2021, but in fact, it is available until 2025. While it is unlikely that TID 8 will have sufficient cash to cover these costs, that will depend in part on how successful the city is in getting Community Development Block Grant, Clean Water Fund and Safe Drinking Water Loan Program money. Even if the TID will cover some costs, some money will likely need to be borrowed up front and then repaid from annual TID receipts over up to one decade.
While preliminary cost estimates have been prepared, actual costs will be based on public bids received. Assessments will be calculated based on actual bid costs. Grant and loan applications are already being worked on, which was part of the impetus for getting preliminary costs estimates together. There seemed to be consensus that a public information meeting can be deferred until, perhaps, February, when the city may know whether the requested Clean Water Fund and Safe Drinking Water Loan Program money will be approved.
Because the announcement of CDBG awards isn’t anticipated until next August, construction won’t realistically be done until 2021.
The state Department of Transportation’s one-time Multimodal Local Supplement Program or “MLS” holds potential to finance up to 90 percent of the cost of resurfacing streets, with minimum project size of $250,000, but provides no assistance for underground work. For that reason, applications are being submitted for the following streets, where surface conditions are the primary issue:
— Barnett Road.
— Flambeau Avenue for which the Town of Flambeau is a joint applicant.
— Gustafson Road.
It was pointed out, after legislative “earmarks” are taken from this program, what remains available statewide may not go far.
There were 37 contractors signed up on a recent walk-through of the former Army Reserve Center with six general contractors signing bid documents. Crews from the Flambeau Correctional Center have done some preliminary demolition at the armory, saving the city some money. Wood framed offices were removed from the south end of the drill hall and heavy wire cages were removed from the former supply room.