Prior Lake will save tens of thousands of dollars on its interest for road construction bonds thanks to its AA+ financial rating from Standard and Poor’s Financial Services, city officials said.
The city sought the rating before selling a general obligation bond for $2.65 million to fund road resurfacing and other construction on Highways 13 and 21 and downtown roads. The bond will also fund the purchase of a Fire Department water tanker to serve the Spring Lake and Credit River townships.
The city’s rating from Standard and Poor’s allowed for a 1.82% interest rate, about half a percent below the city’s projection, Mayor Kirt Briggs said. That’ll shave $110,000 from the interest expense.
“If I try to make it really straightforward, it’s the city’s credit score,” he said.
Cities of comparable size often miss that low mark. Tammy Omdal of Northland Public Finance, a finance consulting firm, showed Waverly, Iowa, rated Aa3, sold bonds for $3.5 million with an interest rate of 2.1 percent, for instance.
“This is good news for taxpayers,” Briggs said.
With the bond money, the city will build roundabouts at the intersection of Highways 13 and 21 and at the intersection of Highway 21 and Arcadia Avenue starting around the end of summer. Stage 1 of the project, stretching from Highway 282 to Vergus Avenue on Highway 13, began May 13.
According to Erickson, the estimated total project cost is about $12.9 million; the cost will be finalized after all construction bids are awarded. Scott County is leading the project and will help fund it with state and federal assistance.
The fire department water tanker will cost approximately $249,000. Briggs said the old tanker has reached the end of its service life of about 25 years.
The water truck is not to be confused with a pumper truck. Because townships do not have fire hydrants, the truck must bring its own water supply.
The truck’s assembly will likely be finished near the start of fall.
Police radio equipment was removed from the list of items supported by the bond sale because of Chief Steve Frazier’s recent hiring, city Finance Director Cathy Erickson said.
“We got caught between someone leaving and someone coming in, and we’d like to have (Frazier) involved,” she said.