Sturgeon Bay borrows $2.44 million at 3.09%

The Town of Sturgeon Bay has locked in an interest rate of approximately 3.09% to borrow money over the next 10 years for a series of capital improvement projects.

Sturgeon Bay City Council approved a resolution last week to adjudicate the sale of up to $2.445 million in general obligation promissory notes.

The financing plan calls for borrowing $95,000 in principal over five years, with the remaining $2.35 million being borrowed over 10 years.

Items included on the list to borrow money over five years include patrol boat engines and lawn mowers.

Projects listed for 10-year funding include paving municipal service parking lots; brush-truck replacement; replacement of squad cars; annual road improvements; a compact loader; a one-ton dump truck; a heavy-duty snowplow truck with a dump bed; Improvements at Highway 42/57 intersections; annual expenses for driveways and parking lots; roofing, soffit and fascia work at Memorial Field; work in Little Lake; a weeding truck; and work in the library.

Brad Viegut of Baird, who developed the city’s financing plan, appeared before council to provide details of the loan. Four bids have been submitted for the issuance of the tickets.

Viegut said Bernardi Securities submitted the lowest interest rate at 3.0938%, with two others submitting bids less than 0.1% higher.

“These rates are slightly higher than what I presented in April,” he said. “At this meeting, the rate used for projection planning purposes was 2.85%, so that 3.09% is just a bit higher than what was presented at the time.”

Municipal borrowing rates continue to rise, which is why the city has chosen to borrow now rather than in October, when it typically sells capital improvement bonds.

When interest rates hit historic lows after the onset of the COVID-19 pandemic in 2020, the city borrowed money at less than 1% per year.

Viegut said final payment on the notes would be made in 2031, with the amount of debt service paid by the tax levy increasing from about $1.5 million this year to about $1.655 million in 2023.

Factoring in interest charges minus the bid premium the city receives, he said the total amount was $2,978,306 to redeem the notes.

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