It’s been several years since Rushford Village has had financial planner Mike Bubany, of David Drown Associates, at a meeting. Typically, he’s brought on board to discuss cost impacts for project planning. This time, it was Bubany who approached the city with a cost savings proposal.
“We’ve got a possibility of refinancing debt for the sole purpose of lowering payments. We can take two bonds and roll them into one. Even with issuance costs and a penalty for early payment on one, the gross savings are $18,600,” explained Bubany.
The refunding note includes a 2015 general obligation (GO) bond, which itself was already refinanced once, and a 2016 GO bond for street reconstruction. The current interest rates on the two bonds are 2.7% and 2.55% respectively. The new rate would be just 1.6%.
“I thought about stripping the 2015 bond out, but it saves $1,000 more by doing them both at the same time. The issuance costs are the same,” added Bubany. The refinanced bond would run through Minnesota Rural Water Association and be sold through direct bank placements. Rural Water is involved because of set fees. The new bond will not be callable, by whole or in part, until February 2027. The question of paying off the current 2015 bond and then restructuring the 2016 bond was discussed. Bubany clarified that payments are designed to mirror the current schedule with higher payments for the next three years, and then drop by roughly $30,000 a year when just the 2016 portion remains.
“I looked at what you can get in the open market, too. You can get better rates, but you’ll pay a ton more in issuance costs. This deal does just as good, or better. It’s better than what other cities are getting in the open market,” he noted.
Even though he thinks the Village could obtain an A rating if a rating was pursued, Bubany advised against it. “I would be very hesitant to bring you into a rating world. You’re not going to be a risk, but the real difference is rated and non-rated debt. On a smaller deal, if we can get like A-rated payments without the rating, that’s what I’d suggest.”
“I think it’s a no brainer. We should accept Mike’s proposal and lower the interest rates,” motioned Councilor Bob Hart. The motion passed and the refinancing was approved unanimously.
In other news, street maintenance continues to be an issue in the forefront. While possible resurfacing appears not to be on the horizon this year, gravel roads need work. The city is still waiting on Bruening Rock to deliver crushed rock and Public Works Supervisor Trenten Chiglo noted he is attempting to get after road issues.
The Ridgeview Road bridge approach will be done this year. The issues with the approach were noted after the spring road tour. An Armor Asphalt estimate was approved. Work on the approach will be done one lane at a time to avoid any shutdown.
Clerk Mary Miner brought up discussion on utility customer payments online. Currently, the Village does not accept online payments, but residents have asked.
Miner was approached by GovCard regarding a webinar for their government entity services. She indicated she was told the League of Minnesota Cities (LMC) supported the software, but during the webinar, when asking again, Miner received a less enthusiastic answer and was told they don’t support any. Miner indicated she will be contacting the league directly to find out their stance and the standing of the company.
“What do you think? You’re the ones doing it not us,” asked Councilor Roger Knutson. “Down the road, everybody will be doing it. I think it’s appropriate to look into and consider it.”
Miner will follow up with the league and other municipalities to find out more.
Lastly, a citywide fall cleanup has been scheduled for Saturday, September 11, from 8 a.m. to noon.
The next regularly scheduled meeting is Tuesday, June 16, at 7 p.m., at the Village Hall. A public hearing will be held prior at 6:45 p.m. Both meetings are open to the public.