The city of Edina has sold more than $14.5 million in general obligation bonds to pay for infrastructure improvements.
The city will use $6.16 million for local street improvements, which will be paid back in special assessments over 15 years. And it will use $8.345 million on other local street and parking ramp improvements, which will be paid back through Grandview 2 Redevelopment District tax increment financing collections over 22 years, according to city documents.
The bonds were sold at an interest rate of about 1.6% over a 20-year term, which City Manager Scott Neal said in a tweet is “low.”
Municipal bonds are often issued by government entities as debt securities to fund projects or other obligations.
The city’s financial advisor, Ehlers & Associates, Inc., received, calculated and aided in the sale. The city received seven bids, but chose Dallas-based Hilltop Securities as the purchaser. The Edina City Council unanimously approved the award of the sale at its meeting on June 1.
The closing date for these tax-exempt bonds is scheduled for June 24, which is when the funds would be sent to the city’s account.
Once there, the city will put $6.16 million toward street improvements, covering mostly Melody Lake reconstruction costs, Neal told the Sun Current. In April, the City Council authorized the street reconstruction special assessment amounts to be paid by homeowners over 15 years.
The remaining amount, which is around $8.345 million, will be put toward Grandview area street improvements, including water utilities. This amount will also be used for better stability and security in the parking ramp at Jerry’s Foods. A pedestrian bridge connecting this parking ramp area to Arcadia Avenue across the Canadian Pacific Railway tracks would use some of these funds, too.
The city received “AAA” bond ratings from both Moody’s Investor Services and S&P Global Ratings. Edina has retained this bond rating from Moody’s since 2000, and from S&P since 2003. A “AAA” bond rating is the highest designation possible, meaning the issuer’s bonds are of the highest quality and subject to the lowest level of credit risk, according to Moody’s and S&P.
“Very strong” credit aspects for the city included an affluent tax base, growing economy, budgetary performance and flexibility, liquidity, and management, financial policies and practices. Moody’s said a credit challenge was the city’s above-average level of long-term debt.
“Certainly, year-in, year-out, having a double triple ‘A’ bond rating has helped keep our borrowing costs at a very, very competitive rate,” Mayor Jim Hovland said at the meeting.
The city’s budget amendment, which cut $2 million from its 2020 budget, and other forward-thinking actions by the city have helped it maintain its bond ratings, Don Uram, the city’s director of finance, told the council.
This includes the city’s push for better diversity and inclusion and its climate work, he told the Sun Current.
“The proactive stance that we took in terms of the pandemic last year was really recognized by both Moody’s and S&P,” Uram said at the meeting.
In 2020, the city issued bonds twice, once for general obligation and another for refunding, Uram said. Typically, the city issues bonds once or twice per year.
– Follow Caitlin Anderson on Twitter @EdinaSunCurrent