Nine financial firms submit bids for $4.5 million in general obligation bonds
Low interest rates have generally been bad news for holders of savings accounts, but those same rates turned out to be very good news for Village of Saukville officials last week.
The Village Board unanimously approved the sale on Jan. 19 of $4.5 million in general obligation bonds to the lowest of nine bidders from around the country.
The winning bid was submitted by UMB Bank of Kansas City, at an average interest rate of 1.79% for 12 years.
Other financing groups offering bonds to the village included 1.84% by Piper Jaffray & Co. of Minneapolis; 1.88% by BOSC, Inc. of Dallas; 1.92% by Baird of Milwaukee; 1.94% by Keybanc Capital Markets Inc. of Cleveland; 1.97% by FTN Financial Capital Markets of Memphis; 2.03% by City Securities Corp. of Indianapolis; 2.07% by Raymond James & Associates of St. Petersburg, Fla.; and 2.09% by Mesirow Financial of Chicago.
According to an analysis prepared by Ehlers, the village’s financial consultants, the high bid barely topped 2%. However, over the life of the bonds, the cost in interest between the highest and lowest bids was $110,080.
Officials said the village’s ability to retain its high-grade Aa3 rating from Moody’s Investor’s Service was largely responsible for the favorable bids.
In its rating review, the Moody’s analysis said the rating “reflects the village’s modestly sized tax base, above average socioeconomic profile, sound financial operations characterized by healthy reserves levels and an elevated debt profile with above average principal amortization.”
The analysis also noted the community benefited from its proximity to Milwaukee.
The village rating was also buoyed by its $1.4 million general fund balance, equal to 43% of its general fund revenues.
The village had recorded operating surpluses for four of the last five fiscal years.
The rating agency was also impressed with how the village has been able to weather the challenges of the recent recession.
“Although Saukville has experienced recent tax base declines, we expect that the village’s economy will continue to benefit from its proximity to Milwaukee,” the Moody’s analysis said.
Like many other communities, the village’s tax base declined .2% over the past half decade, but that trend began to reverse in the past two years — gaining 2.5% in 2014 and .4% in 2015.
The new bonds will cover some refinancing 2008 debt related to the construction of the police station, along with funding for pending street improvements and water system projects.
In December, trustees decided to pull money for a new ambulance from the borrowing.
In response to that action, Fire Chief Gilly Schultz said he supported the plan to move the ambulance purchase further down on the village’s capital spending schedule.