City secures bond financing at .92% for projects

City benefited from bond market turmoil with historically low interest rate

The investment market’s loss is the city of Medford’s gain as the city accepts an ultra low interest rate on a $4.5 million in bond issue.

Members of the Medford City Council on Tuesday night voted to issue bonds for $4,455,000 to complete a number of projects including the financing for the construction of a new tower on the north side, upgrades at the wastewater treatment system and the refinancing of a 2011 bond issue for interest savings.

According to Brian Reilly senior municipal advisor with Ehlers Public Finance Advisors, the city received seven bids for the taxpayer-backed general obligation bonds. He said this was an unusually high number for the municipal bonds, indicating that they are sought after in the investment market. The effective interest rates were within 10 basis points of each other with the interest rates between .92% and 1.02%.

The low bid came from Bankers Bank of Madison in partnership with Prevail Bank of Medford with an effective interest rate of .92%. The bonds will be paid off by 2031. Over the life of the bond issue, the city will pay $275,335 in interest.

“You are literally borrowing at almost zero percent interest,” Reilly said.

As a result of the very low interest rate, Reilly said the city was able to reduce the total bond amount by about $40,000. The city had originally planned on bonding for $4,476,530.

“Municipal bonds are very attractive right now,” Reilly said, noting there were bids received from as far away as Texas for the city’s bonds. He said the city’s credit rating of AA- was also a factor in securing the interest rate. “For a city your size it is a very good rating,” Reilly said, noting the strength of the city’s reserves and its comparatively low debt level. “They view you as a very well run ship,” he said.

Another major factor in the low interest rate was overall market volatility. He said the principal and interest rate bids came in about $160,000 less than the estimate Ehlers had given in June. “You are hitting the market at a really good time,” he said, noting there has been an overall rate collapse. He said that he has never expected to see rates go this low.

Council members unanimously approved issuing the bonds.

City Clerk

On Tuesday morning, members of the city’s selection committee met and interviewed finalist for the city clerk position. The individual hired will replace longtime clerk Virgina Brost when she retires at the end of the year.

Finalists were Misty Hartman, Ashley Lemke and Nathanael Brown.

According to Mayor Mike Wellner during a closed session at Tuesday evening’s city council meeting, committee members shared their recommendation to hire one of the finalists.

Wellner said that following discussion it was decided to go with the recommendation of the selection committee rather than holding additional interviews. He said the individuals will not be notified until after the August 4 city council meeting where formal action on the hiring is scheduled to take place.

In other business, council members: _ Approved a rezoning request from Misty Standke for 215 East Pine St. from single family residential to C-1 commercial use. The former school building is located across the street from the Francs L. Simek Memorial Library. Standke said she intends to have an accounting office in part of the building and a residence in other parts.

_ Approved applying $29,000 of fund balance in the refuse budget to keep the solid waste and recycling fees unchanged from last year at a combined $16.25 per unit with residents over 62 paying $15.25 per month. This includes both solid waste and recycling fees.

_ Approved a three-year contract with Spielbauer Fireworks Company to hold fireworks on July 3 in 2021, 2022 and 2023. Streets/water superintendent Joe Harris asked if there was an opportunity, if the city would want to switch it back to July 4. “I am good where it is at,” said alderman Dave Roiger, noting that it is better to not have it the day before people have to return to work.

_ Received word from the Wisconsin Department of Revenue that Nestlé is contesting its property tax assessment for the plant and bulk freezer seeking a 66% reduction. The state assesses manufacturing facilities. Alderman Mike Bub said a substantial reduction would shift more of the local tax burden onto residential property owners.

_ Approved applying for the annual shared-ride taxi grant. The grant helps subsidize the taxi service to keep user rates down.