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2009-11-21

2009-11-18

2009-11-05

Agriculture

Lifestyles

Saturday, November 07, 2009 12:00 PM

Bond news has local officials smiling

By VICKIE MOSS, Herald Public Affairs Editor

Ottawa and Franklin County will get a little help when it comes to borrowing money.

Ottawa has received its first bond rating, which is expected to give investors more information and open up the city to a broader audience of investors when the city borrows by issuing bonds, the city’s top financial officer said.

Meanwhile, Franklin County Commissioners accepted more than $2 million in Recovery Zone Bonds as part of the federal stimulus package.

Ottawa

City officials sought the city’s first bond rating from Moody’s Services as part of the Northeast Water Tower project.

The city will sell about $2.345 million in general obligation bonds Nov. 18 for the project, which includes a new water tower, main lines and a booster pump station. The project, now under construction, is expected to take about a year to complete.

Municipalities issue bonds to raise money for specific projects, like to develop infrastructure. They pay back the borrowed money with interest. A bond rating provides potential buyers with additional information about the city and likely will open the city to a broader audience of interested bond buyers, Scott Bird, city clerk and finance director, said.

The city received a bond rating of A3, the lowest of the A ratings but typical for a city of Ottawa’s size, Bird said. The city can work toward a higher rating for future projects that use general obligation bonds, he said. AAA1 is the highest available rating.

Ottawa typically does well when selling bonds, Bird said.

“However, in light of everything that’s been going on in the economy, our bond attorney recommended we seek a bond rating,” Bird said.

Mayor Blake Jorgensen, who was part of a committee that worked with Moody’s for the bond rating, said he appreciated the hard work that led to the rating.

“This is good news,” he said.

Franklin

Commissioners accepted more than $2 million in Recovery Zone Bonds, but it’s possible the county won’t need them.

As part of the American Recovery and Reinvestment Act of 2009, Franklin County qualified for $2.336 million in recovery zone facility bonds.

Recovery Zone Bonds provide tax incentives for state and local government to borrow at lower costs to promote job creation and economic recovery in areas hit hard by unemployment.

The county doesn’t have specific projects the bonds could be used for, but if it didn’t accept the bonds, the money would have gone elsewhere, Lisa Johnson, county administrator, told commissioners at meetings last month. Commissioners accepted the bonds to make sure the money would be available if they discovered an eligible project.

If the county doesn’t issue the bonds before July 1, 2010, the money will be reallocated by the state.

The county’s bond attorney recommended officials investigate possible projects that might qualify for the bonds.