The Clear Lake City Council approved a bond services underwriter agreement with a West Des Moines company at its Tuesday, Sept. 3, meeting. The action was taken in anticipation of new bond issuances the City may make. Bonds may be issued for projects in the Courtway Park development east of Interstate 35, as well as a health and wellness center currently being discussed.
Northland Securities will provide advice and services related to future competitive sales of bonds and/or notes, especially general obligation bonds. Northland will also arrange with Moody’s Investor Service to determine what the city’s bond rating is.
City Administrator Scott Flory said the city hasn’t had Moody’s issue a bond rating since 1993, but he anticipates the city will have a high mark.
“We’re probably on the early side of getting started on things, but the ratings process is going to take some time, and then the issuance process is going to take some time,” he said.
Traditionally local banks have helped with smaller bond issuances by the city, but with bigger projects ahead, those issuances won’t be as attractive for the local banks to fully cover. Flory said the City anticipates an estimated $4 million bond issue, which he says is more than local banks will have an interest in their entirety.
Chip Schultz, of Northland Securities, explained that while there’s a cost involved with being rated, the end result will financially benefit the city. An excellent rating would result in a lower interest rate on bonds, which will more than pay for the cost of the rating itself, he said.