Poplar Bluff city officials expect to set a date soon to break ground on a new police department after a financing agreement for the project was approved Tuesday.
Just over $600,000 in interest costs will be saved on the financing, according to information presented to city council members.
Poplar Bluff saw high market desire for the sale of certificates of participation which will fund the project, along with a positive credit rating, city officials explained. This led to lower interest rates than were projected even a few weeks ago.
The city will receive approximately $11.6 million for the Shelby Road project when the financing closes Feb. 26, said James J. Lahay, managing director of Stifel Public Finance of St. Louis. Another approximately $1 million will be held in a project reserve fund and will be used to help make final payments at the end of the debt service.
The city had orders for more than 3.8 times as many certificates of participation as it had available for sale, Lahay said.
Many market factors contributed to that, he explained, including a BBB+ rating from Standard & Poor’s, rating the quality of the investment.
The debt will be repaid over 25 years, with the final payment in 2046.
It is structured so that the city will not make principal payments until 2025.
“That means the city has some flexibility with their payments that are due for other commitments that they have,” Lahay explained after the measure was approved by council members. “There are some debt (payments) that are going to go away. When the city has to start paying the principal and interest from this, they’ll be in a stronger position.”
Payments will be $790,000 a year, down from the $815,000 annual payments estimated a few weeks ago, said Matt Winters, city manager. This is because of lower interest rates.
The total repayment for the project will be $18 million, Lahay said.
This includes approximately $6.1 million in interest.
Total repayment — $18 million
Interest costs — $6.1 million
Project costs:
• Construction - $8,133,171
• Special construction - $61,500 (permits, materials testing)
• Furniture, fixtures, and equipment - $570,056
• Professional Services - $1 million (Navigate consultants, architect, Geotech, environmental reviews)
• Technology - $353,877
• Land - $1,050,000
• Financing - $160,000 (bond council, underwriter)
• Miscellaneous - $18,500
Total project costs — $11,347,104