CLEAR LAKE — The Clear Lake City Council last night approved a proposal for a bond services underwriter agreement with a West Des Moines company to provide services in anticipation of new bond issuances surrounding the Courtway Park development east of Interstate 35 and north of State Highway 122.
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.
Chip Schultz of Northland Securities says while there’s a cost involved with being rated, the end result will financially benefit the city. “The benefit really is that the lower interest rate on the bonds more than pays for the cost of the rating itself. So you are able to save some number of dollars that more than pays for the cost of the rating by going through the rating process.”
City Administrator Scott Flory says the city hasn’t had Moody’s issue a bond rating since 1993 but he anticipates it will be high once their study is completed. “Today obviously our hope would be that we go through the ratings process that we achieve a AAA rating, which is the very highest rating level possible. From that point it goes to a AA1, AA2, AA3. Hopefully we’ll be in that high-end category there.”
Flory says he wants to get the process of being rated started now so the city is ready when it needs to issue general obligation bonds to cover the costs of projects such as the Courtway Park development. “We’re probably on the early side of getting started on things, but the ratings process it’s going to take some time, and then the issuance process is going to take some time.
Flory says local banks have usually 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. “Those have been smaller issues where, as we talked about what we anticipate in the future with the Courtway Park subdivision development project, getting ready for about a $4 million issue. That will be more than what the local banks here will have an interest in. They would certainly be interested in some of that debt, but the rest will probably be with Chip’s firm or another underwriter might buy.”
The council unanimously approved the proposal.