Tim Ryan, tryan@wolfrivermedia.com
Shawano city officials this week closed on a bond issuance deal that includes additional borrowing for park improvements approved in an April referendum with better terms and rates than initially expected.
However, those terms are not expected to significantly affect the projected tax rate increase.
Voters approved $1.85 million in additional borrowing over the city’s usual borrowing for capital improvement projects over the next two years, bringing the total borrowed to $7.48 million.
The amount is about $150,000 less than the city expected it would need to borrow, thanks to what’s called a bond premium, according to City Administrator Brian Knapp.
That means investors were willing to pay more and cover the city’s legal fees and insurance costs in order to buy the city’s debt, according to Knapp.
“The buyers were willing to pay more for our debt because of the way we structured it,” he said.
The total 20-year bond issue came with an interest rate of 2.57 percent, but the park improvements portion of that — calculated separately — came in at 3 percent, instead of the 3.5 percent city officials had expected.
“The impact of the parks borrowing will be less than the 25 (cents per $1,000) that we had anticipated,” Knapp said.
But not significantly less.
The city made it clear in the run-up to the referendum that approving the additional borrowing for park improvements would raise taxes by $0.25 per $1,000 of equalized value, or $25 on a $100,000 home.
The reduced interest rate will probably put that figure at about $0.2425 per $1,000, Knapp said.
The city increased its self-imposed debt limit to allow for the additional borrowing; something that still would have been necessary even giving the better-than-expected terms of the bond issuance.
The city previously did not have a resolution on the books limiting its debt, but has had a policy that its debt would be capped at 80 percent of what the state says it could borrow. The policy is laid out in the budget approved each year by city officials, stating the city’s debt limit should be 20 percent more stringent than the state mandate.
The state mandates a municipality’s debt cannot be more than 5 percent of its assessed value, which means the city was holding itself to about 4 percent of that amount.
The resolution adopted by the Common Council in April allows the city to go as high as 85 percent of the state debt limit, or roughly 4.5 percent of its assessed value.
The parks borrowing will fund improvements at three parks.
At Franklin Park, the improvements will include an amphitheater for music, movies and community events; public restrooms, and pavilion space available for public rental; a water fountain with benches and trees for visual interest; parking, electrical, landscaping and infrastructure to accommodate community events; walkways, picnic tables and benches; and space for a future playground.
At Smalley Park, plans call for a park pavilion with restroom facilities and a rentable picnic shelter; a canoe and kayak launch; boat landings and boat slips; improved parking, lighting and security; walking trails that connect all of the major park features; trees and other native plantings, including native plantings along the waterway to deter geese; and continued revitalization of the beach and the improvement of beach amenities.
The plan also call for replacement of the wading pool at Memorial Park with a splash pad.