Mason City council approves sale of general obligation bonds at a very low interest rate

MASON CITY — The City Council in Mason City this week approved the sale of over $6.8 million in general obligation bonds to finance capital improvement projects for this fiscal year.

Maggie Burger of Speer Financial of Waterloo oversaw the bidding process, which saw eight bids, with the lowest bid coming from UMB Bank of Kansas City at a true interest rate for the ten-year bonds of 0.6773%.  “Over the length of maturity of this bond of $6.845 million, you will only pay $272,074 in total interest. That is a pretty remarkable low number in interest accrual for that amount of bonds sold.”

Burger says the interest rate is one of the lowest she’s ever seen.   “You may have set a new record low at Speer Financial for a ten-year bond. I don’t believe that we’ve had one this low. We had one at about 0.72% last week, but this probably sets our new record for ten-year bonds.”

Burger says Mason City’s bond rating is AA3, which is important to most portfolios. She says the city’s financial report shows Mason City is in a good financial position.  “It talks very kindly about how the city does have a solid financial profile and that you have ample revenue raising ability, and you ended your June 30th 2020 with a general fund surplus, which is always something they like to recognize. You have great fund balances, which they are very happy with, and you do pay back 78.5% of your debt in the next ten years that is related to general obligation debt.”

Among the biggest projects in the capital improvement plan are a paving project for South Monroe Avenue as well as the purchase of a new fire engine.