Sturgeon Bay to Borrow $2.44 Million at 3.09%

The City of Sturgeon Bay has locked in an interest rate of around 3.09% to borrow money over the next 10 years for a series of capital-improvement projects.

The Sturgeon Bay Common Council approved a resolution last week to award the sale of up to $2.445 million in general obligation promissory notes.

The financing plan calls for $95,000 in principal to be borrowed over five years, with the remaining $2.35 million borrowed over 10 years.

Items included on the list to borrow money over five years include patrol-boat motors and riding lawn mowers.

Projects listed for 10-year financing include municipal services parking-lot pavement; brush-truck replacement; squad-car replacement; annual road improvements; a skid steer loader; a one-ton dump truck; a heavy-duty plow truck with a dump box; Highway 42/57 intersection improvements; annual expenses for alleys and parking lots; roof, soffit and fascia work at Memorial Field; work at Little Lake; a water-weed truck; and work at the library.

Brad Viegut of Baird, which put together the city’s financing plan, appeared before the council to provide the borrowing details. Four bids were submitted for issuing the notes.

Viegut said Bernardi Securities submitted the lowest interest rate at 3.0938%, with two others submitting bids less than .1% higher.

“These rates are slightly higher than what I had presented back in April,” he said. “At that meeting, the rate used for projection planning purposes was 2.85%, so this 3.09% is just a little higher than what was presented then.”

Municipal borrowing rates continue to increase, which is why the city opted to borrow now rather than in October, when it usually sells bonds for capital improvements.

When interest rates dipped to historic lows following the onset of the COVID-19 pandemic in 2020, the city borrowed money at less than 1% annually.

Viegut said the final payment on the notes would be made in 2031, with the amount of debt service paid for by the tax levy increasing from around $1.5 million this year to about $1.655 million in 2023.

When factoring in interest costs minus the bid premium the city is receiving, he said the total amount is $2,978,306 to repay the notes.

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