City council approves temporary financing for North Sixth Street project
On Monday night, the Baldwin City Council moved one step closer to beginning the North Sixth Street Project.
The city council unanimously approved a temporary note issue for the principal amount of $2,325,000, which will be used to pay the beginning costs of the project. It will gave the city cash to pay for the start of the project before it issues bonds after the project is complete.
“It's like a two-year loan,” Baldwin City Administrator Chris Lowe said Wednesday. “Temporary notes are typically used to get cash in your hand. We know we're going to issue bonds on this project. We don't know what the final project costs are going to be, but we need the cash.”
The North Sixth Street Project is slated to begin in early 2012. It is a reconstruction project of Douglas County Road 1055 from U.S. Highway 56 north one mile to Douglas County Road 12.
It will widen County Road 1055 to three lanes, adding a turn-lane in the middle, along with adding curbing and sidewalks on the east and west sides of the road. The project will also reconstruct the the intersection of Ames and Sixth Street.
Greg Vahrenberg from Piper Jaffrey came to Monday's meeting to explain the financial side of the project to the city council. The two-year temporary note will be in the amount of $2,325,000 with a 1.5 interest rate.
He explained how the temporary note worked and that it will be the first step in the financial side of the project. Vahrenberg said the city will be selling bonds to pay for the rest of the project. Last week, Baldwin City was given an “A” rating for bonds, according to Vahrenberg.
“The temporary note issue provides financing during the construction of the improvements,” Vahrenberg said. “Then we will work with you to determine the final amount of the construction costs and then you can convert that to a long-term bond issue.”
Douglas County is splitting the cost of the project with Baldwin City. The county will be paying for $1.9 million, while Baldwin City will pay $2.3 million of the $4.2 million project. However, Baldwin City will be paying for the sidewalks. The project is expected to begin early in 2012.