The City Council approved two small bond sales last night. We sold $3,120,000 of General Obligation equipment certificates to Morgan Keegan & Company of Memphis, Tennessee. The bonds are sold at auction to the offer with the lowest True Interest Cost (TIC). Morgan Keegan offered the lowest TIC for these notes yesterday at 3.77182%. There were six bidders who submitted bids for our bonds. The highest TIC offered was 4.1213%.
We also sold $1,845,000 of General Obligation improvement bonds yesterday as well. Wells Fargo purchased these bonds for a TIC of 4.22198%. There were three other bidders who submitted proposals. The highest bid was 4.460596%.
General Obligation equipment certificates are used to finance new equipment, such as fire trucks, expensive computer software, etc. General Obligation improvement bonds are used to finance construction projects for City projects, such as street, water and sewer projects. The term “General Obligation” means the bonds are ultimately a general obligation of the City of Eden Prairie, which means the City will impose a property tax on its tax payers in order to pay the debt service for the bonds. That’s good security these days. These bonds are very safe. That’s one of the reasons we can still sell them, even in this market.
In this time of economic turmoil across the globe, we weren’t so sure that yesterday was the best time for the City to sell municipal bonds. The sale went just fine. The rates and terms are good. Our projects will proceed as planned.
