The Clearwater City Council voted Wednesday to issue General Obligation Improvement Bonds in the amount of $1,085,000 to finance the Southeast Area Street Improvement Project.

 

The council had a lengthy discussion about the term of the bonds. Three scenarios were presented by Northland Securities for financing options: 10, 15 and 20 years. The council opted for a 20-year term to make debt service payments lower.

 

“Part of the reason they  did the 20 (years) is because they know we have other projects coming up,” said Administrator Kevin Kress.

 

The city is planning to run a new water main under I-94. The council is also discussing construction of a major stormwater system along Co. Rd. 75 to divert water from the Wellhead Protection Area. Both those projects might require bonding. The city is currently paying debt service on bonds from 2002, 2003, 2008 and 2015.

 

Kress said the council also discussed paying off the new 20-year bond early. But the city would have to find money for that pre-payment.

“They want to look at paying it off early, which means they would have to tax higher or increase water and sewer rates - however they are going to put extra funds into the bond payment,” said Kress.

 

The bond that was just approved by the council carries an average interest rate of 2.81%. Total debt service over the 20-year term is $1,444,273. The average annual debt service payment is $75,824. But that amount is lowered by property assessments for the project. So the average annual levy is $56,956.

 

Based on current tax capacity figures, a home valued at $75,000 would pay $14.15 in additional taxes per year. A $200,000 home would pay $56.82.

 

A commercial/industrial property valued at $250,000 would pay an additional $133.59 a year. A business property valued at $750,000 would pay an additional $447.93 annually.

 

An 80-acre non-homestead agricultural property with a value of $6,000 per acre would pay $150.88 in additional taxes a year.

 

Kress said the city would receive the proceeds from the bonds in July. Debt service payments would begin in 2020.