SEQUIM –– City officials say Sequim’s first-ever construction bonds came at a lower cost than expected during initial sales after the bonds went on the market last Thursday.
The bonds will fund construction of a new 34,000-square-foot City Hall and police station.
Elray Konkel, the city’s administrative services director, said the bonds came with an interest rate of 4.53 percent, below the 4.9 percent the city and its financial advisors had anticipated.
That means, Konkel said, the city will save $440,000 in interest over the 30-year term of the bonds.
In total, the city will receive $10,439,000 from the bonds.
The city’s annual debt payments will stay under the council-set limit of $660,000. The council had authorized the issuance of up to $11 million in bonds.
Local banks First Federal and Sound Community Bank were active purchasers in the bond sale, Konkel said.
The bonds were marketed by D.A. Davidson’s Port Angeles office.
“The AA- rating that the city received by Standard & Poor’s was critical in getting the bonds sold quickly and at these good rates,” Konkel said.
Representatives of the city met with analysts from Standard & Poor’s in San Francisco on July 12 in a two-hour presentation on the city’s management structure, financial policies, financial history and current financial status.
The analysts recommended the AA- rating to a national review panel based on the presentation.
In total, the new City Hall is expected to cost about $15 million.
$15 million City Hall
The city has spent $1.6 million in buying property and for consultants. Another $3.4 million will be taken from the city’s cash reserves.
Utility funds will be tapped to pay for portions of the building that will be used to house utility departments.
The bonds will be repaid from several sources: $225,000 from a public safety tax approved by voters in 2012, which raised the city sales tax by 0.1 percent; $200,000 from elimination of current rent for city office space, including the police station inside the Sequim Village Shopping Center at 609 W. Washington St.; $75,000 from the real estate excise tax; and $160,000 from current excess budget capacity.
The City Council recently approved three design and construction teams to submit their designs for the new City Hall and police station.
The designs are expected to be complete in the fall.
Sequim citizens will have an opportunity to provide input prior to a final decision on which team will be awarded the project.
Construction is expected to begin in early 2014 and be completed in 2015.