WILLMAR -- The Willmar City Council has approved the financing process for the Municipal Utilities' two wind turbines.
The council Tuesday night voted to adopt an ordinance that will allow the issuance of $8,730,000 in utility revenue bonds to finance most of the project. The bonds will be repaid with revenue from utility rates. The remaining cost of the project is being paid with nearly $3 million from the utility's generation reserve account.
Doug Green, assistant vice president of Springsted Incorporated of St. Paul, the city's financial consultant, said his firm will use a negotiated process to obtain the best interest on the bonds, instead of using the traditional competitive bidding process in which the underwriter with the lowest interest rate is selected.
Green said the negotiated process will be used due to current market conditions.
"This is a unique time in the market and the market dictates -- for this particular kind of issue -- that you get much better results for the city if we negotiated," said Green.
He said investors at this time prefer safe investments such as municipal general obligation bonds, which are repaid with revenue from property taxes.
He said municipal utilities cannot have a general obligation backing and those bonds are not as attractive to the general market at this time.
"That requires us to go to underwriters and negotiate a process and see who understands electric utilities and Willmar's regional economy and we can ensure that we get a better deal for the city right now," Green said.
In response to a question, Green said Springsted will send out seven to eight requests for proposals to banks. The proposals are to be returned on Feb. 24. He said the banks will be interviewed and an underwriter will be selected, he said.
Bruce Gomm, Willmar utilities general manager, said he will be watching the new federal stimulus package very closely for any financial opportunities for "green" energy projects such as wind turbines.
Each turbine will be capable of generating up to 2 megawatts of power. Construction of the turbine foundations and the access roads at the site located north of Willmar Senior High School began last November and was completed.
The timetable calls for the pieces of the units to arrive in early June. There are eight major pieces per machine: three blades, four sections of tower and turbine on top. Erection should last through June and into July.
Wes Hompe, staff electrical engineer with the Willmar Utilities, said in an interview that the utility hopes to have the turbines running by the end of July.
The project had been discussed and studied since 2006.