Willmar City Council issues $5 million in bonds for sales tax projects
To fund the Invest in Willmar Local Option Sales Tax projects at Robbins Island and Swansson Field, the Willmar City Council approved taking on $5 million in additional debt, through the issuance of $5 million in general obligation sales tax revenue bonds. The bonds will be paid back using revenue from the local option sales tax, but give the city an advance on the funds so that project construction can go forward.
WILLMAR — To make it possible for the city of Willmar to begin construction on the six Invest in Willmar local option sales tax projects, taking on debt in the shape of general obligation sales tax revenue bonds will be a necessity.
At the Nov. 16 meeting, the Willmar City Council approved the first issuance of bonds, $5 million worth to fund the projects at Robbins Island Regional Park and Swansson Field Recreation Complex.
"These are funding the first two projects of the six sales tax projects," said Doug Green, director from bakertilly Municipal Advisors.
The Robbins Island project will receive $3 million for the infrastructure improvements, including a new road and parking lots. Construction has already begun on that project. The remaining $2 million will go toward a new playground and spectator amenities at Swansson Field.
The bonds will be paid off using revenue from the voter-approved 0.5 percent increase in the city's sale tax. As of October, the city is estimating the tax will raise approximately $2 million a year.
The council also had to decide whether it wanted to issue the bonds through the public or private market. Going the private route would allow the city to work with local financial institutions, as well as pay approximately $68,000 less in financing costs, freeing up more money for construction up front.
However, Green said the interest rates on the private market were running higher than on the public market. He said the city would save approximately $200,000 in interest costs over the 12-year life of the bond going through the public market.
"It is a subject to consider," Green said.
After a brief discussion, the council decided to issue the bonds through the public market, due to the interest rate savings.
The city will most likely have to issue bonds again for future sales tax projects, such as the new recreation fields and center near the Willmar Civic Center. All totaled the six projects — Robbins Island, Swansson Field, Willmar Community Center, recreation field, recreation center and stormwater improvements — are estimated to cost $30 million.
The sales tax, which was approved in 2018 and collection began in October 2019, has another 12 years on it. Revenue collection has been under initial estimates of $250,000 a month, which also means total revenue at the end of the local option sales tax might not cover the entire costs of the projects. The Invest in Willmar board, along with its project subcommittees, have been working on project plans and ideas on how to fund them completely.