Mitchell City Council OKs $13.9M in tax bondingThe bonds will pay for $6.5 million in improvements and renovations to the Corn Palace, $2.6 million for a new city hall, $2.5 million for a second ice rink at the Mitchell Activities Center and $2.3 million for upgrades to the Mitchell Public Library.
By: Tom Lawrence, The Daily Republic
The Mitchell City Council voted unanimously Monday night at City Hall to issue $13.9 million in sales tax bonds for four major projects.
The bonds will pay for $6.5 million in improvements and renovations to the Corn Palace, $2.6 million for a new city hall, $2.5 million for a second ice rink at the Mitchell Activities Center and $2.3 million for upgrades to the Mitchell Public Library. The money will be in hand by January, with the city pledging to pay back $16.9 million over a 20-year period.
The next step is final plans and budgets for the four projects. These steps come as Mayor Ken Tracy marks three months since he took office.
Tom J. Grimmond, senior vice president of Dougherty & Company LLC, of Sioux Falls, which is handling the bonding for the city, said the firm will sell $10 million in bonds in late November or early December, and the remaining $3.9 million in January.
That’s because the city can only issue $10 million annually in bank-qualified bonds, which means the bond holders will be able to write off federal taxes on the bonds, which makes them more attractive.
He said 10 to 20 percent of the bonds will be purchased by Mitchell banks and people, he said, with up to 80 percent of them remaining in the state. Bonds are bought in $5,000 increments, Grimmond said, and some people might want to buy one to say they own a Corn Palace bond.
Councilman Mel Olson asked if Mitchell will get a favorable interest rate.
“Do they recognize we are a thrifty, Midwestern community?” Olson said.
Grimmond said investors like bonds from this region.
“We do get a little bit of a bump,” he said.
If the city projects come in under $13.9 million, the city will “still be on the hook” for that amount and must borrow it if the bonds have already been issued, Grimmond said.