The Jefferson City Council recently sold $2.46 million in general obligation bonds.

The original price tag for the bond was $2.54 million, but the Council approved the sell of $2.46 million to First Bankers’ Banc Securities from St. Louis, Missouri. City Financial Advisor Tim Oswald said there were five bidders and all of them overbid the total amount so that the bidder can get a higher interest rate, and it was in the best interest of the Council to approve the highest purchase price to maximize the bond proceeds. The purchase price was $2,550,895, with an interest rate of 2.63-percent. 

City Administrator Mike Palmer says the City received the same value on $2.46 million as they would’ve gotten from $2.54 million, with a savings of about $90,000. Now that the Council has sold the bonds, the City will be taking on additional debt, which Palmer says will increase the debt service levy. The current levy rate is $2.10 per $1,000 of property valuation. Starting in the 2022 fiscal year, the levy is estimated to increase to $2.53, but then slowly come back down. Palmer describes how property valuations can also be a factor.

“That’s all based on assuming our valuations of properties stay the same over the next few years. If the valuations go up, the rate doesn’t need to go up very much because those new valuations will offset that.”

We’ve previously reported that the bonds are for essential and non-essential equipment and projects. Along with using bonds to pay for additional projects and equipment, while also replenishing the City’s general fund for money spent on some of the items, the City will also use other sources of revenue. Those include tax increment financing and money collected from the bond premium.