Mt. Pleasant finalizes sale of bonds for water well project

At last week’s meeting, the Mt. Pleasant City Council finalized the sale of just over $2 million in bonds to pay for the Cedar Lane well project, the construction of a new city water well.

The city sold the bonds on behalf of Mt. Pleasant Municipal Utilities.

The council approved a loan agreement with the utility, which will pay the city for the bonds out of water revenue.

Earlier this month, the utility’s General Manager Jack Hedgecock said that the agreement between the two entities was a way to save money on interest.

“Because of the way the city leverages grant money, they have kind of an ongoing bond already,” Hedgecock said. “They’re out getting bonds and loans all the time, and their bond rating is very good.”

The principal on the bonds totals $1.965 million, which was lower than originally expected.

The sale of the bonds generated a premium — where buyers pay a higher-than-par price for the bonds, usually because of the issuer’s high credit rating — of $92,000.

The effective interest rate on the bonds is 1.77 percent, and the life of the bonds is 20 years.

The total cost of the project is just over $3 million.

The utility and the city collaborated on a $1.1 million grant from the Iowa Economic Development Authority for the project.

“We had to work through the city, as an entity, to apply for the grant,” Hedgecock said.

Hedgecock said that the project is on schedule to begin by Sept. 26 and be completed by July 2022.

The grant stipulates that it must be completed by Sept. 26, 2023, so there is some leeway in the project timeline in case there issues arise.

“When you drill a hole 2,000 feet deep, you don’t know what you’re going to hit,” Hedgecock said.