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Brownton City Council approves bond issues for project funding

The Brownton City Council approved three resolutions at its June 5 meeting to provide financing for its street and utility improvement project.
Shannon Sweeney of David Drown Associates, the city’s financial consultant, presented three different bonds for approval: one temporary bond to finance the project until United States Department of Agriculture (USDA) Rural Development financing kicks in, one for street work that does not qualify for USDA financing, and a third for utility improvements not funded by USDA.
The lion’s share of the financing was for $4.72 million in temporary general obligation utility revenue bonds, for a term of 21⁄2 years at an interest rate of 2.75 percent. Sweeney said those bonds will finance the project until the USDA funding becomes available, typically after the project is substantially completed.
Mayor Norm Schwarze asked why the city couldn’t submit the bills to the USDA as they come in, since the Rural Development loan is at a lower interest rate.
Sweeney said it is the Rural Development standard to not reimburse payments until the project is complete, and said he had asked the same question of a USDA representative.
“Even they don’t really know,” said Sweeney. But he pointed out that the bond is for a very short period of time, so the city will not really be paying that much in interest.
For more from the council meeting, see the June 13 print edition of The Chronicle.