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Mauston Mayor Brian McGuire, left, and and Richard Noe, council president, review the terms and conditions of the revenue bonds to help pay for sewer and water portions for2017-18 street projects.

ERICA DYNES/Star-Times

Mauston is set to fund a number of upcoming street and sewer projects.

Mauston unanimously approved to issue revenue bonds for its 2017-18 sewer and water projects at its Sept. 26 meeting.

“If we feel like we have cash balances in these funds and we want to pay it off early we can,” said Nathan Thiel, city administrator, said.

The 2017 street projects include improvements to Hickory, Vine and Genevieve Streets as well as Pine, Prairie, and Washington Streets are near completion with the 2018 project will be done on Suszycki Drive. The closing date on the bonds is Oct. 12. Thiel said there are no plans to increase the water and sewer rates because of the debt.

“Instead of doing two issues and paying the cost of issuing two bonds sometimes municipalities what we will do is we will issue a bond between two projects,” Thiel said.

Thiel said the city saw a need for the projects because Washington and Prairie Street needed improvements to asphalt and the water and sewer systems infrastructure were in poor shape.

“As far as the funding we couldn’t just pay for this out of our current cash balances,” Thiel said. “We do debt service in order to cover those projects.”

Sean Lentz, senior municipal advisor/director for Ehlers, a financial services firm, said the sewer utility system revenue bonds will be $1.4 million for the sewer utilities projects and $1.41 million for a water system bond to fix water mains. Both bonds have an interest rate of 3.3 percent over a twenty year period.

“They payments over that twenty year period, should you choose not to pre-pay at all, it would be about $95,000 to $97,000 a year in principal and interest paying that issue back over the twenty year term,” Lentz said about the sewer bond.

The water projects will be getting some assistance from TIF district number two with a $770,000 water system revenue bond expected to pay back the water utility project at a 1.5 percent interest rate over a five-year period.

“We needed money to cover for the water project and we could’ve basically gotten a larger debt service on just the water side but we knew that TIF owed water (fund) money,” Thiel said. “Instead of pulling it (the money) from the water fund we’ll let the TIF pay back the water fund by issuing the rest of some debt to pay it back.”

With the $770,000 water system bond also at a pre-payable basis, Lentz said the city could put additional funds towards the bonds to save additional money.

“If by chance the tax increment district was able to pay the water utility back faster should the revenues be available more than what we are expected at this time this note is also pre-payable at the city’s digression and you could allocate those dollars,” Lentz said.

Refinancing old debt

The council unanimously approved to refinance old debt from 2012 by issuing a $2.6 million tax increment revenue bond.

The bond will carry a 1.5 percent interest rate for five-years for tax increment district three to refinance a balloon payment originally due later this year. In 2012, Mauston issued debt with TIF number three with the schedule making a balloon payment, or a lump sum, of $2.8 million at the end of the five years.

According to Thiel, the city set the schedule this way to keep as much funds available as possible for capital projects and developer incentives.

“What we are proposing to do is extend the balloon payment for a five-year period and use projected tax revenue from district number three to pay the new debt on this note, the $2,685,000 note, over the next five-years,” Thiel said.

Other business

The council unanimously approved to install an additional street light on Maine Street and west of Division Street.

Contact Erica Dynes at 608-393-5346 or on Twitter @EDynesSports.