The first general obligation bonds, totaling $9.995 million, will be sold in the coming weeks to fund a full-scale rebuild of U.S. 54 through Iola.
Dave Arteberry of Stifel Financial explained to Iola City Council members Monday the protocol for the rebuild, which could total as much $20 million, when accounting for water utility relocations and added sidewalks and other amenities for pedestrians.
Council members approved Arteberry’s suggestion of a two-phased bond sales, the first phase for a shade under $10 million — a pivotal number, it turns out — and a second, estimated at about $4.6 million a year from now.
The two-phased bond structure carries multiple benefits, Arteberry explained.
Because neither will reach the $10 million threshold, it means those bonds will have an added tax incentive to purchase by local banks, which equates to a slightly lower interest rate for the city.
More importantly, the gives the city a better handle of the project’s final price tag, which up to now, has been pretty much speculative
“We don’t yet know what the final project cost is going to be for the road,” he said. “If you were to go out and issue all of the bonds right now … you could end up having a situation where the bond issue is not sized properly, where you’ve got leftover money, or you need more money for the project.
“By the time that second bond comes along hopefully you’ll have a much better idea of what the project cost is going to be,” Arteberry said.
The initial cost breakdown is about $15.5 million for the road improvements, $4.13 million for the water system changes, and another $200,000 in bond issuance costs, bringing the projected price tag to about $19.8 million.
Council members approved the bond sales resolution. Arteberry said the bonds will be sold in March.
The bonds will be paid off over the next 25 years using sales tax revenues. Arteberry projected annual bond payments of about $957,000.
The city also received a $4.2 million grant from the Kansas Department of Transportation to make the route more walkable and bike-friendly, with such things as added cross walks, handicap ramps and signals.
The project is projected to begin in April or May, with substantial completion forecast for the fall of 2026.
