ROBERT PIERCE
• Leader & Times
Last Monday, Seward County commissioners moved forward with a bond issue Administrator April Warden said is now nearly complete.
The commissioners approved unanimously a bid from Piper Sandler & Company of Minneapolis, Minn., one of 11 bids received for the sale of $6.105 million in general obligation bonds to help the county with several road projects.
Seward County has been working diligently to put together a five and 10-year road plan that began with the hiring of the civil engineering firm, Kirkham Michael & Associates, to assist in reviewing county roads both gravel and asphalt.
Warden said in an interview Wednesday, a core sampling of all asphalt roads was completed, as was prioritizing what roads needed attention based on their current state, traffic and utilization.
Beginning in 2024, commissioners set a goal of addressing 10 miles of overlay a year. However, Warden said due to timing and the bid process to find contractors who could fit the work in, no bids were received to complete the work in 2024.
Earlier this year, the county bid out an overlay project to cover 28 miles of asphalt roads.
“During strategic planning, budget preparation, budget work sessions and public hearings, it was determined the most cost-effective means to build and repair roads and remain revenue neutral was to get a bond issue to pay the costs of the needed overlay project,” Warden said.
Warden added she feels it is important for the public to understand the cost associated with simply completing a small amount of mileage.
“We’re taking out a $6 million bond project to cover 28 miles of road,” she said.
In October 2024, Resolution 2024-13 was adopted and signed by the commission, and 60 days was given for written protest against the issuance of the bonds of the projects. This came after the resolution was published for three consecutive weeks, and Warden said there was no written protest received.
“The bond issue didn’t have to go to a vote of the people, but they had a protest period in which they could do that,” she said.
The road projects addressed by the bond issue include:
• Road R – U.S. Highway 54 to U.S. Highway 160
• Meade Lake Road – Hwy. 54 to Meade County line
• V Road – Meade Lake Road to Hwy. 54
• Road 16 – T Road to Kismet Main Street
• Kismet Main Street – Hwy. 54 to Road 16
• Road J – Road I to Kansas Highway 190
• Larabee Road – Oklahoma stateline to Hwy. 160
After the protest period, county officials circulated the preliminary official statement, and on Jan. 6, the commissioners adopted the bond sale resolution approving the sale of the General Obligation Bonds Series 2025.
Jan. 15, the summary notice of bond sale was forwarded to the Kansas Register and the Leader & Times, and Jan. 20, county officials had a due diligence conference call with S&P Global Rating.
Jan. 23, a preliminary official statement was finalized, and a bond sale summary was published and sent to potential bidders. At Monday’s meeting, Brett Shogren of Stifel Financial, the county’s bond consulting firm, said S&P gave Seward County an AA-minus rating, the same rating received for a past expansion project for Southwest Medical Center.
“That was a good result,” he said. “We used that rating to advertise the sale for potential underwiters, banks and purchases.”
Shogren said everyone was excited to see the 11 bids the county received with true interest costs, or TICs, ranging from 3.255909 to 3.374888 percent. He added, though, issues were seen with the premiums on the bonds.
“A premium is additional proceeds, extra cash above the underwriter spread to enhance their bid, make it more attractive,” he said. “In this case, Piper Sandler out of Minneapolis, Minn., was the best bid at 3.55092 percent. They bid a premium of $468,677.30.”
Shogren said at the direction of the county commission and staff at a previous meeting, the size of the bond issue was reduced by about that premium amount to lower the interest cost as much as possible, meaning the county pay less interest due to a lower interest amount.
“As a result, you’ll have sufficient funds to pay your $6 million road project,” he said. “We’re only issuing $5,660,000 in bonds. These are 10-year general obligation bonds, and the average debt service with this result will be $733,918 annual.”
As required by law, Shogren said the county received a 2 percent good faith deposit from Piper Sandler amounting to $122,100.
“If they were to go broke or go bankrupt in between now and closing, you’d have damages to start this process again,” he said. “That’s never happened since I’ve done these, so I wouldn’t worry too much abut it. The other approximately 98 percent will arrive on the closing date of Feb. 26 The bond resolution has been prepared by your bond counsel, Gilmore & Bell in Wichita.”
Along with the bid, commissioners likewise approved a bond resolution, and Shogren said the printed bonds will be ordered, and a transcript will be submitted to the Kansas Attorney General’s office for approval before bonds are sent to the Kansas State Treasurer’s office.
Finally, on Feb. 21, the bonds will be shipped to the Depository Trust Company, and the bond closing will be Wednesday, Feb. 26.
Shogren said Stifel evaluates bids based on TIC, and this calculates the time value of money.
“A dollar today is worth more than a dollar 10 years from now, and the biggest weight on general obligation tax exempt bonds like this is the premium,” he said. “That’s because they factor in that you get that cash upfront, and there’s two ways to use it in this type of situation. The only situation that really applies to you being a public entity with tax exempt bonds is you can use that premium to reduce the size of the issue down by that premium and offset that higher interest cost, and that’s exactly what we did with Piper Sandler’s bid. If you do that same methodology with Country Club Bank’s bid, if you reduced the size of their issue by their $305,000 premium, Piper Sander’s true debt service cost would be about $6,000 less, and that’s why the true interest costs are really close.”
Shogren said this is offset by issuing fewer bonds.
“That’s why we can fund a $6.1 million project with only $5.66 million in bonds,” he said. “It does flow through that way, but offset that higher interest cost by reducing the principle.”
