The Lake County Board of Commissioners have unanimously approved the purchase of a general obligation capital improvement bond to continue construction on the new highway maintenance facility.

The county purchased a bond for approximately $1.4 million with an interest rate of 2.69 percent, which the county will repay with more than $382,000 of interest over a 15-year term.

Originally, the principal amount set for this bond was $1.48 million, but the principal amount was reduced due to a premium bid from the winning bidder, Atlanta-based IFS Securities.

"Because IFS submitted a premium bid, that is to say that they basically paid the county about $80,000 to buy the bond, they paid the county more than what the par amount of the bonds are and that allowed us to then reduce the bond size," Chris Mickelson, financial specialist for Ehlers, the company that assisted the county with the bond sale, said during the county board meeting Tuesday, Feb. 26, in Two Harbors.

Mickelson said this premium and the three competitive bids, ranging in interest rates from 2.69 to 4.59 percent, were good signs for the county's financial standing.

"We saw more competitive bids than we were expecting," Mickelson said. "And that can save the county roughly $10,000 a year in payments compared to what we'd predicted."

Ehlers predicted yearly payments around $128,000, but most payments are "in the ballpark" of $119,000.

The highway facility, a $8.6 million, nearly 54,000-square-foot building currently under construction, will replace the old facility that was damaged by a fire in December 2016 and was demolished by the Lake County Highway Department in April 2018.

After more than a year of negotiation between the county and its insurer, Minnesota Counties Intergovernmental Trust, there was a settlement for more than $1.7 million in damage to the building. Instead of repairing the building, the county chose to invest the settlement in building a new facility instead of repairing a structure that was nearly 60 years old and no longer met the needs of the department.

The county bonded for $2.7 million last spring and is using $3.7 million in state aid construction funding to help finance the building. This bond will finance the remainder of the construction.