City Completes $10 Million Borrowing For Drexel Ave. Projects
City officials say borrowing money to finance the Drexel Avenue widening and its contribution to the new Drexel Interchange will be done with low interest rates.
The Oak Creek Common Council authorized borrowing $6 million for the Drexel Avenue reconstruction project and $4.6 million for its contribution to the Drexel Interchange, and it got some good news on the way.
City officials trumpeted Moody's Rating Service giving Oak Creek the highest rating possible for the reconstruction project and the second-highest rating available for the Drexel Interchange.
The ratings impact the interest rate the city pays on the debt it issues. In general, the better the bond rating, the lower the interest rate.
"These are two very excellent ratings that helps keep the city's interest rate exposure low," Finance Director Mark Wyss said.
Moody's said the "city's financial operations are expected to remain sound" and cited operating surpluses in each of the past two years.
The Drexel-related debt will be repaid through utility aid the city gets from hosting the We Energies power plant.
"None of the debt service on these two issues … will be paid for from tax levy from the citizens of Oak Creek," Wyss said. "It will all be handled by this utility aid."
Money to repay the Drexel Interchange debt could also come from tax increment generated from new development, as the area is part of a tax-incremental financing district.
Mayor Steve Scaffidi said the interchange and widening represent an investment in the city's future.
"The reason why we are investing is to improve infrastructure so we can develop that area," he said. "We start from a very healthy financial position and (the Moody's ratings) can only make this even better."
The two Drexel Avenue projects were among the priorities Oak Creek laid out in a capital financing plan approved last fall. The plan spelled out how the city would use the roughly $3 million it gets each year from hosting the power plant.
Both the reconstruction and interchange are expected to be completed by the end of the year.