The future of a $20 million plan to build a new hydroelectric power plant on the north bank of the Kansas River is now in the hands of big city bankers and financiers.
City commissioners on Tuesday approved the issuance of $23.7 million in industrial revenue bonds for the Lawrence-based Bowersock Mills & Power Company’s project to expand its power plant operations. Now comes the critical part: Bowersock officials have to find buyers for the bonds.
And, no, Lawrence residents likely won’t be able to help much.
“We’ve had tons of people calling us from the community wanting to buy our bonds, and we wished it worked that way but it doesn’t,” said Sarah Hill-Nelson, a co-owner of Bowersock.
Instead, the bonds have to be sold to “qualified institutional buyers,” which means groups like mutual fund companies, investment banks and other large financial organizations.
The bonds must be sold by the end of the year in order to take advantage of some financing available as part of the federal stimulus program. Hill-Nelson said that within the next two weeks the company’s financial advisers should have a good idea of whether they’ll find buyers for the bonds.
“They’re going to hit it really hard after the Thanksgiving holiday,” Hill-Nelson said. “By the middle of next week, we should know how the market is going to treat it.”
City commissioners on Tuesday night did their part to help the project.
The city agreed to issue the industrial revenue bonds, but did so on the condition that the city has no responsibility in paying off the bonds if Bowersock is unable to do so.
By going through the city, Bowersock is expected to qualify for a lower interest rate.
The city also agreed on a 4-0 vote — Commissioner Mike Dever was absent — to a low-cost lease allowing Bowersock to build the new power plant on city-owned property between the north end of the Bowersock Dam and the Kansas River levee.
The city agreed to lease the property to Bowersock for $10 a year through 2077. Parts of the area, though, will still be open to public use. The Bowersock project includes a new area for public fishing and dock for canoes.
In other news, commissioners:
• Agreed to new contract with Hamm’s Quarry that raises the city’s landfill rates by 3.5 percent in 2011. The city already has increased its trash rates to account for the higher fees.