City to offer municipal bonds to Lawrence residents to support fire truck purchase
Lawrence residents will soon be able to purchase municipal bonds to back a major purchase for Lawrence-Douglas County Fire Medical.
The city expects to sell $654,000 of bonds through a new “minibonds” program that allows residents to directly purchase bonds to fund infrastructure in their city. The city will use the bonds to purchase a new fire truck, and Finance Director Bryan Kidney said the idea is to make the bonds more accessible.
“We are able to sell directly to citizens in the community that are interested in investing in city bonds,” Kidney said.
The bonds will also be sold in smaller increments. All municipal bonds previously sold by the city were sold in denominations of $5,000 or more, but the program allows increments of $1,000. Previous sales also required the use of a brokerage firm or investment adviser, Kidney said.
Lawrence was one of five cities chosen nationwide to participate in the minibonds program offered by Neighborly Securities, a new public finance and underwriting firm from San Francisco. Cities were selected based on community impact, credit ratings and community engagement, and the projects selected will have their bond issuance fees waived by Neighborly.
Kidney said he applied for the Neighborly program because residents often ask him how they can purchase City of Lawrence bonds.
“They see us issuing literally millions of dollars each year in tax-exempt debt in bonds, and so I get that question a lot: ‘How can I also invest in these bonds?'” Kidney said.
But the answer isn’t necessarily a simple one. Kidney explained that a lot of the city’s bonds are issued in large blocks by insurance companies or large banks that hold onto them.
“You just can’t call up a bank and say give me a $5,000 City of Lawrence bond,” Kidney said. “It’s not as easy to purchase as an individual retail investor; you just have to do some work to get there.”
In addition, the city typically does an open bid for bonds, but the Neighborly bonds will be a negotiated sale. Kidney says the city may consider doing other community bond issues in the future, depending on how the issuance goes.
“If this goes well and I’m comfortable with how the market rates were derived, then I would recommend that we could use this again in the future,” Kidney said.
The city will publish the Preliminary Official Statement regarding the bonds Tuesday, and the statement will be available on the city’s investor relations website. Residents who are interested in buying the bonds will need to create an account through Neighborly.com. Neighborly Securities representatives will be at City Hall from 6 to 8 p.m. May 3 to provide assistance and discuss the bond process.
The coupon interest rate on the bonds will be announced May 4, and the bond sale will take place May 4-8.