In government parlance, “special meeting” defines a gathering that is outside the usual schedule of a governing body.

The Litchfield City Council’s meeting May 8 fit the traditional definition, but it might just as well have received the “special” designation for the topic of discussion. After all, it is not often the city has the opportunity to save more than $800,000 over a 20-year period.

“I think this is a moment (for) just a little bit of celebration,” City Administrator Bruce Miller told council members.

The city will save about $860,000 in interest payments on $9.98 million in electric utility bonds issued last week to finance construction of an electric power generation plant.  

The plant will be part of a “Quick Start” generation agreement between the city and Southern Minnesota Municipal Power Agency to provide up to 10 megawatts of electricity to the power grid on an as-needed basis.

The interest savings will be due in large part to the strong bond ratings the city earned from financial analysts Moody’s Corp. and Standard & Poor’s.

While Litchfield and its financial consultant Ehlers & Associates traditionally seek credit ratings from Moody’s, Miller said, “through some brilliant strategy” the city also sought a rating from Standard & Poor’s.

Moody’s already had rated Litchfield at an A3, or low credit risk. Believing that another good rating could make the city even more attractive to investors, Miller said, staff and Ehlers consultants also went to Standard & Poor’s, who never had rated the city. It turned out to be the right move, as the “second opinion” rated Litchfield an A-minus, on the same level as the Moody’s rating.

“We celebrated quite a bit with that rating,” Miller said. “Whatever those things they saw about Litchfield, they saw enough good things to give an A-minus.

“This is a large, critical project and I think everybody has teamed up really well, and I think it has been structured about as well as it could be structured,” Miller added.

John North of Ehlers told the City Council that the Standard & Poor’s rating was based on a numberof factors including: a broad manufacturing base that contributes to a nonresidential electric customer base of more than 60 percent of system revenues; the fact that the bond issue would respresent all of the electrical system’s long-term debt; and Litchfield’s current low electric rates.

Along with the solid ratings, the city was helped by Ehlers strategy, according to Stacie Kvilvang. Where most bond bidding is conducted Mondays and Tuesdays, Ehlers consultants decided they “didn’t want to place Litchfield within a pool of high traffic,” so the city’s electric bond bidding was scheduled for a Thursday.

The strategy worked, Kvilvang said, as the auction drew four bids. Wells Fargo posted the lowest bid with a true interest cost of 4.1465 percent. Original estimates, made in early April, set the true interest cost for the $9.98 million in bonds at 4.9433 percent. The difference between the estimate and actual sale result totaled $862,431 in interest payments.