The Shell Rock River Watershed District board on Tuesday unanimously approved awarding the sale of $1.94 million in limited tax bonds to R.W. Baird, a capital marketing company headquartered in Milwaukee.

The resolution passed 4-0, with Mick Delger, Brad Kramer, Gary Pestorious and Dan DeBoer voting in favor of the resolution. Board managers Joe Pacovsky, Al Bakken and Mike Hanson were not present at the meeting.

The resolution provided for the issuance and sale of the bonds and levying a tax for the payment. The proceeds of the bonds will be used, together with any additional funds of the district, to finance the first contract for the dredging of Fountain Lake.

“We had selected Baird a while back because they have greater experience than others in selling limited tax obligations, and we thought their experience and their general thoughts with regard to how this would be marketed were better than most,” said Shannon Sweeney of David Drown Associates Inc., a financial consultant firm out of Minneapolis.

Throughout the credit rating process, the district received an “A” credit rating from Standard & Poor’s, a financial services company headquartered in New York, which Sweeney said was what he considered a good result. Once the credit rating was in-hand, an interest rate could be established in sale of the bonds. The net effective interest rate on the bonds was established at 2.89 percent for the district.

Sweeney said the offer made by Baird fell within the parameters resolution, so Baird executed a bond purchase agreement. The bonds were sold with a reoffering premium, meaning the underwriter paid more than the asking price, which results in additional funds being available. He said this is a typical outcome under current market conditions.

“This credit report is used in marketing the bond’s potential investors — they rely on these credit rating reports pretty heavily with regard to making investment decisions,” Sweeney said. “The result was what we were hoping for.”

Sweeney, who has been working with the district for several months throughout the process of obtaining a credit score, presented the approved resolution.

In July, Sweeney presented a resolution to the board that approved the issuance of up to $1.94 million of limited tax bonds if certain parameters are met, which ultimately authorized the board chairman, Dan DeBoer, and the district administrator, Brett Behnke, to execute a bond purchase agreement at an acceptable fixed interest rate prior to Tuesday’s meeting.

By taking this action in July to approve the parameters resolution, David Drown Associates Inc. had more leeway with a timeline to purchase the bonds, as well as to “garner a better price in the marketplace.”

The award resolution presented to the board Tuesday reaffirmed the action taken by DeBoer and Behnke earlier this month.

Following the execution of a bond, the board was then able to pass the resolution Tuesday that ratified the bond purchase agreement.