The Van-Far R-I Board of Education approved the sale of $2,161,000 General Obligation Bond Issue to its Municipal Bond Underwriter, L.J. Hart & Company, of St. Louis during their special meeting held on May 12.
“We appreciate the vote of confidence we received from local patrons at the election and want to lock in interest rates that are highly favorable,” said Van-Far Board President Christy Nelson.
These new money General Obligation Bonds were approved by about 77.11% of the voters at the April 7, 2015 election, for the purpose of providing funds to complete facility improvements including addition of an Early Childhood facility, upgrades and elimination of current pod classrooms, parking lot repairs and replacement, classroom and exterior door upgrades, and other remodeling and repair improvements to the existing facilities of the District.
According to Brad M. Wegman, Assistant Vice-President with the firm, the Community State Bank purchased $450,000 and the American Bank acquired $100,000 of the bonds to support the district.
Superintendent Dr. Stephen Hunter mentioned that he was pleased efforts were made to accommodate local investors.
“It is nice that our marketing procedures facilitated this local involvement while still receiving attractive interest rates,” Dr. Hunter commented.
The Board of Education selected the negotiated sale of the bonds in order to capture current market conditions, to be certain that local individual investors and banks received an opportunity to purchase the bonds, and because the proposed interest rates were fair based upon current conditions in the municipal bond market.
Dr. Hunter said the district did compare proposed interest rates with the national bond indexes and other comparable Missouri issues with a similar rating quality sold at competitive and negotiated sales to be certain that rates for the District’s bonds were favorable.
“Based upon pricing of these other financings on May 12, 2015, the date firm rates were proposed to the District, and the national indexes for AA rated General Obligation Bonds our rates were as good as or better than some public sales and other negotiated sales for a similar quality level of bond issue,” Dr. Hunter said.
According to L.J. Hart & Company, the bonds are scheduled to mature on March 1, 2017 through March 1, 2035 with reoffered yields ranging from 0.80% to 3.42%. L.J. Hart & Company sold $1,300,000 of the bonds with a reoffering premium that produced about $107,523 of additional funds for the projects, which is very useful in case the construction bids exceed the architect’s projections.
The Board of Educa-tion complimented Dr. Hunter and L.J. Hart & Company for arranging the bond payments and pricing structure to produce the extra funding without the need to increase the debt service fund levy.
“We are especially pleased to have the strong support from the Community State Bank and the American Bank for our bonds,” Nelson concluded.
The interest income from the bonds is exempt from federal and state of Missouri income taxes and the bonds were available in $5,000 denominations. These bonds carry a “AA+” rating from Standard & Poor’s Corporation due to the District’s participation in the State of Missouri Direct Deposit Program coordinated through the Missouri Health and Educational Facilities Authority.
The bonds do contain optional redemption (call) provisions on March 1, 2020 at no penalty that will facilitate the reduction of future interest expense in the event of prepayment or a future refunding to lower rates if market conditions make it economically feasible.
The financing proceeds are expected to be available to the District by June 9, 2015 and will be promptly reinvested by the District to earn additional interest for use in the completion of the projects.
The legal documents to complete the issuance of the bonds were prepared by E.J. Miller, Esq. of Mickes Goldman O’Toole, LLC in its role as bond counsel for the District.