The Van-Far R-I School Board approved a measure during a special meeting last week that will result in a net savings of $224,791 to the district.
Board members unanimously approved a resolution authorizing the issuance and sale of the Series 2017 General Obligation Refund Bonds.
The sale of the $1.7 million bonds came at an average interest rate of around 2.24%, this compared to the Series 2015 Refunded Bonds that had an interest rate of 3.86%.
The more than $220,000 decrease in future interest expense will shorten the final repayment period by five full years. This is an improvement of $15,487 from what was presented in the November 16 board meeting.
In further examination, the $224,791 plus the approximate savings of $424,409 from the Series 2009 refunding and three prepayments means the district has saved about $649,200 of interest expense since 2009.
“This plan achieves nice savings and shortens our repayment schedule by five full years, while preserving considerable flexibility for the district in the future,” said Van-Far Superintendent Dr. Stephen Hunter.
This means that, according to a press release, the district could have more savings due to the 2017 Refunding Bonds having a call feature in 2022 at no penalty to Van-Far R-I.
The levels locked in are almost one and a half percent (1.44%) lower than they were in 2015.
L.J. Hart & Company, of St. Louis, prepared the refunding proposal and explained how it can fit into the long range plans of the district.
Brad M. Wegman, Vice-President of the firm, said the three significant factors making the Series 2017 refunding possible were the lower interest rates in 2015, the fact that the Series 2015 Bonds are subject to prepayment on March 1, 2020 at no penalty, and the district’s ability to participate in the State of Missouri’s Direct Deposit Program.
This program helps the district receive an “AA+” rating from Standard & Poor’s Corporation on the refunding bonds.
Wegman complimented Superintendent Dr. Hunter for his prompt and thorough preparations to supply the data necessary for the rating application and official statement, as well as the board of education for their foresight in making the Series 2015 Bonds callable in five years.
The proceeds from the Series 2017 Refunding Bonds will be placed in an escrow account with the UMB Bank of Kansas City, Mo. and reinvested in U.S. Treasury Securities. The earnings from the escrow account meet the interest payments on the Series 2017 Refunding Bonds through March 1, 2020 and prepay the callable Series 2015 Bonds on March 1, 2020.
The Series 2017 Refunding Bonds were underwritten by L.J. Hart & Company.
The Central Bank of Audrain County also purchased $125,000 of the bonds, which is helpful for the success of the refinancing.
The closing for the Series 2017 Refunding Bond issue is December 28.
Many district patrons may choose to commend Superintendent Dr. Hunter and the L.J. Hart & Company for developing the attractive refunding plan.
In total, $224,791 of taxpayers’ money is being saved and the total savings is boosted to around $649,200.