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The Board of Education of the Palmyra R-I School District approved a parameters resolution at a regular meeting on Oct. 12, 2021, that authorized a final terms committee to sale $7,775,000 in general obligation refunding bonds.
The committee, consisting of Oneta Crowe, board president; Kirt Malone, R-I superintendent; and Larry J. Hart, CEO of L.J. Hart & Company; to sell the bonds to its municipal bond underwriter, L.J. Hart & Company of St. Louis, Mo., within certain reoffering yield ranges.
On Oct. 28, 2021, the final terms committee was able to lock in interest rates for the Series 2021 Refunding Bonds with reoffering yields ranging from 0.35 percent to 1.10 percent to constitute a new effective rate of 0.87 percent, compared to the average interest rate of 2.68 percent for the Series 2016 and Series 2017 Bonds being refunded.
Through this refinancing, the district reduces future interest expense by $615,178, which is $12,567 more than what was presented at the board of education meeting on Oct. 28, and shortens the final repayment period by one full year.
It is the result of the extremely strong current municipal bond market that is producing nearly historically low interest rates as well as the good name of the district in the municipal bond credit market, according to L.J. Hart & Comapny.
The District previously captured $1,646,548 of savings with the Series 2016 and Series 2017 Refunding Bonds that, respectively, refinanced the Series 2011A and Series 2014 Bonds.
This $615,178 plus the savings of $3,888,801 from previous refundings and prepayments means that the District has saved $4,503,979 of interest expense since 1998.
Malone expressed enthusiasm and support for the refunding option selected by the board of education.
“This plan achieves significant savings and allows the district to capture better conditions in the municipal bond market for the benefit of our taxpayers,” he said. “It also preserves considerable flexibility for the District in the future for building improvements with no-tax rate increase opportunities.”
Brad M. Wegman, vice president of L.J. Hart & Company, prepared the refunding proposal and explained how it can fit into the long-range plans of the district.
He said the three significant factors making the Series 2021 refunding attractive were the lower interest rates than in 2016 and 2017, the fact the Series 2016 and Series 2017 Bonds are subject to prepayment at no penalty, and the district’s ability to participate in the State of Missouri’s Direct Deposit Program.
This program makes it possible for the District to receive a “AA+” rating from S&P Global on the refunding bonds.
Wegman complimented. Malone for his prompt and thorough preparations to supply the data necessary for the official statement, as well as the board of education for their foresight in making the Series 2016 and Series 2017 Bonds callable in five years.
The Series 2021 Refunding Bonds will have a five year call feature of March 1, 2026 at no penalty.
The Series 2021 Refunding Bonds were made available to local financial institutions as part of the marketing procedure.
Hannibal National Bank has agreed to purchase $1,000,000, HOMEBANK has committed to $950,000, and United State Bank acquired $250,000 of the bonds as well.
The closing for the Series 2021 Refunding Bond issue is to occur on Dec. 2, 2021.
Malone said he was pleased efforts were made to accommodate local investors.
“It is great that our marketing procedures facilitated this local involvement while still receiving attractive interest rates, and we appreciate the strong local support from the HOMEBANK, United State Bank and Hannibal National Bank,” Malone said.
Several board members commended Malone and L.J. Hart & Company for developing the attractive refunding plan.
“We are glad to be able to save $615,178 of our taxpayers’ money by taking advantage of the most favorable conditions in the municipal bond market in over 60 years,” said Crowe.