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by Patty Cheffey
The the Palmyra R-I board of education approved a resolution at a regular meeting on Nov.14, 2023 that authorized the sale of $3,170,000 general obligation refunding bonds to its municipal bond underwriter, L.J. Hart & Company of St. Louis, Mo.
The Series 2023 refunding bonds have reoffering yields ranging from 4.05 to 4.25 percent to constitute a new effective rate of 4.22 percent compared to an average interest rate of 5 percent for the Series 2019 Bonds being refunded.
The Series 2019 Bonds were originally sold at premiums that produced $370,508 of additional funds for the projects.
Through this refinancing, the district reduces future interest expense by $484,965.
This is the result of the recent improvement in the current municipal bond market as well as the good name of the district in the municipal bond credit market:
This $484,965 new interest savings plus the savings of $4,503,979 from previous refundings and prepayments means that the district has saved $4,988,944 of interest expense since 1993.
Superintendent Jason Harper, expressed support for the refunding option selected by the board.
“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 Wegman, Vice President of L.J. Hart & Company of St. Louis, Mo., prepared the refunding proposal and explained how it can fit into the long-range plans of the district.
Wegman said the three significant factors making the Series 2023 refunding attractive were the recently improved interest rates, the fact that the Series 2019 Bonds are subject to prepayment at no penalty on March 1, 2024, 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 “M+” rating from S&P Global on the refunding bonds.
Wegman complimented Harper 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 2019 Bonds callable in five years.
The Series 2023 Refunding Bonds will also have a five-year call feature of March 1, 2029 at no penalty.
The Series 2023 Refunding Bonds were made available to local financial institutions as part of the marketing procedure.
The HNB National Bank has agreed to purchase $300,000, and HOMEBANK has committed to $500,000 of the bonds as well.
The closing for the Series 2023 refunding bond issue is to occur on Dec. 5, 2023.
Harper 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,” he said. “We appreciate the support of HNB National Bank and HOMEBANK.”
Several board members commended Harper and L.J. Hart & Company for developing the refunding plan.
“We are glad to be able to save $484,965 of our taxpayers’ money by taking advantage of the recently improved bond market conditions,” said Joe Knochel, board president.