The Board of Education of the Holden R-III School District of Johnson County, Missouri approved a parameters resolution at a regular meeting on November 8, 2021, that authorized a final terms committee consisting of Tonyea Inglis, Board President, Dr. Mike Hough, Superintendent, and Larry J. Hart, CEO of L.J. Hart & Company.
The resolution approved the sale of $3,435,000 General Obligation Refunding Bonds to its Municipal Bond Underwriter, L.J. Hart & Company of St. Louis, Missouri, within certain reoffering yield ranges.
On December 2, 2021, the final terms committee was able to lock in interest rates for the Series 2021 Refunding Bonds with reoffering yields ranging from 0.40 percent to 1.15 percent to constitute a new effective rate of 0.84 percent, compared to the average combined interest rate of 2.44 percent for the Series 2015 and Series 2017 Bonds being refunded.
Through this refinancing, the District reduces future interest expense by $151,633, which is $14,579 above the savings figures presented at the November 8, 2021 meeting, and shortens the final repayment period by two full years.
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.
This $151,633, plus the savings of $2,136,313 from previous refundings and prepayments means that the District has saved $2,287,946 of interest expense since 1996.
The Superintendent of Schools, Dr. Mike Hough, 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.
It also preserves considerable flexibility for the District in the future for building improvements with no-tax rate increase opportunities,” Dr. Hough remarked. Brad Wegman, Vice-President, and Dr. Wesley Townsend, 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.
They mentioned that the three significant factors making the Series 2021 refunding attractive were the lower interest rates than in 2015 and 2017, the fact that the Series 2015 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. Mr. Wegman complimented Dr. Hough 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 2015 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.
The F&C Bank agreed to purchase $750,000 and the Central Trust Bank of Warrensburg has committed to $535,000 of the Bonds.
The closing for the Series 2021 Refunding Bond issue is to occur on December 20, 2021.
Dr. Hough stated that 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 F&C Bank and Central Trust Bank,” Dr. Hough commented.