Local News: Scott County R-4 School District approves sale of $ 6.5M bonds (5/13/22)

BENTON, Mo. – The Scott County R-4 “Kelly” Board of Education at its regular meeting on May 10 approved the sale of a $ 6.5 million general obligation bond issue to its municipal bond underwriter, LJ Hart & Co. of St. Louis, Missouri.

“We appreciate the strong vote of confidence we received from local patrons at the election and want to lock in interest rates that are still favorable in a rising rate environment,” said David Brashear, president of the R-4 Board of Education.

These new money general obligation bonds were approved by about 76.42 percent of the voters at the April 5 election. The proceeds will mainly be used to install a secure vestibule, complete renovations at the Middle School, to replace the High School gym bleachers and to install field lighting for the baseball / softball fields.

The bond marketing process provided the first opportunity to invest in local financial institutions, and according to LJ Hart & Company, the Bank of Advance purchased $ 1.5 million, Alliance Bank acquired $ 350,000, and the First Midwest Bank of Dexter bought $ 1,325 million of the bonds.

This strong local support was very helpful to the success of the funding, according to LJ Hart.

“It is nice that our marketing procedures facilitated this local involvement while still receiving attractive interest rates,” Superintendent Dr. Bradley Kolwyck said.

The Board of Education selected the negotiated sale of bonds in order to capture current market conditions in a rising interest rate environment, to be certain that local 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, according to LJ Hart.

Kolwyck said the district did compare proposed interest rates with the national bond indexes and other Missouri issues with similar rating quality sold at competitive and negotiated sales to be certain that rates for the district’s bonds were favorable.

“Based on pricing of these other financings, 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,” Kolwyck said.

The information shared by Thomas J. Pisarkiewicz, president of LJ Hart & Co., indicated that the bonds are scheduled to mature on March 1, 2026, through March 1, 2042, with re-offered yields ranging from 2.60 percent to 3.25 percent. The district is selling the bonds with an interest rate of 4.00 percent to the March 1, 2027, call date, which produces additional funds as a re-offering premium for the projects in the amount of $ 241,502.00. 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 an “AA +” rating from the S&P Global due to the District’s participation in the Missouri State Direct Deposit Program coordinated through the Missouri Health and Educational Facilities Authority.

The bonds do contain optional redemption (call) provisions on March 1, 2027, 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 May 26 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 Rick McConnell, Esq. of Armstrong Teasdale LLP in its role as a bond counsel for the district.

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