CASSVILLE R-IV SCHOOL DISTRICT APPROVES GENERAL OBLIGATION BOND REFUNDING WITH A NET SAVINGS OF ABOUT $1,000,892
At the October meeting of the Cassville R-IV School District Board of Education on October 13, 2016, a Refunding Bond Resolution was approved that established a final terms committee consisting of John Sullivan, Board President, Jon Horner, Board Treasurer, Dr. Richard Asbill, Superintendent of Schools, and Larry J. Hart, President and CEO of L.J. Hart & Company, for the purpose of setting the interest rates on the refunding bonds once the Standard & Poor’s Corporation rating became available. On October 25, 2016 the final terms committee was able to lock in the interest rates to “refinance” the 2014 bonds; the $4,000,000 General Obligation Refunding Bonds achieved an average of about 2.47%, compared to the remaining Series 2014 Bonds which carry an average interest rate of approximately 4.33%.
The District was able to move quickly when the very strong municipal bond market became enhanced by “Brexit”; which is the acronym describing the vote of the United Kingdom to withdraw from the European Common Market. The District reduces the future interest expense by about $1,000,892 and shortens the final repayment period by two full years from the original Series 2014 Bonds. Dr. Asbill expressed enthusiasm and support for the refunding option selected by the Board of Education. “This plan achieves good savings, and provides an opportunity for the District to plan and meet the future fiscal needs of the District. In addition, the strategic planning allows the Cassville School District to be in a better situation to present no tax increase building proposals when needed to our patrons,” Dr. Asbill remarked.
The Board President, Mr. Sullivan, pointed out that the $1,000,892 of interest savings for the Series 2016 refunding is not all the District may realize due to the Series 2016 Refunding Bonds having a call feature in March 1, 2021 at no penalty. “If interest rates are lower in 2021 or later, we can take advantage of that. Meanwhile we are locking in these levels that are almost two percent (1.86%) lower than they were in 2014,” stated Mr. Sullivan. L.J. Hart & Company of St. Louis, Missouri prepared the refunding proposal and Brad M. Wegman, Vice President of the firm, explained how it can fit into the long range plans of the District. Mr. Wegman mentioned that the three significant factors making the Series 2016 refunding possible were the lower interest rates than in 2014, the fact that the entire $4,000,000 of the Series 2014 Bonds are subject to prepayment on March 1, 2019, 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 an “AA+” rating from Standard & Poor’s Corporation on the refunding bonds. Mr. Wegman complimented Dr. Asbill 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 2014 callable in five years.
The Proceeds from the Series 2016 Refunding Bonds will be placed in an escrow account with the UMB Bank, N.A. and reinvested in U.S. Treasury Securities. The earnings from this escrow account meet the interest payments on the Series 2016 Refunding Bonds through March 1, 2019, and prepay the callable Series 2014 Bonds on March 1, 2019. The Series 2016 Refunding Bonds were underwritten by L.J. Hart & Company. The Security Bank of Southwest Missouri acquired $360,000, First State Bank of Purdy purchased $1,380,000, and UMB Bank, N.A. bought $445,000 of the bonds to support the District, according to L.J. Hart & Company. The closing for the Series 2016 Refunding Bond issue is to occur on November 30, 2016.
Dr. Asbill commended the board of education members and L.J. Hart & Company for acting on the local patrons behalf and approving the attractive refunding plan. “Our Board of Education members are committed to making sure that Cassville School District continues to be progressive and strategic in meeting the needs of our teachers, students, and patrons”, said Dr. Asbill. “It is nice to be able to save our local patrons just over one million dollars ($1,000,892) of our taxpayers’ money for the Series 2016 Bonds and shorten the length of the financing by two full years, while also receiving strong local support from the community banks,” commented Becky Henningson, Vice President of the Board of Education. The legal documents to complete the issuance of the bonds were prepared by Lori Lea Shelley, Esq. of Mickes O’Toole LLC in its role as bond counsel for the District.