The Monett R-1 Board of Education voted at its April meeting to refinance its lease purchase agreement on the high school and combine it with a new agreement to cover construction at Monett Elementary School.
The lease purchase deal authorized the sale of $2,715,000 Lease Refunding and Improvement Certificates of Participation. Proceeds from the certificates will provide approximately $2 million of funding to supplement the $4.5 million in general obligation bonds approved by the voters on April 6, 2010. The bonds are for construction and furnishing of additional classrooms to the elementary buildings.
The remaining proceeds will be used to refinance the existing Series 1998B and Series 2004 bonds. According to Superintendent Dr. John Jungmann, the move will save the district approximately $87,271 in interest payments paying agent fees.
Refinancing will provide total savings to the district of $3,522,336 over the past 18 years of the bonds, and includes prior refundings, prepayments and participation in the Qualified School Construction Bond and Qualified Zone Academy Bond programs.
"This plan consolidates our existing lease financings and maintains our present payment structure while taking advantage of the lower interest rates currently available in the municipal bond market." Jungmann said.
L.J. Hart and Company, of St. Louis, prepared the financing proposal. Larry J. Hart, president and chief executive officer of the firm, attributed the success of the financing in part to the purchase of certificates by Central Trust Bank, Community National Bank and Empire Bank.
Edward Jones and Company also assumed responsibility for some of the certificates, which are available to local individuals.
R-1 Board President Dr. Jerry D. Roberts said he was pleased that efforts were made to accommodate the local individuals and banks.
"It is nice that our marketing procedures facilitated this local involvement while still receiving attractive interest rates," Roberts said.
The school board selected the negotiated sale of the certificates in order to capture current market conditions. The move enabled certain local banks to receive an opportunity to purchase the certificates.
According to Hart, the certificates are scheduled to mature on April 15, 2012 ,through April 15, 2031, with reoffered yields ranging from 0.75 percent to 5.0 percent. The certificates carry an "A" rating from Standard & Poor's Corporation (S&P) and the District has an "A+" issuer credit rating from S&P based on evaluation of its overall credit worthiness.
The certificates contain the option to buy back and refinance or retire the debt on April 15, 2016, at no penalty. The option provides a way to reduce future interest expense in the event of prepayment or a future refunding to lower rates if market conditions make it economically feasible.
Hart complimented Jungmann and Board Secretary Patty Leach for their prompt and thorough preparations to supply the data necessary for the official statement and credit assessment with Standard and Poor's. He commended the R-1 Board as well for its foresight in making the Series 1998B and Series 2004 Certificates callable within five years.
The closing for the financing is to occur on May 5.
"It is nice to complete the funding for the elementary projects at attractive interest rates and be able to save $87,271 on interest expense and fees that can be otherwise used in our overall educational program," added Mark Coatney, R-1 board vice president.