The Montgomery County R-II School District approved the sale of the $8,000,000 general obligation bond issue to its municipal bond underwriter, L.J. Hart & Company of St. Louis, during a regular meeting on May 9.

“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 the current rate environment,” R-II Board President Maria Stille said.

These new money general obligation bonds were approved by about 73.32 percent of the voters at the April 2 election for the purpose of providing funds for new HVAC units, classroom remodeling, new windows, lighting, parking lot paving and other improvements to existing facilities of the district.

The bond marketing process provided the first opportunity to invest to local financial institutions and according to Brad Wegman, Senior Vice President of L.J. Hart & Company, Peoples Savings Bank purchased $1,450,000. This strong local support was very helpful to the success of the financing.

“It is nice that our marketing procedures facilitated this local environment while still receiving attractive interest rates,” R-II Superintendent Dr. Tracy Bottoms said.

The Board of Education selected the negotiated sale of the bonds in order to capture current market conditions, 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 bonds market. Dr. Bottoms stated that the district did compare proposed interest rates with the national bond indexes and other Missouri issues with a similar rating quality sold at competitive and negotiated sales to be certain that rates for the district’s bonds were favorable.

“Based upon 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,” Dr. Bottoms said.

The information shared by L.J. Hart & Company indicated that the bonds are scheduled to mature on March 1, 2040 through March 1, 2044 with reoffered yields ranging from 3.85% to 4.10% which calculates an effective interest rate of 3.99% and produces additional funds for the projects in the amount of $344,226.50. 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 a “AA+” rating from S&P Global due to the district’s population in the State of Missouri Direct Deposit Program coordinated through the Missouri Health and Educational Facilities Authority.

The bonds do contain optional redemption (call) provisions on March 1, 2029 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 financial proceeds are expected to be available to the district by May 30, 2024 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 Lori Lea Shelley, Esq., of Lathrop GPM in its role as bond counsel for the district.