The Warren County R-III School Board has approved a financing plan to acquire the building owned by a company that had been providing early childhood special education programs to the district.
The board approved the sale of $580,000 Lease Certificates of Participation through its municipal bond underwriter L.J. Hart & Company, of St. Louis, for the acquisition of the building owned by United Services following a public hearing held June 14.
The building is located off of Veterans Memorial Parkway West near the Market Street Plaza at its June 14 meeting.
United Services has occupied the building for the past two years, providing outsourced early childhood special education to 3- and 4-year-old children. The company recently announced that it will no longer provide services in Warren County.
Superintendent Dr. Thomas Muzzey said that after United Services announced its intention to leave, everything fell into place for R-III to acquire the building and step in to provide services in a “seamless way.”
Muzzey said the total cost of the deal was $700,000, significantly under an earlier asking price of close to $1.4 million. The primary revenue source for the repayment of the lease certificates will be a grant from the state of Missouri’s Department of Elementary and Secondary Education (DESE) which will reimburse the entire principal cost of the building over eight years, according to district officials.
“This is a very favorable deal for the district and our community,” said Muzzey, noting that United Services had completed a “beautiful” $300,000 build-out, leaving the district with very little to do in order to move in and take over.
Currently, 4,000 of the building’s 11,800 square feet are utilized, leaving ample room for expansion at some point down the road, noted Muzzey.
“This was an amazing opportunity for us, enabling the district to acquire the building for around $150,000 after the grant from DESE,” said Muzzey.
The district anticipates closing on the property this month.
Muzzey said that currently about 55 young children are enrolled in the program’s extended school year that is held through June. He anticipates fall enrollment will increase to about 70 students. Two groups of children receive pre-school education at the former United Services facility — developing students and those who may need focused developmental attention such as speech therapy.
“The more our community can prepare children for kindergarten, the better their chances are for success throughout their education,” said Muzzey.
In a statement, L.J. Hart noted that the certificates were offered to local institutional investors. Purchasing all of the certificates were The Missouri Bank, First State Community Bank and FMB Bank.
Muzzey said he is pleased efforts were made to accommodate investors from the community.
“It’s nice that this effort facilitates local involvement while enabling attractive interest rates,” he said.
The school board selected the negotiated sale of the certificates to capture current market conditions. School officials said they wanted to be certain local individual investors and banks had the opportunity to purchase the certificates and that the proposed interest rates were fair based upon current conditions in the municipal bond market.
To ensure that rates for the district’s certificates were favorable, the district’s Chief Financial Officer Pam Frazier said the district compared proposed interest rates with the national bond indexes and other comparable Missouri issues with a similar rating quality sold at negotiated sales.
“Based upon pricing of these other financing (deals) on June 14, 2012, the date firm rates were proposed to the district and the national indexes for A rated leases, our rates were as good as or better than other negotiated sales for a similar quality level of lease issue,” Frazier explained.
The certificates are scheduled to mature on April 15, 2013, through April 15, 2020, with yields ranging from 0.75 percent to 2.25 percent. The certificates carry an “A” rating from Standard & Poor’s, and the district has an A+ issuer credit rating from S&P based on evaluation of its overall credit worthiness.
The certificates contain an optional redemption (call) provision on April 15, 2014, 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 this economically feasible.
Muzzey said a letter to parents with more information about the district’s plans for the early childhood special education program will be distributed soon.