The Board of Education of the St. Clair R-XIII School District approved the sale of a $9.7 million general obligation bond issue to its municipal bond underwriter, L.J. Hart & Co. of St. Louis.
“We appreciate the strong vote of confidence we received from local patrons at the election and want to lock in reoffered yields that are the best in more than 60 years,” said David Berkel, president of the school board, at the Aug. 27 meeting.
The new money general obligation bonds are a portion of the $12.8 million approved by 64 percent of the voters at the June municipal election.
The bond proceeds will be used to add safety and security enhancements district-wide, construct a performing arts auditorium, remove existing modular classrooms and complete other repairs and improvements.
The bond marketing process provided local financial institutions the first opportunity to invest. Tom Pisarkiewicz, president of L.J. Hart and Co., said Farmers and Merchants Bank purchased $500,000 of the debt; Sullivan Bank, $650,000; United Bank of Union, $1.5 million; Bank of Washington, $250,000; and First State Community Bank, $1 million.
“It is good that our marketing procedures facilitated this local involvement while still receiving attractive pricing for the bonds,” said St. Clair Superintendent Dr. Kyle Kruse.
The board 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 on current conditions in the municipal bond market.
Kruse said the district compared proposed interest rates with the national bond indexes and other Missouri issues with a similar rating quality sold at negotiated sales to be certain that the reoffered yields for the bonds were comparable.
The bonds are scheduled to mature on March 1, 2023 through March 1, 2040 with reoffered yields ranging form 0.60 percent to 1.05 percent.
The district is selling $500,000 of the bonds maturing on March 1, 2023 and March 1 , 2024 at an interest rate of 2 percent with yields ranging from .60 percent to .65 percent and a reoffered premium of $20,162.50.
The district is also selling $185,000 of the bonds maturing on March 1, 2029 at an interest rate of 3 percent with a yield to the call date of 0.85 percent to produce a reoffered premium of $17,427.
The district is likewise selling $9,015,000 of the bonds maturing on March 1, 2030 through March 1, 2040, at an interest rate of 5 percent with yields to the call date ranging from 0.90 to 1.05 percent to produce a reoffered premium of $1.6 million.
These additional funds are to serve as a cushion in the event the construction bids exceed estimates.
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.
The bonds carry a “AA+” rating from S&P Global due to the district’s participation in the State of Missouri Direct Deposit Program coordinated through the Missouri Health and Educational Facilities Authority.
Proceeds from the financing are expected to be available to the district by Sept. 10, 2020, and will be reinvested by the district to earn additional interest for use in the completion of the projects.
The legal documents to complete the bond issue were prepared by Lori Lea Shelley of Lathrop GPM in its role as bond counsel for the district.