Ash Grove R-4 saves $161K on bond refunding

The Board of Education of the Ash Grove R-IV School District established a final terms committee consisting of Dr. Aaron Gerla, superintendent, Bill Duncan, board president, and Larry J. Hart, CEO of L.J. Hart & Company at a regular meeting on Nov. 30, 2020 by authorizing a parameters resolution. It approved the sale of $1,955,000 General Obligation Refunding Bonds to its Municipal Bond Underwriter, L.J. Hart & Company of St. Louis, within certain reoffering yield ranges.
Subsequently on Dec. 14, 2020, the Final Terms Committee authorized the final sale of the Refunding Bonds with reoffering yields ranging from 0.40 percent to 0.90 percent to constitute a new effective interest rate of 2 percent, compared to the average interest rate of 2.34 percent for the Series 2013 Bonds being refunded.
The district reduces the future interest expense by about $161,839, which is an improvement of $18,970 from previous conservative projections of the Nov. 30, 2020 meeting. It is the result of the extremely strong current municipal bond market that is producing historically low interest rates. This $161,839, plus the approximate savings of $1,529,913 from previous refundings and prepayments, means that the district has saved $1,691,752 of interest expense since 2009.
Superintendent of Schools Dr. Gerla expressed enthusiasm and support for the refunding option selected by the board of education.
“This plan achieves significant savings and allows the district to capture better conditions in the municipal bond market for the benefit of our taxpayers. It also preserves considerable flexibility for the district in the future for building improvements with several no tax increase opportunities,” Dr. Gerla said.
Tom Pisarkiewicz, president of L.J. Hart & Company of St. Louis, prepared the refunding proposal and explained how it can fit into the longrange plans of the district. Pisarkiewicz mentioned that the three significant factors making the Series 2021 refunding attractive were the lower interest rates than in 2013, the fact that both the Series 2013 Bonds are subject to prepayment at no penalty on March 1, 2021, and the district’s ability to participate in Missouri’s Direct Deposit Program. This program makes it possible for the district to receive a “AA+” rating from S&P Global on the refunding bonds.
Pisarkiewicz complimented Gerla for his prompt and thorough preparations to supply the data necessary for the official statement, as well as the board of education for their foresight in making the Series 2013 Bonds callable in five years. The Series 2021 Refunding Bonds will also have a five year call feature of March 1, 2025 at no penalty.
The Series 2021 Refunding Bonds were made available to local financial institutions. The closing for the Series 2021 Refunding Bond issue is to occurred on Jan. 5, 2021. Several board members commended Gerla and L.J. Hart & Company for developing the attractive refunding plan.
“It is excellent to be able to save $161,839 more of our taxpayers’ money by taking advantage of the most favorable conditions in the municipal bond market in over 60 years,” said Board President Duncan.