NS Board Approves General Obligation Bond Refunding
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The North Shelby Board of Education approved a resolution at a special meeting Tuesday, March 9, 2022 that authorized the sale of $950,000 General Obligation Refunding Bonds to its Municipal Bond Underwriter, L.J. Hart & Company of St. Louis, Missouri. The Series 2022 Refunding Bonds have reoffering yields ranging from 1.15% to 1.75% to constitute a new effective interest rate of 1.58%, compared to an average interest rate of 3.56% for the Series 2017 Bonds being refunded. Through this refinancing, the District reduces future interest expense by $81,916. It is the result of the current municipal bond market that is producing low interest rates. This $81,916 plus the savings of $313,454 from previous refunding and prepayments means that the District has saved $395,370 of interest expense since 2003.
NS Superintendent Kim Gaines, expressed enthusiasm and support for the refunding option selected by the board.
“This plan achieves good 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 no-tax rate increase opportunities,” Gaines remarked.
Erin McManus, Senior Analyst, and Connor Brickler, Analyst of L.J. Hart & Company of St. Louis, prepared the refunding proposal and explained how it can fit into the long-range plans of the District. They mentioned that the three significant factors making the Series 2022 refunding attractive were the lower interest rates than in 2017, the fact that the Series 2017 Bonds were subject to prepayment at no penalty on March 1, 2022. These bonds carry an “A+” rating from S&P Global based on evaluation of its overall credit worthiness. McManus complimented Gaines for her 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 2017 Bonds callable in five years. The Series 2022 Refunding Bonds will have a four-year call feature of March 1, 2026 at no penalty.
The Series 2022 Refunding Bonds were made available to local financial institutions as part of the marketing procedure. Community State Bank in Shelbina has agreed to purchase $270,000 of the Bonds. The closing for the Series 2022 Refunding Bond issue is to occur on March 16, 2022. Gaines stated she was pleased efforts were made to accommodate local investors. “It is great that our marketing procedures facilitated this local involvement while still receiving attractive interest rates and we appreciate the support of the Community State Bank,” Gaines commented.
Several board members commended Gaines and L.J. Hart & Company for developing the at-tractive refunding plan.
“We are glad to be able to save $81,916 of our taxpayers’ money by taking advantage of some of the more favorable conditions in the municipal bond market,” stated Scot Shively, President of the Board of Education.