The Board of Education of the Gallatin R-5 School District of Daviess County at a regular meeting on Aug. 13 approved the sale of $790,000 lease certificates of participation to its municipal bond underwriter, L.J. Hart & Company of St. Louis. These certificates are for the purpose of funding the site development, construction, equipping, and furnishing of an addition to the middle school building.
According to Dr. Bruce A. Johnson, vice preside of L.J. Hart & Company, BTC Bank bought $645,000 of the certificates. The certificates were also offered to other local institutional and individual investors.
R-5 Superintendent Dr. Bryan Copple commented that he was pleased efforts were made to accommodate investors from within the local community and surrounding area.
“It is nice that our marketing procedures facilitated this local involvement while still receiving attractive interest rates,” he said.
The board selected the negotiated sale of the certificates in order to capture current market conditions, to be certain that local individual investors and banks received an opportunity to purchase the certificates, and because the proposed interest rates were fair based upon current conditions in the municipal market.
Brice Terry, president of the R-5 board, stated that the district compared proposed interest rates with the national bond indexes and other comparable Missouri issuers with a similar rating quality sold at negotiated sales to be certain that rates for the district’s certificates were favorable.
“Based upon pricing of these other financings on August 13, 2015, the date firm rates were proposed to the district, and the national indexes for non-rated leases, our rates were as good as or better than other negotiated sales of similar quality level of financing,” Mr. Terry remarked.
According to Dr. Johnson, the certificates are scheduled to mature on April 15, 2019, through April 15, 2030, with reoffered yields ranging from 2.00% to 3.35%. The certificates do contain an optional redemption (call) provision on April 15, 2019, 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 financing proceeds are expected to be available to the district by August 27, 2015, and will be promptly reinvested by the district to earn additional interest for use in the completion of the projects.
