Princeton Board of Education approves general obligation bond refunding

Princeton R-5 School District website 2021 -2022

The Board of Education of the Princeton R-V School District of Mercer County, Missouri approved a parameters resolution at a regular meeting on November 8, 2021, that authorized a final terms committee consisting of Rick Ellsworth, Board President, Jerry Girdner, Superintendent, and Larry J. Hart, CEO of L.J. Hart & Company.

The resolution approved the sale of $4,970,000 General Obligation Refunding Bonds to its Municipal Bond Underwriter, L.J. Hart & Company of St. Louis, Missouri within certain reoffering yield ranges. On December 9, 2021, the final terms committee was able to lock in interest rates for the Series 2021 Refunding Bonds with reoffering yields ranging from 0.40% to 1.15% to constitute a new effective rate of 1.08%, compared to the average interest rate of 4.61% for the Series 2017 Bonds being refunded. Through this refinancing, the District reduces future interest expense by $1,266,131, which is $36,147 above the savings figures presented at the November 8, 2021 meeting. It is the result of the extremely strong current municipal bond market that is producing nearly historically low-interest rates as well as the good name of the District in the municipal bond credit market. This $1,266,131 plus the savings of $672,757 from previous refunding and prepayments means that the District has saved $1,938,888 of interest expense since 2009.

The Superintendent of Schools, Jerry Girdner, 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,” Mr. Girdner remarked.

Dr. Bruce Johnson, Vice-President of L.J. Hart & Company, presented the refunding proposal and explained how it can fit into the long-range plans of the District. He mentioned that the three significant factors making the Series 2021 refunding attractive were the lower interest rates than in 2017, the fact that the Series 2017 Bonds are subject to prepayment at no penalty on March 1, 2022, and the District’s ability to participate in the State of Missouri’s Direct Deposit Program. This program makes it possible for the District to receive an “AA+” rating from S&P Global on the refunding bonds. Dr. Johnson complimented Mr. Girdner 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 2017 Bonds callable in five years. The Series 2021 Refunding Bonds will have a five-year call feature of March 1, 2026, at no penalty.

The Series 2021 Refunding Bonds were made available to local financial institutions as part of the marketing procedure. The BTC Bank agreed to purchase $500,000 and the Farmers Bank of Northern Missouri has committed to $365,000 of the Bonds. The closing for the Series 2021 Refunding Bond issue is to occur on December 29, 2021. Mr. Girdner stated that he 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 strong local support from the BTC Bank and the Farmers Bank of Northern Missouri,” Mr. Girdner commented.

Several board members commended L.J. Hart & Company for developing an attractive refunding plan. “We are glad to be able to save $1,266,131 of our taxpayers’ money by taking advantage of the most favorable conditions in the municipal bond market in over sixty years,” stated Rick Ellsworth, President of the Board of Education.

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