District Approves Sale of $4,000,000 Lease Financing
During a special meeting on May 29th, 2019, the West Plains School District Board of Education approved the sale of Lease Certificates of Participation in the amount of $4 million to L.J. Hart & Company of St. Louis, Missouri, a municipal bond underwriter. L.J. Hart & Company has agreements to re-sell approximately 54 percent of the certificates to local banks and Edward Jones and Company to offer to local individuals.
The sale of the certificates provides funding for the district’s current maintenance project that includes repairing and replacing more than 67,000 square feet of roofing as well as replacement of windows and energy improvements to several aging buildings. According to Board President Jim Thompson: “The district is currently making payments on existing debt, which is nearing maturity, thus freeing up some money that allows us to consider this lease-purchase option at this time. We did not have this option to fund the cost of repairs and maintenance prior to this because of the existing debt repayment that will roll off soon. While this is far from ideal, we’re doing the best we can to manage the district's resources, aging facilities, etcetera without additional tax support.” The financing proceeds are expected to be available to the district by June 10th, 2019 and will be promptly reinvested by the district to earn additional interest for use in the completion of the projects.
Dr. Lori Wilson, Superintendent of Schools, said she was pleased efforts were made to accommodate investors from within the West Plains community and surrounding area. “The district is very pleased our local community supported our financing at almost 54 percent of the total amount,” Wilson commented. According to Larry J. Hart, CEO of L.J. Hart & Company, the following local banks agreed to purchase some of the Certificates: Community First Banking Company ($500,000), Landmark Bank ($475,000), West Plains Bank and Trust Company ($450,000), and West Plains Savings and Loan Association ($215,000), which boosts the success of the financing. Board member Courtney Gohn Beykirch abstained from the vote to approve the sale of certificates due to her role as an officer and shareholder of West Plains Bank and Trust Company.
The Board of Education selected the negotiated sale of the certificates in order to capture current market conditions, to be certain local banks and individuals received an opportunity to purchase the certificates and because the proposed interest rates were fair. Due to favorable financial market conditions and rates, the total interest expense on the project is coming in at a savings of almost $206,000 from original projections.
According to L.J. Hart & Company, the certificates are scheduled to mature on April 15, 2021, through April 15, 2039, with yields ranging from 2.30 to 3.35 percent. The certificates carry an “A” rating from S&P Global and the district has an “A+” issuer credit rating from S&P based on evaluation of its overall credit worthiness. The certificates contain an optional redemption (call) provision on April 15, 2024, at no penalty, which could help reduce future interest expense if the district is in a position to pre-pay or refinance to a lower interest rate if market conditions make it economically feasible.