The Lindbergh Board of Education recently took the first step toward saving taxpayers nearly $900,000 by initiating the process to refund general obligation bonds issued in 2001.

Board members voted unanimously last month to approve a resolution authorizing the hiring of a financial adviser and bond counsel to begin the refunding process.

WM Financial Strategies will serve as financial adviser to the district while Gilmore & Bell will be bond counsel.

As proposed, Lindbergh would sell more than $8.59 million in general obligation bonds to refund the bonds issued in 2001.

“… In what has just been one financial piece of bad news after another, we finally have a good piece of financial news,” Chief Financial Officer Pat Lanane told the Board of Education at its August meeting. “I guess fortunately or unfortunately, depending on where you sit, it has really no good effect for the school district, but it has a great effect for our local taxpayers.

“We are preparing the documents and the activities necessary to refund the Series 2001 bonds. The atmosphere, the interest rates, for bonds, as you can all imagine, have dropped considerably.”

Lanane credited Gilmore & Bell, which became the district’s bond counsel in 1995, for advising Lindbergh officials to issue callable bonds.

“One of the things that we began in 1995, which is one of the pieces of what you’re doing here is approval of the bond counsel. Per our new bond counsel in 1995, they said you really need to include call dates on your bonds …,” he said. “If you have it too early, you pay too much for that call date. If you don’t have them at all, you don’t have the opportunity that we have tonight.

“So again, I give them some real credit for having the foresight to do that. The previous bond counsel had never done that and so we thought that was a great idea. We jumped on it and in 2001, you’re not even thinking about 2010. But it’s here.

“And so the call date will be December and we would propose to call those bonds. I have had our financial adviser, which also is (in) the proposal tonight, to bring that person back on and to continue to work with us on these,” Lanane said.

The financial adviser, Joy Howard of WM Financial Strategies, has done some calculations regarding the amount of savings taxpayers would realize from the refunding, the chief financial officer said.

Based on current interest rates, district taxpayers would save $891,744, according to Howard’s calculations.

Howard also prepared a second scenario based on a half-point increase in interest rates. Even with that increase in interest rates, the savings to district taxpayers by refunding the bonds would total $628,000.

“If we were able to do that bond sale last week, we would have seen a benefit to the taxpayers — meaning less taxes paid through debt service, less taxes paid — of $891,744,” Lanane said. “So looking ahead, you’d say: Well, what does that mean for December? … I don’t see much change between now and then, quite frankly. But even should bond rates go up a half a percent, which I think is highly unlikely, we would still be looking at a savings of $628,000 to the taxpayers.

“So this is a real nice benefit for our taxpayers and whenever we’ve had these opportunities, we certainly have tried to take advantage of these. So it’s actually the last series that we’ll be able to look at for a while. But again, we think the time is right.

“You can only refund one time and so when you do refund, you want to be sure you picked a good time. Well, I think this is a great time and so we very much want to go forward with this,” Lanane said.

Because the 2001 bonds have a Dec. 2 call date and the new bonds will be sold within a day or two of that call date, a special meeting of the board may be required in early December, he said.

“… We will, as always, have an independent financial adviser not connected with any of the firms that will be bidding on the bonds — I think that’s a bit of a conflict of interest, although that is a very common and probably more the normal practice,” Lanane said. “And we will also have a competitive bid, which is also a little bit — there’s far more negotiated-type settlements. So when you have the financial adviser negotiating a settlement with themselves, I’m always a little worried about that.

“But in this case it’s an independent financial adviser who is throwing it out there on an open website. We actually do these usually over the Internet now and we’ll have an independent sale and hopefully we’ll get several bids,” he said, noting the difference between the low and high bids in previous competitive bond sales has been “quite a big number.”

Lanane again emphasized, “There’s no financial gain to the school district. I don’t want anyone to think: Oh suddenly the district’s going to receive money. All of this is attributable to the taxpayers through less debt-service taxes they will pay.”

In a separate matter, the board voted to adopt a resolution honoring board Treasurer Mark Rudoff for “earning the title ‘Master Board Member’ by the Missouri School Boards Association for completing 40 Certified Board Member credits.”

The resolution noted Rudoff “is a role model among his colleagues and an example for others to follow.”