COPs sale to reimburse Lindbergh for purchase of land adjacent to Long

Board of Education votes to approve Stifel Nicolaus as COPs underwriter

By Mike Anthony

The Lindbergh Board of Education will meet today — Jan. 31 — to finalize the issuance of roughly $1.35 million in bond-like certificates.

The board will meet at 5 p.m. in the district’s Central Office Professional Development Rooms, 4900 S. Lindbergh Blvd.

The $1.35 million in certificates of participation, or COPs, will reimburse the school district for its purchase of 4.684 acres adjacent to Long Elementary School, 9021 Sappington Road, and fund improvements to the property.

As first reported by the Call, the Board of Education voted in October to purchase the property and closed on the sale in late December.

The district paid $850,000 for the property, which was sold by Richard and Dorothy Abeln, who have lived in the district for 57 years.

The property will be used for a parking lot, field space and an alternate entrance and exit for parents and buses.

The Board of Education voted unanimously earlier this month to approve a resolution calling for the issuance of $1.35 million in COPs to reimburse the district for the purchase of the property and to fund improvements to the site.

Of the land purchase, Chief Financial Officer Charles Triplett told the board Jan. 8, “We paid for that out of district funds, knowing that we had this process in place to sell these certificates of participation, lease-purchase it’s sometimes also called …”

Bob Ballsrud of Gilmore & Bell, the school district’s bond counsel, said, “Federal tax law allows the district to issue tax-exempt obligations to reimburse itself for a prior expenditure as long as those expenditures occur not earlier than 60 days prior to the date of either the sale of those obligations or the passage of a reimbursement resolution.

“And so the action requested of you tonight will simply preserve the ability and start that clock running so that when you closed on the property around the middle of December that there’s no problem whatsoever with reimbursing yourself out of proceeds of these lease obligations when they’re issued …”

The district’s independent financial adviser, Joy Howard of WM Financial Strategies, told the board competitive proposals were sought for the COPs and the district received three bids.

“… We have three proposals, which, for this type of financing, a lease financing, is a good number of proposals,” she said. “It’s not a general-obligation bond. It’s an annual appropriation and it has a limited asset associated with it, which is the land only, as opposed to buildings. So I’m pleased that we have three proposals …”

The proposals were judged primarily on the basis of the true interest cost, or TIC, “which is a combined measure of both the underwriting fees and the interest rates,” ac-cording to Howard.

Bids were received from:

• Stifel Nicolaus & Co. of St. Louis, which had a TIC of 2.800687 percent.

• Edward Jones of St. Louis, which had a TIC of 3.003896 percent.

• Stern Brothers of St. Louis, which had a TIC of 3.277233 percent.

“These were indications of rates only that are tied to an index. The final rates won’t be set until … (Jan.) 31. That’s when the rates will actually get locked in …,” Howard said. “So if rates go up between now and that meeting, these rates will change up, and vice versa. If rates go down, they’ll go down.

“Now I have to tell you that since we got the proposals, rates did go up a bit, and it wouldn’t be quite as low as you’re seeing here. But if you look at these rates, they are really super great … So even though rates have gone up in the last couple weeks, it’s all very low on a historical basis.”

The board voted unanimously to select Stifel Nicolaus & Co., which had the lowest TIC, as the COPs underwriter.

While the district maintained its Aa1 bond rating on all general-obligation debt from Moody’s Investors Service, Lindbergh’s COPs automatically received a one-notch downgrade to an Aa2 rating, according to Howard.

“The district still has your fantastic Aa1 rating, but that’s your general-obligation rating … Lease obligations always get at least one notch lower than the general-obligation bonds,” Howard said.

Because of the low interest rates, Triplett noted the district will have to pay less than $100,000 annually for the 20-year term of the COPs.