Lindbergh board eyes sale of $7.2 million in bonds for Prop R work

By MIKE ANTHONY

The Lindbergh Board of Education could vote next week to approve the sale of nearly $7.2 million in bonds awarded through the federal stimulus package to fund Proposition R 2008 projects.

Board members voted in June to apply for $11.7 million in Qualified School Construction Bonds. State officials announced last month the school district will receive $7,165,910 in the nearly interest-free federal bonds awarded through the American Recovery and Reinvestment Act.

Including Lindbergh, 33 Missouri school districts will receive a total of $141,441,000 in nearly interest-free bonds to fund construction projects financed through voter-approved bond issues.

Chief Financial Officer Pat Lanane told the Call he anticipated the school board would consider a resolution approving the sale of the nearly $7.2 million in bonds when it meets at 7:30 p.m. Tuesday in the boardroom of the Administration Building, 4900 S. Lindbergh Blvd.

District voters last November approved Proposition R 2008, a `$31 million bond issue. In March, the board voted to approve the sale of $10 million in bonds to fund Proposition R 2008 projects.

Though the nearly $7.2 million in Qualified School Construction Bonds were touted as interest-free bonds, Lanane said that’s not the case. Because the district maintained its Aa2 bond rating from Moody’s Investors Service, he expects the interest rate on the bonds to be less than 1 percent.

“… Even though they were supposed to be completely interest free, in all the other sales there has been a small underlying interest charge …,” Lanane said. “It’s very different than other bonds because right now there’s only one big company that’s been buying these in the entire United States. So it isn’t like you’re going to do a big, open bid. There aren’t any bidders.

“There’s one group. So we’ve been negotiating with them. We think we have a deal on them and basically the way they’re going to work is this: They carry with them a tax credit. They also will carry a very, very low interest rate.

“We thought it might be zero. Legally, it could have been zero, but what happens is the government says: Hey, you can have these bonds. There’s a tax credit with it and if it’s good enough, maybe you won’t even have to pay any interest. Well, then you throw it out in the marketplace and then it’s what are people willing to pay?”

District taxpayers will reap the benefits of having an interest rate of less than 1 percent on the bonds, Lanane said.

“… That’s a great deal for the taxpayers. Again, it doesn’t result in one penny for us to spend extra. This $7.2 million is the same $7.2 million we would have issued under another format. So it’s still $7.2 million. The savings will be directly to the taxpayer.”

The savings could be up to $2 million, less than originally anticipated, but a savings nonetheless, Lanane said, adding he will have an actual number when the bond issue closes.

“But it appears it’s going to be somewhere around $2 million and that all accrues to the benefit of the taxpayers,” he said.

Regarding the district retaining its Aa2 rating with Moody’s, Lanane said, “We were very pleased with that. Again, for people that are in the financial world, they know that Moody’s says exactly what they want to say and they do a very objective, critical review of the district’s finances.

“And in this environment where lots and lots and lots of cities, school districts in some cases and even states have been downgraded, to maintain what was already the highest rating to a public school district in Missouri — and there’s only a handful of districts that had that — wow, that’s very gratifying.”

The Board of Education had placed Prop R 2008 on the ballot with the goal of providing a long-term solution to space concerns at Sperreng Middle School.

More than 1,300 sixth-, seventh- and eighth-graders are jammed into the middle school that was designed to accommodate 800 pupils when it opened in 1970.

While Sperreng will remain a sixth- through eighth-grade middle school, funds from Prop R 2008 will be used to convert Truman Elementary School to a sixth- through eighth-grade middle school, add onto Crestwood and Long elementary schools, convert Concord School to an elementary school and construct a new Early Childhood Education building next to the Administration Building.