Lindbergh Schools taxpayers save nearly $1 million on bond refunding

CFO says Aa1 bond rating big factor in successful sale.

By MIKE ANTHONY

The refunding of general-obligation bonds issued in 2001 will save Lindbergh Schools taxpayers nearly $1 million.

District officials estimated in August that refunding the general-obligation bonds would save taxpayers nearly $900,000.

But after selling just more than $6 million in bonds last week to refund the 2001 bonds, the savings to taxpayers will total $967,738.59, according to Chief Financial Officer Pat Lanane.

The Nov. 16 sale of $6,055,000 in bonds will be used to refund bonds totaling $6,835,000 that were issued Aug. 1, 2001.

Of the amount issued in 2001, bonds totaling $5,985,000 currently are outstanding. The district will save taxpayers money by selling the bonds and buying new bonds at a lower interest rate.

Four bids were submitted to purchase the bonds, which were sold to UMB Bank of Kansas City. UMB Bank’s true interest cost was 2.798571 percent, Lanane told the Board of Education. Other bidders included Piper Jaffray of Minneapolis, Wells Fargo Advisors of St. Louis and Morgan Keegan & Co. Inc. of Memphis, Tenn.

“… We did have a very successful sale today, just to make a few introductory comments. We had four bidders. We were a little worried. That’s fewer than normal. We were a little worried about whether we’d have any …,” he said, citing the Federal Reserve’s recent purchase of $600 billion worth of Treasury bonds to help boost the U.S. economy.

“It’s actually thrown the markets into a bit of a tailspin, not knowing which way to go in some ways,” Lanane continued. “But today it worked out very well for us.”

Moody’s Investors Services recently renewed Lindbergh’s bond rating at Aa1 — the best a school district can have — and that played an important role in the number of bids the district received. Moody’s cited the recent Prop L tax-rate increase and Lindbergh’s budget reductions as evidence of the district’s sound financial management and fiscal responsibility.

“That is actually a tribute to the (district’s) Aa1 bond rating …,” Lanane said of obtaining four bids. “Today is the day when we talk about the importance of having an Aa1 bond rating that it really comes home and it comes home to the taxpayers.”

Seeking bids for the bond sale also contributed to its success, the CFO said, adding most school districts sell bonds through a negotiated sale.

“… Another important point that we always talk about is the importance of an open, competitive bid. If we’d gone to our fourth bidder and said: Let’s make a deal, which is the most common way that school districts sell bonds — by far, the most common — the taxpayers would have paid an additional almost half-million dollars. So the spread from low to high is a half-million dollars,” he said.

“It’s very important, I think, that we continue the tradition of open, competitive bidding. And the other really good news is: What did we get with our bid? I’m like all the other financial guys: Here’s the savings to the taxpayers — $967,738.59. On a $6 million issue, that’s almost unheard of. So today was a very good day to have an Aa1 bond rating and a very good day to have passed Prop L, which helps us keep that bond rating. When Moody’s looked at where we are going in the financial future, it’s very important that that happened …”