Lindbergh taxpayers will save $1.1 million in sale of GO bonds

District maintains top rating on its bonds from Moody’s

By Mike Anthony

Lindbergh Schools taxpayers will save roughly $1.1 million with the sale of more than $34 million in general-obligation bonds.

The Board of Education voted unanimously last week to approve a resolution authorizing the sale of $34,035,000 in general-obligation bonds to investment bank Piper Jaffray of Minneapolis, Minn., which submitted the lowest of 10 bids.

Piper Jaffray’s bid carried a true interest rate of 2.84 percent, while the highest bid had a true interest rate of 3.06 percent. The true interest rate is a combined measure of the interest and underwriting fees.

Seeking bids for the bond sale contributed to its success, according to Chief Financial Officer Charles Triplett. Most school districts sell bonds through a negotiated sale.

By accepting Piper Jaffray’s bid, Lindbergh taxpayers will save roughly $1.1 million in interest over the 20-year term of the bonds, according to Triplett.

Lindbergh voters authorized the sale of the bonds with the passage of Proposition G in the April election.

Prop G — for Growth — increased the district’s debt-service levy by 21 cents, to 68.3 cents per $100 of assessed valuation from 47.3 cents.

A total of $23.9 million of the bond proceeds will fund the construction of a 650-student elementary school on the nearly 10-acre Dressel School site at 10255 Musick Road.

As proposed, the new elementary school will open in August 2017. In the meantime, the district continues to face aggressive enrollment growth.

Besides the construction of a new elementary school, $3 million of the bond issue proceeds will fund some critical needs at Lindbergh High School, including doubling the size of the cafeteria, creating two science classrooms from existing classrooms, converting a record-storage room into two new classrooms, modernizing the library and replacing the wood floor and bleachers in Gymnasium 3.

The building projects will have $3 million in contingency.

In addition, proceeds from the bond issue will be used to retire roughly $3.5 million of debt incurred when the district purchased the Dressel site for $1.94 million in July 2011 and property adjacent to Long Elementary School in December 2012.

To fund the purchases, the board approved the issuance of certificates of participation, or COPs, totaling nearly $3.5 million. The COPs will be retired, with the remaining debt rolled into the bond issue and paid by the debt-service fund.

The school district now spends roughly $300,000 per year in operational revenue for that debt.

At the Sept. 9 meeting, Triplett said, “… This morning we conducted the bond sale in association with Proposition G — if you can believe it’s been five months since that campaign. But this morning was a good day for bond sales …”

About the sale, he said, “We did use again a competitive sale, which is what we’ve always done as a practice, and we like it. Three to five bidders is considered very good, and we had 10 different firms bid for us today … When we put the paperwork together … we thought an interest rate of about 3.5 percent would be very good. We ended up with an interest rate of 2.84 percent today, and that’s largely due to our reputation as a school district, quite frankly.”

The 2.84 percent interest rate is the lowest since June 2013, Triplett said, adding, “So 15 or 16 months have gone by since we’ve seen those kind of rates. The 10 bids were very tightly grouped together. From that low bid to the high was only three-tenths of a percent difference, but that difference was a difference of $1.1 million. So we were able to save that by using that competitive bid.”

The cost of issuing the bonds also was low “due to the fact that we already had bond buyers lined up with the winning firm. They don’t have to do much work to sell our bonds. They had people clamoring to buy Lindbergh bonds. So they didn’t charge us very much to sell those bonds because they don’t have to do much work to do it, which is very nice also …”

For the bond sale, the district retained its Aa1 bond rating, according to Moody’s Investors Service.

Moody’s is a national credit rating agency that provides an independent opinion regarding the school district’s financial stability. The Aa1 bond rating is the highest a school district can earn.

Superintendent Jim Simpson told the Call he was pleased with the bond sale.

“… Munies (municipal bonds) are red hot, and Lindbergh munies are one of the most sought-after ones, according to the experts that were bidding on them. We’re top-rated ..,” he said.

Noting district officials had anticipated a higher interest rate, they were very pleased with Piper Jaffray’s 2.84 percent rate.

“… So when it came out 2.8 (percent), it was, ‘Whoa, that’s a lot of savings to our taxpayers, and that’s a rock-bottom interest rate,'” Simpson said.

“It’s a great time to sell bonds. There are times schools have to go to bonding to build buildings, and it’s not a good time and the interest rates are very high …,” he said. “I would say school districts in Missouri will not see 2.8 (percent) interest on bonds maybe for decades. That’s just rock bottom …”