Mehlville approves COPs issuance to fund new districtwide auditorium

No out-of-pocket cost to school district associated with auditorium, Franz says

By Kari Williams

The Mehlville Board of Education last week approved the issuance of more than $6 million worth of bond-like certificates to fund the construction of a districtwide auditorium on the Mehlville Senior High School campus.

Board members voted unanimously March 15 to approve the issuance of certificates of participation, or COPs, totaling $6,060,000 to fund the auditorium construction. Chief Financial Officer Noel Knobloch said the district’s timing has been “very good” with locking in interest rates.

“When we started talking about this back in August of last year at the board retreat, we were looking at 3.25 percent … We actually got the longest term rates (at) 2.25 since those rates were locked in several days ago,” Knobloch told the board.

Over three refundings almost $6.32 million of interest has been saved, according to Knobloch. That savings will allow the COPs to be retired in eight years.

“That gives us the benefit to issue these without any net cost to the district over the next eight years,” he said.

The COPs issued last week are a new issue, not a refunding as has been done in the past, Knobloch said.

“We have gone through the process of putting the notice in the paper for the last two weeks because when you issue new certificates you have to give notice to the public …,” he said.

Also, Superintendent Eric Knost addressed community concerns about the process the district has gone through to fund the auditorium.

“There seems to be kind of a new paradigm that maybe if we’d been wiser, or maybe the community would have appreciated more, if we held money and not pursued these projects,” he said.

In meetings with district critics, Knost said there has never been an interest in holding taxpayer money and building large reserves.

“I just think that’s important for all of us to remember, that we’re not damaging our reserves significantly,” he said. “We could not have taken these COPs that we’re purchasing and done something besides facilities with that. There seems to be a thought process that we could have done that, and that was not an option. We can’t go purchase COPs and then use that for teaching positions or what have you.”

Board member Rich Franz said he wanted to ensure that residents understand the nearly $6.32 million savings comes from refinancing.

“There’s no out-of-pocket cost to the district associated with that … Our ability to do this project does not decrease our ability to meet our other obligations,” he said, “and it doesn’t affect our budget, including budget projections into the future.”

Budget projections Knobloch discussed with the board in February included the numbers to repay the debt. The chief financial officer said the auditorium funds do not come from “a recurring stream of money.”

“Had we not refunded — and we’d have been silly not to refund, don’t get me wrong — we would have paid this out in interest over the next four years… This is a one-time number. We don’t get it every year,” Knobloch said.

Franz said the district was obligated to retire the COPs, regardless of if they were refinanced.

“We accomplished two things. We refinanced, saved the money; and with the money we saved, we’ve accomplished the goal of a project that’s been the goal of the school district for a number of years,” he said, “and we’ve instituted a facilities program as set forth by the superintendent.”

Board member Mark Stoner said the district’s other choice would have been to let the savings go and do nothing.

“If we had just let that go and we’d gone to the taxpayers and said we want to build a new auditorium, we could have (gone) the route of general obligation bonds,” he said, “and we would have had to pay to market those general obligation bonds and then bring those to market and commit a new tax stream for the district.”