Refinancing roughly $17 million of bond-like certificates issued to fund the Proposition P districtwide building improvement program will save the Mehlville School District $415,000.

Resolutions approving the advance refunding of the $17,065,000 in certificates of participation were approved last week by the Mehlville R-9 School District Public Facilities Authority and the Mehlville Board of Education.

Voters in November 2000 approved Proposition P, a nearly $68.4 million bond issue funded by a 49-cent tax-rate in-crease. However, the Board of Education voted Nov. 3 to approve a revised Prop-osition P budget totaling $88,927,440.

To fund Proposition P, bond-like certificates of participation totaling $83,730,000 were issued in two separate sales — one for $36.9 million in 2001 and a second for $46.83 million in 2002.

Until the certificates are retired, the building improvements performed as part of Proposition P actually are owned by a non-profit corporation, the Mehlville R-9 School District Public Facilities Authority, and leased back to the school district in return for an annual appropriation totaling the amount of the certificate payments.

When the certificates are retired in 2021-2022, the building improvements revert back to the district.

The certificates being refinanced were from the 2002 certificate issuance and were payable from 2013 to 2018, Sean Flynn, an attorney with Gilmore & Bell, said during the May 19 meeting of the facilities authority. Gilmore & Bell serves as bond counsel to the facilities authority and the Board of Education.

“The bonds (certificates) that are being refunded are actually not prepayable until Sept. 1, 2012. So the money that’s being issued from this bond issue is going to be set up in an escrow fund, which will be held with UMB Bank, and they will hold the money, invest it in local government securities. The escrow will pay the interest on the bonds and on Sept. 1, 2012, will pay them off entirely,” Flynn said.

Anne Noble of A.G. Edwards & Sons, which served as underwriter of the transaction, said, “… We actually were able to bring the savings in 20 percent higher than the minimum floor that we set. The market was cooperative with us yesterday. We had a good little blip.”

Members of the facilities authority are Board of Education member Cindy Chris-topher, Larry Weiss and Frank Ziegler.

Christopher and Weiss voted to approve a resolution authorizing the advance refunding of the certificates. Ziegler was absent.

At a Board of Education meeting immediately following the facilities authority meeting, the Board of Education voted 5-0 to approve a resolution authorizing the advance refunding of the certificates.

Board members Tom Correnti and Ken Leach were absent.

Noble told board members that nearly $19 million in new certificates would be sold to refinance the $17,065,000 worth of certificates being refunded. The new certificates carry interest rates ranging from 3 percent to 5 percent.

“Over the 13-year life of the bonds, you save $525,000 or about $40,000 a year and on a net present-value basis, which is how we measure your savings — that’s what it’s worth to you today if I were to give you a check today — it’s $415,000. When you all authorized us to proceed with this, we set a minimum savings target of 2 percent of the amount that we’re refinancing, which is very standard, and what we’re bringing you today is actually 20 percent better than that or 2.4 percent …,” she said.

This is the second time some of the certificates issued to fund Proposition P have been refinanced.

Both the facilities authority and the Board of Education last November adopted resolutions approving a debt restructuring plan that provided $2 million immediately to ease cash-flow problems associated with the Proposition P districtwide building improvement program. Besides providing $2 million immediately to ease cash-flow problems, the debt restructuring plan also freed up an additional $1.9 million over the next two years to meet construction costs.

As part of the debt restructuring plan, $2 million was released from a $4 million reserve fund and repayment was guaranteed with a $2 million surety bond. In addition, nearly $11 million worth of certificates were refinanced for a present-value savings of nearly $105,000.

Those certificates had maturity dates of 2005, 2006, 2014, 2015, 2016, 2017 and 2021.