Cedar County approves leasehold revenue refunding bonds with net interest savings of $446,004

At a regular meeting of the Cedar County Commission conducted at 11 a… on Monday, April 11, at the County Courthouse in Stockton, Missouri, an order authorizing the issuance and sale of $3,275,000 of leasehold revenue refunding bonds was unanimously approved. According to the figures presented by the County’s Municipal Bond Underwriter, L.J. Hart & Company of St. Louis, Missouri, the net interest savings to the taxpayers of Cedar County, Missouri with this plan computes to $446,004 which represents an improvement of about $45,413 above the projections reviewed at the March 14, meeting. These interest rates now available to Cedar County are not far removed from one of the lowest borrowing environments in more than sixty years of the municipal bond market.
Presiding Commissioner, Marlon Collins, briefly described the plan which involved accelerating principal payments to absorb interest savings from 2023 through 2031 with the bulk of the savings occurring beginning in 2032, the final year of the original $4,820,000 Leasehold Revenue Bonds, Series 2012 that funded the construction of a new jail. This program also reduces payments by four full years from 2035 to 2031 (the County previously defeased the 2017, 2018 and 2019 maturities moving them to 2033, 2034 and 2035 for cash flow purposes with the Series 2016 Refunding Bonds). It was one of three structures that L.J. Hart & Company shared with the County officials and became the favored proposal due to the excellent amount of interest savings without having to deplete the County’s reserves. “We generally came to a consensus that this plan represented our most economical action and are very pleased that the municipal bond market brought us these favorable interest rates to benefit the Cedar County taxpayers,“ Mr. Collins remarked.
The average interest rate on the Series 2012 and Series 2016 Leasehold Revenue Bonds is 3.81%. Both bond issues are scheduled to be called (prepaid) on May 1, 2022. The Series 2022 refunding bonds are issued with an average interest rate of 3.00%, which becomes an effective interest rate of 2.59% after reflecting the reoffering premiums generated from the resale. L.J. Hart & Company was directed to make the refunding bonds available to local financial institutions. The Northern Commissioner, Don Boultinghouse, was pleased that efforts were made to give local banks this opportunity. “The support from the Community Bank of El Dorado Springs by purchasing $1,085,000 of the bonds is an added benefit. Knowing that we can still get this level of support on a financing with an effective interest rate of 2.59%, when there are likely more profitable investments and loans to consider, speaks highly of the banks’ support for the County,” Mr. Boultinghouse stated. Southern District Commissioner, Ted Anderson, pointed out that these refunding bonds are also callable at no penalty in five years. “Preserving our ability to prepay with our future revenue surplus can further improve this initial $446,004 of savings while also allowing for other options for long range facilities planning by the County Commission,” Mr. Anderson said.
Brad Wegman, Vice President of L.J. Hart & Company, explained that the settlement (closing) date is April 21, 2022, which is within 90 days of the May 1, 2022 call date of the Series 2012 Bonds enabling this financing to be considered a current tax-exempt refunding. The Series 2016 Bonds have been callable since May 1, 2018 and only required thirty days notice to the investors in order to be refinanced. “The refunding bond proceeds, after deducting the costs of issuance, are to be kept at trustee bank, BOKF, N.A. St. Louis, Missouri, to be applied on May 1, 2022 to prepay all of the remaining $2,910,000 of the Series 2012 Bonds and $695,000 of the Series 2016 Bonds,” Mr. Wegman remarked. He also complimented the three County Commissioners, the County Treasurer, Peggy Kenney, and County Clerk, Heather York, for their attention to detail and preparations for the official statement on the Bonds. The legal documents for the refunding bonds were prepared by Lori Lea Shelley, Esq. of Lathrop GPM, St. Louis.