Houston Schools recently refinanced its general obligation bonds to save the district just over $375,000 in future expenses. Dr. Justin Copley, superintendent, expressed enthusiasm and support for the refunding option selected by the board of education in cooperation with the district’s municipal bond underwriter.
“This plan achieves significant savings and allows the district to capture better conditions in the municipal bond market for the benefit of our taxpayers,” Copley said. “It also preserves considerable flexibility for the district in the future for building improvements with no-tax rate increase opportunities.”
During its Oct. 10 monthly meeting, the Houston Board of Education authorized a final terms committee consisting of Jennifer Scheets, board president; Jeff Gettys, board secretary; Copley, superintendent; and Larry J. Hart, chief executive officer of L.J. Hart & Company of St. Louis. The group was given the ability to approve the sale of $5,930,000 General Obligation Refunding Bonds to its municipal bond underwriter, L.J. Hart & Company, within certain reoffering yield ranges.
On Nov. 22, the committee locked in interest rates on the Series 2023 Refunding Bonds with reoffered yields ranging from 3.85 to 4.30 percent to constitute a new effective rate of 4.12 percent –– compared to an average interest rate of 5.00 percent for the Series 2019 Bonds being refunded. The bonds were sold at premiums that produced $86,499 of additional funds for the projects.
Through the refinancing, the district reduced future interest expense by $376,198 –– an improvement of $93,737 from the Oct. 10 meeting. Hart said the move is the result of the improved tone of the current municipal market as well as the good name of Houston Schools in the municipal bond credit market. The savings, plus the savings of $337,434 from previous refundings and prepayments, totals $713,632 of interest expense the district has saved since 2013.
The Series 2023A Refunding Bonds were made available to local financial institutions as part of the marketing procedure. The Bank of Houston has agreed to participate by purchasing some of the bonds. Courtney Wegman, Vice President of L.J. Hart & Company, prepared the refunding proposal and explained how it can fit into the long-range plans of the district. She said three significant factors making the Series 2023 refunding attractive were the recently improved interest rates: the Series 2019 Bonds are subject to prepayment at no penalty on March 1, 2024, and the district’s ability to participate in the State of Missouri’s Direct Deposit Program. This program makes it possible for the District to receive a “AA+” rating from S&P Global on the refunding bonds.
Wegman complimented Copley for his prompt and thorough preparations to supply the data necessary for the official statement, as well as the board of education for their foresight in making the Series 2019 Bonds callable in five years. The Series 2023A Refunding Bonds will also have a five year call feature of March 1, 2028, at no penalty.
The closing for the Series 2023A Refunding Bond issue will occur on Dec. 13, 2023. Copley said he was pleased efforts were made to accommodate local investors.
“It is great that our marketing procedures facilitated this local involvement while still receiving attractive interest rates, and we appreciate the support of The Bank of Houston,” Copley said.
Several board members commended Copley and L.J. Hart & Company for developing the attractive refunding plan. “We are glad to be able to save $376,198 of our taxpayers’ money by taking advantage of the recently improved bond market conditions,” Scheets said.