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At a special meeting of the Clark County Commission conducted at 11:00 A.M. on Thursday, April 9, 2020, at the County Courthouse, while observing the lock down imposed by Governor Mike Parson because of COVID-19, a resolution authorizing the issuance and sale of $2,205,000 of general obligation 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 from this plan computes to $302,350.47. Presiding Commissioner, Buddy Kattelmann briefly described the plan which involved applying $500,000 of the $619,984 accumulated reserves in the 1/2 Cent Courthouse Sales Tax Fund as of December 31, 2019 to immediately reduce principal at the June 15, 2020 call date for the Series 2010 General Obligation Taxable Economic Recovery Zone Bonds that funded the construction, equipping, and furnishing of the new courthouse. It was one of four options that L.J. Hart & Company shared with the County officials and became the favorite idea because it helps pay down this debt at a faster rate. County Treasurer Roberta McAfee mentioned that it improved the earnings on the surplus fund balances as an added benefit. “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 favorable interest rates to save Clark County taxpayers the $302,350, “Mr. Kattelmann remarked.
The average interest rate on the Series 2010 General Obligation Taxable Economic Recovery Zone Bonds is 6.32%, which after consideration of the U.S. Treasury subsidy of 45% of annual interest payments, becomes 3.48%. Since these bonds are callable at no penalty on June 15, 2020, the refunding bonds that are issued with a 2.00% interest rate, which becomes an effective interest rate of 1.72% 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 Eastern District Commissioner, Henry W. Dienst, was pleased that efforts were made to give local banks this opportunity. “With an effective interest rate of 1.72%, I am not surprised that many banks in the area have more profitable investments and loans to consider,” Mr. Dienst stated.
Western District Commissioner, Gary Webster, 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 $302,350 of savings while also allowing for other options for long range facilities planning by the County Commission,” Mr. Webster said.
Courtney B. Wegman, Vice President of L.J. Hart & Company, explained that the settlement (closing) date is April 29, 2020. “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 June 15, 2020 along with the $500,000 of the 1/2 Cent Courthouse Sales Tax reserves to prepay all of the remaining $2,675,000 of the Series 2010 Bonds,” Ms. Wegman commented. She also complimented the three County Commissioners, Treasurer Roberta McAfee, and County Clerk, Kelly Waples, for their attention to detail and strong performance on the rating call with S&P Global (formerly Standard & Poor’s Corporation). “The cooperation and team work were impressive and helped achieve the investment grade rating of “A-”,” Ms. Wegman concluded.