Hannibal School Board approves bond issue that will save the district $3.65 million

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The Hannibal School Board met at the Board of Education on Thursday afternoon to decide on the $14.5 million bond refinancing proposal submitted by L.J. Hart Company. Megan Duncan

HANNIBAL, Mo. — The Hannibal School Board approved a bond issue Thursday afternoon that will save the Hannibal Public School District approximately $3.65 million.

The school board held a special open session Thursday afternoon at 1 p.m. after licensed financial advisor Jason Hoffman submitted his thoughts on the proposal from L.J. Hart Company to refinance a 2019 $14.5 million bond.

This was approved by the regular board meeting Wednesday night when the company told them they needed to decide before the end of the following day to lock in on the interest rate and savings.

In a five to one vote, the bond refinance proposal by L.J. Hart was approved. Five yes votes came from J’Nelle Lee, Stacy Graves, Tysa Coleman, Justin Parker and Blane Mundle. Jeff Evans voted no. Scott Hawes was unable to attend the meeting.

Susan Johnson, superintendent of Hannibal Public School District, shared Hoffman’s response to L.J. Hart’s proposal with the board.

“He acknowledged the higher underwriting fee but indicated that it is offset by the total costs which included services and bond council a comparison to competitors’ overall fees,” she said. 

Johnson said the total cost or the proceeds from the refinance would be $194,740 with L.J. Hart’s overall fees being $37,550. 

She also reported Hoffman said the 4 percent interest rate was a good rate.

“I asked him if this was a favorable proposal for the Board of Education to consider and approve. He said based on his limited timeline to review—which he obviously had a limited timeline—he really has no concerns,” Johnson explained. “He did feel that the guaranteed savings of $3,642,690 was compelling, and that’s the word he used.” 

“He did acknowledge that if the board waited for a future opportunity it’s possible you could take advantage of additional savings because it depends on what the market is and what those rates would be locked in. Or you could have a reduced net interest savings, depending on the market. 

“So it’s kind of a gamble on what that’s going to be, and of course, nobody knows that. You can’t predict things like that—it’s yet to be determined. 

“He didn’t have any major concerns based on him limited time. He said if you want me to take a deeper look into that I can—he said he’d be happy to dig in,” Johnson continued.

Board member Jeff Evans said J.L. Hart’s fees were probably a third higher than they should be. He also had some concerns about the interest rate.

“Four percent historically is great but it’s not great right now because the market is actually about half a percent lower than 4 percent at the present time,” he said.

He believed the hurried timeline was unnecessary and caused by J.L. Hart’s high pressure sales tactic. 

“I still think we need to pursue a competitive bidding structure. There is no time crunch on this. If this deal doesn’t go through, there’ll be 100 other deals to come that can be put together.”

Otherwise Evans agreed the general statements by Hoffman are accurate, but voted “nay” in the roll call.

The board agreed they will work on a protocol to have a financial advisor in place and ready to review bids when needed.

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