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Pettisville School Construction Bonds Are Big Sellers Locally




Chris Lee, treasurer of the Pettisville Local School District, said local investors bought more than $350,000 of the bonds the district sold for the local share of the construction of the new Pettisville School.

A total of $4.8 million in bonds were sold. The State of Ohio is funding the rest of the cost of the more than $20 million structure through the Ohio School Facilities Commission.

Lee said the representative of the bonding house who handled the bond sale told him that normally, when someone says there are local investors interested in purchasing the bonds, that usually means about $20,000 in bonds are purchased locally.

The representative said selling more than $350,000 worth of bonds locally is highly unusual.

Interest

Lee said the bonds went on sale in a national bond market in Chicago on Monday, March 2. The last bonds were sold Monday, March 16.

The bonds carried an interest rate of about 4.999%, “close enough to call 5%,” Lee said.

“Obviously, we would have liked to have done better, but that was the figure we used to project the millage we would need to repay the bonds. We were right on our projections,” he said.

Rated

The bonds were rated Aa2, which is “a pretty decent rating.”

Because the Pettisville School District tax base is so small, the district would not have qualifi ed for Aa2. The lower the rating, the higher the interest rate on the bonds- and the more it costs to repay them.

To achieve a higher rating, Lee said the district went through the State of Ohio Credit Enhancement Program. The program ties the school district’s state aid subsidy to the bonds as a form of collateral.

If the district defaults on the bonds, the district’s state subsidy money goes to repay the bonds.

The State of Ohio has the same credit rating- Aa2.

To qualify for OSFC money, the district needed to have cash on hand by a certain date.

To meet the requirement, Lee said the board sold $4.8 million in short-term notes in January and February. The notes must be repaid in June.

Proceeds from the bond sale were expected to hit the school’s accounts yesterday, Tuesday, March 17.

So, for a little over two months, the school district will have about $9.6 million.

Lee said all of the money will be invested to earn maximum interest before the notes are repaid.


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