The McDuffie County School board unanimously approved the resolution and placement agreement of bonds through Morgan and Keegan Company brokerage firm at a called meeting Tuesday morning. The county commission adopted the resolution during their regular meeting that evening.
As previously reported by The Mirror, the school board unanimously approved the go ahead for the issuance of bonds during their regular meeting in June. Voters approved the coupling of bonds with the Educational Special Purpose Local Option Sales Tax IV at a special election last September.
Tom Owens, an advisor with the brokerage firm, presented the board the resolution. Mr. Owens said the $8 million in bonds were sold by his firm on July 10. The closing will be Aug. 1.
"And your money will appear in your bank that day," Mr. Owens told the board. "We were very pleased with the pricing you got, and I hope you are, also."
Selling bonds and paying the money back with ESPLOST allows the school system to start projects immediately without waiting for penny-tax receipts to come in. The board approved borrowing $12 million, but is beginning with only $8 million.
Mr. Owens said the amount will be paid back in annual installments beginning May 1, 2008 and ending May 1, 2012 with 3.814 percent interest, making the total payback amount $8,926,611.30. The highest payment will be $2,535,120 in 2009. McDuffie ESPLOST collections have exceeded $2,500,000 since 2003, with collections totaling more than $3,580,000 in 2006.
"So we've left you with a $1 million cushion," Mr. Owens said.
Last month, school board members expressed a desire to keep the bonds at local banks. Mr. Owens said the local banks were given the option, but the amount was too large for them to compete with "the big banks."
However, the local banks have been given the opportunity to bid on investing the proceeds. School Superintendent Mark Petersen said the bids were opened Wednesday at 4 p.m., and the board is supposed to make a selection tonight at the regular meeting.
"We've got $8 million to invest, and we're looking for who can make the most of it," Dr. Petersen said.
Mr. Owens said with the school system's tax exempt status, they can earn greater than a five percent arbitrary profit on the money. The $8 million will be put in the bank to earn interest until it is needed. The money is being used for the construction of the new junior high school on White Oak Road, beginning the new Norris Elementary building and renovations to the Brickyard. The school system will be able to borrow the remaining $4 million at any time. Mr. Owen said that smaller amount will be feasible for local banks to purchase, when and if the opportunity arises.