MISSOULA - The Missoula County Public School (MCPS) Board unanimously adopted the resolutions to authorize the issuance and sale of an initial series of up to $60 million for the elementary school building bonds and $30 million for the high school building bonds at their Dec. 8 meeting.
The goal is that the MCPS Series 2016 bonds will be available for purchase in late January 2016. While this is a public offering and sale of bonds, brokers must submit clients’ orders through D.A. Davidson, the underwriter for the sale. The design and expansion for Seeley-Swan High School is expected to be completed by August 2016.
Aaron Rudio, senior vice president of public finance for D.A. Davidson in Great Falls and underwriter for the MCPS bond sales, presented information regarding the bond process to the MCPS board. Rudio said the reason the entire amount for the bonds authorized by voters in the Nov. 3 election, $88 million for the elementary bond and $70 million for the high school bond, is that MCPS needs to spend the money in a certain amount of time. “We are trying to get a good chunk of them fixed in terms of interest rates [since we are still at historically low interest rate levels],” said Rudio.
Rudio continued that since the bonds are federal and state tax-exempt, IRS regulations require that bond proceeds are spent within three years in an effort to ensure bond proceeds are used for the purpose for which the bonds were sold.
“This amount [that was approved by the MCPS board] seems like an amount that can be expended in that amount of time,” said Rudio.
Rudio said that the interest rates at the time of the board meeting were lower than the interest rates D.A. Davidson used in putting numbers together for running the election. “This is why we want to get this bond issue out there fairly soon is to try to deliver a cheaper product that what voters voted on,” said Rudio. While the final interest rates are not available yet, the resolution adopted by the MCPS board said that they could not be higher than 4.25 percent.
In an interview with the Pathfinder, Rudio further explained the process of purchasing the bonds. While bond sales can be conducted by a sealed bid auction, Rudio said that, for the MCPS school bond, the MCPS board chose D.A. Davidson to be their underwriter. There was not a competitive bid process with other brokerage firms.
“I can’t remember when the last Montana school bond project that wasn’t handled by D.A. Davison,” said Rudio.
At the Dec. 8 meeting, the MCPS board chair, MCPS superintendent and Executive Director of Business and Operations were authorized to approve the principal bond amount, purchase price, maturity dates, interest rates, original issue discount, premium and conditions pertaining to the purchase and sale of the Series 2016 bonds. In cooperation with D.A. Davidson & Company, as underwriter, and Doresey & Whitney LLP, as Bond Counsel, they will prepare a Preliminary Official Statement to be distributed to potential purchasers of the bonds. Two weeks prior to sales date, this disclosure statement will be publically available over the financial news networks.
While D.A. Davidson is the underwriter and their clients will be given preference for the bond purchase, Rudio said firms that represent other clients can submit purchase requests through the D.A. Davidson sales network once the bonds are let. Brokers will then call their clients with the information and they can decide if they are interested and then assess the interest rates and how much they want to spend on the bonds.
Rudio expects the bond sales to be completed in one morning.
D.A. Davidson Senior Financial Consultant Mark Nicholson of Missoula said that the bonds will go “faster than flapjacks at a logging camp.”
For Nicholson, the minimum bond purchase for one of his clients is $10,000. He expects that many of D.A. Davidson clients will invest in large positions of upwards of $100,000 with the bonds.
If interested in purchasing the MCPS bonds, contact a local D.A. Davidson office http://www.davidsoncompanies.com/dc/ or your brokerage firm prior to the sales date.
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