HANNIBAL, Mo. -- The Hannibal School District says Hannibal High School, Middle School and Korf Gymnasium need heating, ventilation and air-conditioning improvements, but with the district's current finances, it can't pay for them all.
So the district said it intends to seek approval of a $13.5 million to $14.5 million general obligation bond issue in the April 2, 2019, election to cover the cost of the upgrades and to pay off a balloon payment from a previous bond.
The Hannibal School Board, school administration and the district's municipal bond underwriter, L.J. Hart & Co., discussed in a July 12 workshop increasing the district's 85-cent levy to a $1.07 levy. The increased levy, which the board would consider at the district's Aug. 15 tax rate hearing, would then give enough support for the April general obligation bond issue.
Business Manager Rich Stilley said the 22-cent levy adjustment represents a cost of $41.80 a year for a home with a market value of $100,000. With the proposed levy, the district's total levy would increase to $4.2466, which would rank the district 20th among the 40 Missouri school districts with a similar 3,500-student enrollment size.
People attending the July 12 meeting discussed how a $4.17 million balloon payment on school construction bonds -- or a larger-than-normal one-time payment at the end of a loan term -- complicated the matter of raising money for the needed HVAC upgrades. The balloon payment is due March 1, 2027, and the bonds were used to build Mark Twain Elementary and the Early Childhood Center.
The bonds' financing, structured by a previous underwriter, used growth assumptions for the district's assessed valuation and ended up being less conservative than what occurred. L.J. Hart & Co. representatives said the payment structure poses cash flow difficulties because they can't be repaid before their maturity, and the subsidy would be lost with any refunding attempts to extend the balloon maturity beyond the due date.
The district must have enough money in its debt service account for the balloon payment due date, and neither a modest levy adjustment nor postponement of the HVAC upgrades until 2027 were considered options, Stilley said. Hence, the district is seeking a nearly $15 million general obligation bond issue in 2019.
The deadline to file for the April 2 election is Jan. 22. In the meantime, the district said it will be prioritizing HVAC improvement needs in each building.