TIME FRAME: 2017 - Present

School District Improvements: Non-traditional Financing

CASE STUDY: Mosinee School District, Wisconsin

The Goal

Mosinee School District, located in Central Wisconsin, is home to three main schools, Mosinee Elementary, Middle School and High School. The District is home to 2,000 students. Prior to 2016, the District recognized the need to upgrade and improve its electrical, lighting, air quality, heating, temperature control, air conditioning, and air handling systems. The District ran two unsuccessful bond elections in 2016 and 2017, which included the needed upgrades as well as major renovations, building additions and maintenance and system improvements.

The District turned to Ehlers to assist with non-voter approved financing to address over $17 million of needed improvements following the two failed referendums. With a pending legislation change beginning January 1, 2018, revenue limit exemptions for financing improvements resulting in avoidance of or reductions in energy or operational costs would no longer be permitted. The District considered their options and decided to issue financing before the revenue limit exemption terminated on January 1. Interim financing would have to be issued by January 1, 2018 while the project would not begin until summer 2018. Under traditional financing, interest would accrue from the time the financing was issued on the full amount of the notes or bonds. This would be a significant expense since the district did not need the funds until the summer of 2018.

The Solution

District officials engaged Ehlers for school finance services. Ehlers was asked to help arrange financing before the revenue limit exemption was terminated. To significantly reduce interest costs, our advisors developed alternative financing options. Following discussions with local and regional banks, Ehlers drafted and provided a Request for Proposal along with the financing terms and conditions to interested banks which were identified in advance.

A promissory note for interim financing was established with a draw feature allowing the District to draw funds as needed. Interest accrued only on the proceeds drawn and only for the amount of time that a balance was outstanding. This draw feature, similar to what you would find in a line of credit, significantly decreased the amount of interest that accrued on the Notes.
The Notes provided interim financing in advance of the legislative change and allowed the District to secure the needed revenue limit exemption to provide the funds necessary to make their future debt service payments. Upon refunding the Notes with long term bonds, the district added over $4 million to finance the construction of a new science addition to their High School. This was combined with the refunding of the Notes to save the District the added costs of issuing separate financing.

The Results

The District has improved its electrical, lighting and HVAC systems, bringing air quality up to current Codes and greatly increasing temperature control within their buildings. All equipment is now managed by an updated energy management system that will save energy and money. Electrical supply panels have been replaced to support future facility needs. The High School has a new science addition to provide up-to-date educational opportunities for the students.