Sale of $10 million promissory note marks final stage of borrowing for capital projects
By Kellen Olshefski
Editor
The Elkhorn Area School District Board of Education voted in favor of a resolution Nov. 23 awarding the sale of a $10 million promissory note, the final stage of borrowing approved by the community through a referendum last spring.
District Business Manager Bill Trewyn said Monday night the sale marks the third phase of the schools borrowing plans, the first being a $10 million bond issue in May and the second a $420,000 state trust fund loan.
Robert W. Baird Assistant Vice President Justin Fischer said bid results were taken at 9:30 a.m. on Monday morning, with seven bids coming in from various companies. Interest rates ranged from Hutchinson, Shockey, Erley and Co. at the high end with 2.32 percent and Janney Montgomery Scott LLC on the low end at 1.91 percent.
Fischer said the closing date on the $10 million general obligation promissory note is set for Jan. 4, with maturity dates beginning on April 1 of next year, paired with the first interest payment, and running through April 2025.
Fischer said the first call date for the debt will be April 1, 2022, and the district’s Moody Rating – which provides investors with a system of gradation by which creditworthiness can be evaluated – falls at a Aa2, consistent with what the district has received in the past.
Fischer said the overall impact of the borrowing came out to about 21 cents for every $1,000 of equalized evaluation.
What Fischer said is impressive is the interest savings the school district is looking at, noting when they started the referendum process interest was expected to amount to nearly $8.57 million. However, with a lower interest rate, he said the district will see significant savings, coming in at about $5 million.
“That really comes down to looking at it from a conservative approach from the beginning and that interest rate holding and being very strong over the last year,” Fischer said.
“So, excellent results and the district should be very happy with these.”
Furthermore, Trewyn added that looking back on how the district decided to handle the borrowing, splitting it into three phases, the only potential risk the district had was a market rate risk by waiting.
With rates coming in positive for the state trust fund loan, Trewyn said the district should be in a position to pay of the loan this March.
“That will save on interest payments as well if we pay that off at one time,” he said.
“Fortunately, we have good interest rates and the Moody’s rating, as Justin mentions, has remained consistently strong for us.”
Trewyn further noted the district’s Moody rating puts them in about the top 55 of the about 500 school districts in Wisconsin.
The board approved the resolution unanimously.
