School board approves preliminary steps to replace Hums Elementary, authorizes bond process up to $45 million

The School City of Mishawaka Board of School Trustees on Feb. 5 approved preliminary resolutions to move forward with replacing Hums Elementary and to begin the process for issuing lease-backed bonds to finance construction.

The measures approved include a preliminary determination resolution tied to a statutory public-hearing process and an amendment approving the form of a lease addendum that would let the Mishawaka 2001 Building Corporation issue lease-rental revenue bonds. Randy Rompola, outside counsel from Barnes & Thornburg, told the board the bond amount in the resolution is a “not to exceed $45,000,000” maximum and that the stated maximum interest rate is 5 percent.

The board held a second required public hearing before taking the votes. Rompola said the “10-28” statutory hearing requirement applies to construction projects over $1 million and that adopting the preliminary resolution satisfies statutory notice and disclosure rules so the district can continue toward a final hearing and bond sale. He described the $45 million figure as a high-side cap to avoid repeating the hearing process if final costs exceed a lower limit.

Rompola said the financing plan contemplates lease-rental revenue bonds issued by the not-for-profit building corporation rather than general-obligation bonds. Under the plan the district would continue to pay lease rental (as it does now for prior financings) and that the lease payments would be paid from a property-tax levy. Rompola said the bond sale and related rating/offer work would follow a March public hearing and, if schedules hold, closing on bonds could occur in May with construction beginning in the fall.

Board members voted to approve both the preliminary determination resolution and the amendment resolution to proceed with the bond/lease structure. The motions passed by voice vote; the meeting record shows “aye” and “motion carries” for both items but does not include a roll-call tally.

Board staff and counsel said additional notices and a formal public hearing will be scheduled for the board’s March meeting; Baker Tilly (financial advisor) was noted as supporting the next steps and will assist with offering documents and rating agency outreach.

Why it matters: Replacing Hums Elementary involves a multi-million-dollar capital project, state statutory hearing requirements, and a financing structure that affects the district’s long-term property-tax levy and debt service. The board’s votes start the formal public and statutory process required to issue bonds and move the construction toward contract award and work in the fall.

Board action and next steps: The board adopted the preliminary determination resolution at its Feb. 5 meeting and also approved the form of a lease addendum authorizing bond issuance by the Mishawaka 2001 Building Corporation. Notices will be published in advance of the March public hearing; final approvals and bond sale work would follow if the board adopts the final resolutions in March.