Manitowoc board approves $14 million promissory note to fund referendum projects

The Manitowoc School District Board of Education voted June 16 to award the sale of a $14,000,000 general obligation promissory note to fund projects approved in last year's referendum, with settlement scheduled for July 10, 2025.

The action authorizes immediate borrowing for the first phase of the district's planned capital work and sets a repayment timeline that presenters described as conservative. Michael Clark, of W.W. Garrett, who presented the financing results to the board, said the sale drew eight competitive bids and that the structure was chosen in part so the district could use a small-issue exemption: "If you borrow less than $15,000,000 in a calendar year, you get 3 years to spend it," Clark said, explaining that the extra year gives the district more flexibility on project timing and on retaining interest earned on proceeds.

Why it matters: The borrowing begins repayment in 2037 under the financing plan presented to the board and will increase the district's debt service in future budgets. Clark said the district's estimated interest costs for this phase are below the conservative assumptions used in the referendum materials and that the district's Moody's rating for the issue is Double-A3. Superintendent (name not specified in transcript) told the board the district is currently projecting roughly $10,000,000 in state aid to offset debt-service costs related to the referendum, a figure the board said it will watch closely as state budget decisions are finalized.

Details presented: Clark said principal payments are scheduled to begin April 1, 2037, and run through 2045, with an optional call date of April 1, 2034. He told the board the district's financing plan used a conservative planning rate (5.5 percent) and that, as of the presentation, the district's expected interest expense for the phase was about $1.1 million lower than earlier estimates. Clark also reviewed the reasons for splitting the referendum borrowing into two parts: borrowing under $15 million provides three years to spend proceeds without triggering certain federal arbitrage rebate rules and intermediate expenditure tests, he said.

Board discussion: Several board members questioned the total long-term cost of the borrowings and the effect of interest on the district's finances. One board member expressed concern that interest costs were high relative to the principal and said the board would watch the second phase closely when it comes up for financing. The board also discussed that some of the referendum debt-service is included in state aid formulas and that changes at the state level could affect net local levy impact.

Vote and next steps: Board member Keith Shaw moved to approve the sale; the motion was approved by roll-call vote. Christopher Eagle, acting as clerk, conducted the roll call and recorded ayes from the members present. The district will finalize closing paperwork and receive the proceeds on July 10, 2025. The board will return to market for the second phase of borrowing in early 2026, as outlined in the district's financing plan.