Underwriter presents financing plan: district could phase $106 million referendum borrowing, lock attractive rates now

Baird, the underwriting firm selected by the West Bend Joint School District No. 1 Board of Education, presented a market update and a two-phase financing approach for the referendum-authorized projects during Monday's meeting.

Brian Brewer of Baird told the board that the district is positioned to consider locking a first-phase sale of roughly $96 million while leaving a second phase for early 2026. Brewer said the current market presents a rare environment in which borrowing rates are historically favorable and reinvestment rates are similar, enabling the district to earn investment income on bond proceeds while minimizing interest-rate risk.

22We are the number 1 ranked underwriter nationally as well as, in Wisconsin,22 Brewer said during his presentation, describing Baird's market role in placing bonds with local and national investors. He noted the district's most recent credit rating (Double-A minus) and that the underwriting and municipal-adviser teams would evaluate whether to request an updated rating from the major agencies.

Key elements of the plan presented and discussed by the board and presenters:

- Two-phase issuance: administration modeled a Phase 1 issuance of about $96 million (a mid-February resolution might authorize up to $96.25 million as a delegation parameter) and a Phase 2 issuance in early 2026. The total voter-authorized referendum amount discussed was $106,250,000.

- Interest-rate modeling: the presentation used an all-inclusive cost (AIC) model of about 4.27% in current snapshots versus a conservative planning estimate of 4.75% used during the referendum communications. Using current modeling, total principal-and-interest costs in the scenario were about $157 million (down from a prior $165 million snapshot).

- Cash-flow/levy alignment: the district's current debt levy was shown at roughly $8.2 million, which administration said corresponds to approximately $2 per $1,000 of equalized property value; the plan aligns debt service with that levy target.

- Bid premium and investor demand: Brewer explained that current investor demand can produce bid premiums (investors paying an upfront premium), which the underwriting team models and applies to reduce long-term interest cost or accelerate principal pay-downs.

- Timing and next steps: administration projected preparing paperwork in January and presenting a resolution authorizing Phase 1 (with delegation parameters) at the Feb. 17 board meeting. If the board adopts such a resolution and market conditions are acceptable, the district could enter the market in late February or early March.

- First principal payment timing: Brewer said the first principal payment on the new issuance would be expected in October 2025, and because the district levied debt funds this year some principal could be paid early (an estimated $7 million in the example), reducing long-term interest costs.

Board members asked about bid premiums, credit ratings, and whether the district would commit to a final structure now or retain flexibility; presenters repeatedly emphasized that selecting advisors and underwriter does not finalize pricing or require immediate lock-in of specific terms—final terms would be negotiated and returned to the board.

Ending

Administration and Baird recommended moving ahead to finalize advisory and underwriting engagements and to return to the board with a mid-February action item if market conditions remain favorable.