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Meeting Date:
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11/14/2017 - 6:30 PM
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Category:
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ITEMS OF BUSINESS
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Type:
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Action
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Subject:
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11. Action on a Request to Adopt a Resolution and Approve the Issuance of Qualified School Construction Bonds (QSCB) in an amount not to exceed $34,933,000 and to Authorize the Approval and Execution of Documents and Certain Related Matters
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Strategic Plan Compatibility Statement:
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Goal 3 Effective and Efficient Operations
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Attachments
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1. QSCB 2017 Board Resolution
2. QSCB 2017 Proposed Project List
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File Attachment:
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Background:
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In March 2010, the Department of the Treasury, pursuant to the American Recovery and Reinvestment Act, allocated to MPS, as a Large Local Educational Agency, $72,933,000 of Qualified School Construction Bond (QSCB) borrowing authority. The allocation is effective for QSCBs issued after March 17, 2010. Beginning in December 2010 and annually thereafter, the Board documented its desire to carry forward this authority to the subsequent year by approving a Board Resolution to do so.
$38,000,000 was used in June 2015 for bonds pursuant to this allocation, leaving available $34,933,000 of borrowing authority from the 2010 Allocation.
Proposed federal tax plan changes would repeal the rules related to tax credit bonds, such as QSCBs, effective January 1, 2018. However, holders and issuers of bonds issued before January 1, 2018 would continue receiving tax credits and payments for tax credit bonds. At the QSCB tax credit rate effective November 9, 2017, this amounts to a potential lost interest subsidy of approximately $1.4 million annually, before sequestration reductions.
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Fiscal Impact Statement:
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Issuing QSCBs before January 1, 2018 will allow the Board to borrow up to $34,933,000 to fund construction projects with little or no interest cost to the district. The maximum maturity of the bonds will be 33 years. The term of the payback will be determined based on the Internal Revenue Service’s rules in effect on the date of issuance.
This item authorizes expenditures. Bond issuance costs in an amount not to exceed 2%, or $698,660, will be funded from the bond proceeds and charged to account FAR-0-0-MMS-DW-EACL, debt administrative costs. Estimated annual administrative cost of $2,100 over the term of the debt will be charged to account ODB-0-0-DBT-DW-EACL.
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Implementation and Assessment Plan
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Adoption of the Resolution for the issuance of redevelopment lease revenue bonds by the Redevelopment Authority of the City of Milwaukee (RACM) as QSCBs in an amount not to exceed $34,933,000 and matters related thereto for Milwaukee Public Schools will provide MPS with funding for QSCB projects that includes addressing deferred maintenance needs. A list of proposed projects is attached.
If approved, the Administration will work with the City and the Financing Team (Piper Jaffray, Katten Muchin Rosenman LLP, Hurtado Zimmerman SC, and Public Financial Management) to issue bonds prior to January 1, 2018, to maintain the tax credit payment rules currently in effect for QSCBs.
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Recommendation:
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The Administration recommends that the Board adopt the resolution relative to the issuance of Qualified School Construction Bonds (QSCB) in an amount not to exceed $34,933,000 and authorize the approval and execution of documents and certain related matters.
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Approvals:
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Recommended By:
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Signed By:
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LaWanda Baldwin - Comptroller
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Signed By:
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Gina Spang - Chief of Staff
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Signed By:
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Dr. Darienne Driver - Superintendent
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