Milan Superintendent Comments on Bond Project

This column from Milan Superintendent Bryan Girbach came in after deadline, but I thought I'd share it with readers of our blog.

MAS Bond 2009 Update

A lot has happened since the passage of the bond on February 24th, so I thought it was time to bring everyone up to speed on the progress that has been made. While no construction or remodeling has started, a great deal of planning and preparation has taken place. Several companies have been brought on board to assist us in the effective use of the approved funds.

First and foremost, we have been working diligently with our legal counsel and financial advisor to make sure that we make wise decisions in the process leading up to the sale of the bonds. The Thrun Law Firm and Stauder Barch & Associates have been very diligent in assisting us through this process. During this time of economic downturn it is crucial that we investigate every alternative available to the district. After evaluating all of our options, we have decided to sell Build America Bonds (BAB’s). These bonds are part of the American Recovery and Reinvestment Act. This new program is intended to assist school districts, states, and local governments in financing capital projects at lower borrowing costs in an effort to stimulate the economy and create jobs. “These innovative bonds give state and local governments an important new tool to help finance public capital projects that will benefit communities in challenging times,” said IRS Commissioner Doug Shulman. Specifically, the federal government will pay 35% of the interest costs associated with these bonds, thus alleviating the Milan taxpayers of some of the burden. Our current estimates place the savings of BAB’s over traditional tax-exempt bonds in the millions of dollars. The true savings will not be known until the bonds have been sold.

The district has also selected Raymond James & Associates as the primary underwriter of the bonds. They will handle the sale of the bonds with assistance from Stifel Nicolaus & Company, Edward Jones & Co., and Fifth Third Securities. The Preliminary Official Statement was released on Tuesday, April 14th, and the bonds were priced on Tuesday, April 21st. The sale of the bonds took place immediately following the pricing process (April 21st and April 22nd) and will continue until all bonds are sold.

BAB’s are only available for use by schools and governmental agencies during 2009 and 2010. Therefore, the district made the decision to sell all $49,165,000 of the approved bonds now. The original plan of waiting to sell $14,000,000 of the bonds in 2012 was altered because of the projected savings for our taxpayers made available by the use of BAB’s. Borrowing all of the money at this time using BAB’s will allow us to complete the projects described during the campaign without raising tax rates. In addition, the estimated savings in interest costs have generated projected payoff schedules that end earlier than the timeline provided during the bond campaign. Again, the specific effect of the savings will not be fully known until the bonds have been sold.

The district has also started the process of hiring an Owner’s Representative, Architect, and Construction Manager. Contract talks are underway with Plante Moran CRESA, Fanning Howey, and Barton Malow in an effort to fill these respective roles. Fanning Howey and Barton Malow assisted the district during the lengthy pre-bond facilities study.

The projected construction schedule will require Paddock and Symons Elementary Schools to be closed during the summer of 2010 as well as the closing of Milan Middle School during the summers of 2010 and 2011. No scheduled school days will be effected. The work on the transportation facility and Milan High School will not create a need to entirely close the buildings at any time. In every case, the district will make every effort to protect the integrity of the educational process during the extensive remodeling process.

If you have any questions regarding the Milan Area Schools, please feel free to contact the Superintendent, Bryan Girbach, at girbach@milan.k12.mi.us or 734-439-5050.