CHICAGO -- The Wisconsin Legislature last week passed a measure that would allow the issuance of tax-exempt revenue bonds to help a day care center pay off a bank loan.
While the bill targets one day care center located in a Milwaukee suburb, state lawmakers said the measure could help several other centers in the state. In addition, municipal market observers have said that lawmakers could later broaden the measure to assist nonprofit organizations in financing day care centers.
The legislation is designed to enable the nonprofit New Berlin Child Care Center Inc., which had difficulty raising private donations, to pay off a short-term bank loan of $1.14 million, according to Gregory Ksicinski, the center's treasurer.
Gov. Tommy Thompson is expected to sign the bill into law in the next few weeks, according to a press release issued by Assistant Senate Majority Leader Margaret Farrow, R-Elm Grove, a primary sponsor of the bill. A spokeswoman for Thompson did not return phone calls.
The legislation would authorize the Wisconsin Health and Educational Facilities Authority or municipalities to serve as conduit agencies to issue bonds for eligible tax-exempt child care providers that are located in industrial parks. Currently, the health authority can only issue bonds to enable health-care facilities or higher education institutions to build child care centers.
Under the legislation, bond proceeds could be used to finance new child care centers or to refinance outstanding debt of an eligible child care provider.
The New Berlin center, which is located in the state's largest industrial park, hopes to issue between $1.2 million and $1.3 million of bonds by the end of the year, Ksicinski said. The center's board of directors has not decided whether the bonds will be privately placed or sold to the general public, Ksicinski said.
Larry Nines, executive director of the health and educational facilities authority, said that the issuance of bonds could give the center a 250-to-basis-point 400-break on interest rates compared with a bank loan.
Tim Tully, a former New Berlin mayor who championed construction of the New Berlin Child Care Center while in office, said that center officials had hoped to pay off the $1.14 million bank loan with private donations. However, several grants from private foundations were substantially less than anticipated, forcing the center to seek other sources of funding.
Farrow has said that the measure would enable the New Berlin center to restructure the payment of its obligation. Revenues and enrollment at the center are healthy enough to pay off any bonds that would be issued, Farrow said.
The measure, if signed into law, would expire on March 31, 1994. Lester Bagley, a spokesman for Farrow, said that Farrow would consider proposing legislation extending the expiration date to assist other day care centers.
The New Berlin Child Care Center is open to the general public and is licensed to serve 144 children ages six weeks to 11 years, Tully said.