CHICAGO -- A group of Wisconsin lawmakers has introduced a bill to allow the issuance of tax-exempt bonds to help a financially strapped child care center pay off a bank loan.
The legislation is targeted to help the nonprofit New Berlin Child Care Center Inc., which has had difficulty raising private donations to pay off a $350,000 bank loan, according to state Sen. Margaret Farrow, R-Elm Grove, and state Rep. Marc Duff, R-New Berlin, primary sponsors of the measure.
The legislation would authorize either the Wisconsin Health and Educational Facilities Authority or municipalities to issue tax-exempt bonds for eligible nonprofit child care providers located in industrial parks. Currently, the authority can 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 measure originally was proposed in June as an amendment to the state's fiscal 1994 biennial budget, but was deleted during the legislative process, Duff said.
Farrow said that the measure would enable the New Berlin child care center to restructure the payment of its obligation. She said that that revenues and enrollment at the center are healthy and ample enough to pay off any bonds that would be issued.
Tim Tully, a former New Berlin mayor who championed construction of the New Berlin Child Care Center while in office, said that lawmakers must pass the measure because the center is about $350,000 short in paying off its obligation to a group of banks. About a year ago, the banks made a loan of about $1.4 million for construction of the center, Tully said.
Tully noted that a local firm is providing short-term assistance to enable the center to make a $30,000 loan payment due tomorrow.
"Time is of the essence to get something through," Tully said.
Tully said that the center had hoped to pay off the loan with private donations. However, several grants from private foundations were substantially less than anticipated, forcing the center to seek other sources of funding.
Duff said that the issuance of tax-exempt bonds would give the center a 200 to 300 basis point break on interest rates compared with a bankloan.
Larry Nines, executive director of the Wisconsin Health and Educational Facilities Authority, said that the authority supports the measure.
"It's no different than the role we play for health and educational institutions in the state. It would create a new class of eligible borrowers," Nines said.
Lester Bagley, executive assistant to Sen. Farrow, said that the bill is on a "fast-track" and is expected to be approved in both houses before the scheduled end of the fall session on Oct. 28. The Senate Committee on Economic Development and Urban Affairs is expected to review the bill on Oct. 6, the day after the fall session begins, Bagley said.
A spokeswoman for Gov. Tommy Thompson did not return phone calls.
Farrow and Duff said that if the measure passes, the construction of child care facilities in industrial parks could be encouraged statewide. Farrow said that two industrial parks being built in the Milwaukee area could take advantage of the legislation.
"Our work setting has changed. You need day care facilities. It's a good idea to set up facilities near workplaces," Duff said.
Stephen Yanisch, a managing director at Piper Jaffray Inc. in Minneapolis, said that he would expect the measure, if passed, to get limited use given its narrow focus on industrial parks. Yanisch said, however, that he would not be surprised if lawmakers broaden the application of the measure to include all nonprofit organizations.
The New Berlin Child Care Center, located in the largest industrial park in Wisconsin, is open to the general public and is licensed to serve 144 children, ages 6 weeks to 11 years, Tully said.