The Wisconsin Health and Education Facilities Authority sold $168.8 million in bonds to finance new offices for a crime lab in Milwaukee.
The bonds mature on August 1, 2027, and yield 3.875%. They pay interest at 5%. The securities received a rating of Baa2 from Moody’s Investors Service.
The office construction includes a complex medley of public and private enterprises. The authority will loan the bond proceeds to Forensic Science and Protective Medicine Collaboration, Inc (FSPMC), a nonprofit associated with a private medical school that owns the land on which the crime lab will be built by private contractors. When completed, the facility will house the Milwaukee County Medical Examiner’s Office and the Milwaukee County Office of Emergency Management, in addition to the state-run crime lab.
FSPMC will own the project until 30 days after its completion, which is expected in 2026. It will then be sold to the County of Milwaukee and the state of Wisconsin.
Moody’s analysts said the rating reflected their view of the credit risk that the nonprofit will receive the purchase price from its government buyers. However, they warned that the rating is tempered by “weaker than usual project financing structure” with regard to force majeure events. The project is less protected against unexpected events than most public-private partnerships, according to Moody’s. “While these catastrophic events are less likely to occur, their impact can be material and take significant time and money to overcome,” the analysts wrote.
Wisconsin officials touted the project as essential for public safety. Wisconsin Attorney General Josh Kaul said in a statement that “ensuring the state crime labs have the facilities they need to keep up with scientific and technological advancements will help with the crucial work of keeping our communities safe.”
The bonds are limited obligations of the authority, payable by the proceeds from the sale of the facility.
Raymond James & Associates, Inc served as lead underwriter on the issuance, purchasing the bonds for $172 million. Kaufman, Hall & Associates, LLC acted as financial advisor.