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Thursday, August 2, 2018

JUST MISSED IT! Grand Traverse Academy Financial Projections Reveal Improved Position; With August 20 $1,521,277 Balloon Payment Looming, Charter School Forgoes Michigan Public School Academy State Aid Note Loan Program To Focus On Second ReFi Of $2.3 Million Traverse City State Bank Line Of Credit

“Please be informed that Grand Traverse Academy did not submit an application for the 2018 PSA SAN program. Accordingly the Department does not have any of the requested information.”

According to a Balance Sheet filed by the Traverse City charter school on July 26, 2018, the Grand Traverse Academy has improved its financial position. With net income pegged at $686,891, the school came close to achieving a key bond covenant. 

According to the terms of its Series 2007 $16.2 million municipal bond, the bond covenant requires year-end net income pegged at 10 percent of total expenditures, which totaled $7,528,846.

Compliance with the 10 percent requirement would have realized at least a $752,884 balance, and the GTA scored 9.1% with its $686,891 net income.

However, a Michigan Treasury official (responding to my Freedom of Information Act Request), revealed the “Grand Traverse Academy did not submit an application for the 2018 PSA SAN program.” 

In 2017, the Grand Traverse Academy board refinanced $2.3 million in short-term debt it owed to Traverse City State Bank with an agreement that included a stunning provision requiring the interception of nearly $895,000 of school aid funds away from the Grand Traverse Academy during the 2017/18 fiscal year and transmitted directly to bondholders for debt-service payments — funding that could not be redirected to any other budget line item.

Along with a $1,521,277 balloon payment due in less than three weeks, and the second refinancing of its debt, the Grand Traverse Academy is also facing the still-unresolved Comstock Construction civil action (scheduled for a bench trial beginning August 28).

Stay tuned; with the first day of school a month away, skidding enrollment trend may impact financial picture.

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