USD 383 creates financial agreement with MATC to assist with new construction

Assistant superintendent Eric Reid told The Mercury that MATC was previously under the authority of the district until the summer of 2004. At that time, the tech college split to become its own entity, establishing a campus adjacent to CiCo Park in Manhattan.

Reid said the district at that time deeded property to the tech college with a reversionary agreement attached. The agreement states that the property deeded to MATC would be returned to the school district if tech college officials stopped using the land for educational purposes. That includes if the tech college runs out of cash to build new facilities.

Reid said the reversionary agreement is now making it difficult for MATC administrators to secure financing for their planned expansion, which includes three new buildings on campus that will house several new programs, including diesel mechanics, plumbing, and childcare education. Since MATC has no local taxing authority, meaning it cannot generate funds for itself, officials are seeking lease-purchase financing from Kansas State Bank to help pay for campus upgrades.

Kansas State Bank will set up an escrow account that MATC will deposit $500,000 into before Sept. 1 to use as collateral for the ongoing loan.

The school district then collects annual interest from the account, which Reid said is set up in escrow “so nobody can touch it.” If MATC officials default on the loan, Reid said the district would then have 180 days to notify Kansas State Bank of its decision either to assume the debt of the property it deeded to MATC, or to release the reversion agreement and let the bank liquidate the property.

If MATC makes all its payments as intended, Reid said the $500,000 in escrow effectively becomes the tech college’s final payment on the loan, and the reversionary agreement stays in effect. If for some reason the tech college defaults and USD 383 decides to not take possession of the property, the district would keep the $500,000 in exchange for the reversionary agreement being forfeited.

The board had little discussion about the agreement before approving it unanimously. The entire board meeting lasted about five minutes.

“It’s not a very common situation,” Reid said of the reversionary agreement. “It’s set up to protect property interests of the district while allowing MATC to move forward with financing for their building projects.”

The tech college’s first phase of expansion features the construction of a $16.3 million Advanced Technology Center, which MATC officials want completed by next March to meet local need for certain trade courses. Much of that cost is being paid through federal and state grants.

“A strong MATC is good for USD 383,” Reid said. “The programs they’re looking to add are in demand by our students.”

Phases two, three and four of the MATC expansion plan include constructing a three-story building on the east side of campus to house biosciences, fire safety and healthcare courses; renovating the central MATC building; and adding a facility on the northwest side of campus to contain an early childhood development program and a regional testing center.

MATC currently has about 1,100 students enrolled. With the planned expansion, tech college officials hope to add at least 300 students by 2027.

Officials with USD 383 and MATC began developing a partnership to offer dual and concurrent-credit courses at the high school in 2014. More than 1,900 students are enrolled in at least one Career and Technical Education course for the current school year.