Sunday, July 17, 2016

from the Massachusetts division of local services;

Typical Chronology
 After city council or town meeting grants the authority to raise money through debt, the actual note or bond issuance may occur months or even years later. For this reason, it is good practice for local finance officials to meet periodically to review borrowings that have been authorized but not issued to make sure that the debt position of the community is understood by all. Once the structure of a borrowing has been determined, a preliminary official statement (POS) is developed under direction of the treasurer and disseminated to the bond market community. The POS will also be used by rating agencies in their analyses of credit worthiness. The POS and the final Official Statement (OS) are documents prepared for potential investors containing information about a prospective bond or note issue, as well as financial data about the city or town. The OS is sometimes referred to as an offering circular or prospectus. After all the preliminary work has been done and the various experts (e.g., bond counsel, rating agencies) have weighed in on the sale, the bonds or notes are sold to underwriters or broker syndicates, and ultimately to investors. Once payment on the purchase has been made, the community has the funds for the specified capital improvement or operating expenditures. To minimize interest costs or more efficiently assemble borrowing packages, treasurers should always communicate with the department head who will oversee a project or purchase to better understand when the funds will be needed. By taking a deliberate and thoughtful approach toward debt, cities and towns can optimize their borrowing practices to better maintain capital assets and minimize costs. Having a basic understanding of the process and making use of the knowledge of investment professionals improves the community’s odds of success.

an email from Templeton Town Treasurer:

Hi Jeff,

I don’t not have any paperwork on the new school.  Maybe the selectmen’s office or the school.  If you are looking for general ledger information that would be Kelli.

Kate Myers
Town of Templeton
Treasurer/Collector
PH 978.894.2764
FAX 978.894.2790

I hope this bothers others as much as it does me, how can a Town approach a 47 million dollar debt issue when the Town Treasurer states they do not have any paperwork on it?


posted by Jeff Bennett












from the Massachusetts Division of Local Servies;

(one entity that John Columbus said we (the selectmen) do not need to talk with because we are doing what is needed)

Bond Counsel Another participant in the issuance phase is the community’s bond counsel. Bond counsel is an attorney or law firm engaged to review and submit an opinion on the legal aspects of a municipal bond or note issue. Bond counsel confirms that a borrowing has met all legal prerequisites before it is put to bid on the open market after examining required documentation (e.g., signed and sealed copies of city council or town meeting votes). If bond counsel determines that a debt issue does not meet legal sufficiency, corrective action must be taken by city or town officials. This may include going back to town meeting or city council for a debt authorization or other cumbersome, not to mention embarrassing, requirements. Therefore, it is helpful to consult bond counsel throughout the authorization phase and up to the point of issuance.

So when the town water department requested a town meeting so they could get town meeting approval to borrow money, was it in the best interest of the town to rely on a bond counsel that the water department said had approved  the process? Would it have been wiser and proper for the town to have it's bond counsel look it over first, before it was presented for a vote at town meeting?

Is it wise and in the best interest of the Town to allow the school district, a separate legal entity from the town, to have so much say in Town borrowing, which will affect the Town's financial picture for years to come. Remember, this borrowing does not affect the school district and when the district increases the Town's assessment, will this debt have an impact on the Town's ability to pay? The answer is of course yes, and without some planning and forethought, it will affect the Town's ability to save and to fund capital planning. I hope the selectmen have thought about this as well.

posted by Jeff Bennett



The Gardner News, page 5, weekend issue of July 16, 2016.

Within this article, it is stated that short term borrowing in addition to MSBA pro pay will be used during construction until the school is finished and the 47 million dollar bond is taken out. So, despite what some have said was not so and would not be done, this word now comes out that this is how it will be done. All along, I could not understand how some people refuse to admit or come to terms with this is how it works. This short term borrowing was even referenced on a document dated October 30, 2015 and this same paper was handed out at Town meeting. It has a box that states the annual tax impacts of new debt. That is correct, new debt and this document also has the police station new debt//construction as beginning 2016 and complete in the fall of 2017 with the school beginning 2016 and complete in the fall of 2018.

Also within this box is Bond anticipation note or BAN, utilized for new elementary school construction with a borrowing rate of 3.5% for 28 years.

from division of local services:
Short-term Debt Short-term debt can be classified best as borrowing through the issue of notes in anticipation of either paying them off or permanently financing the debt. Short-term borrowing also allows communities to make interest-only payments. However, such debt usually has a maturity date of no more than two years, though in some cases, statute dictates a shorter time frame. Additionally, a community might choose to reissue short-term debt and/or to make principal payments under certain circumstances. The various types of short-term debt vehicles used in Massachusetts include the following: Revenue Anticipation Notes (RANs) – These notes, issued for a maximum of one year, are used to stabilize cash flow when the treasurer’s cash balances are low or fore casted to go negative (M.G.L. c. 44, §4). These notes are issued to fill a cash need, usually until receipt of quarterly or semiannual tax payments or local aid distributions from the Commonwealth.

Federal and State Aid Anticipation Notes (FAANs and SAANs) – These notes are issued to fund spending in anticipation of grant receipts, with the expectation that the note will be paid off upon receiving federal, state or other funds (e.g., Chapter 90 highway project reimbursements). 

Bond Anticipation Notes (BANs) – These notes are issued to provide funding for capital improvements. BANs are usually paid off with the proceeds of long-term financing instruments, such as general obligation bonds. However, state law allows for the reissue of a BAN for up to five years if principle payments are made in accordance with an amortization schedule that would be required if the outstanding balance were financed as long-term debt (M.G.L. c. 44, §17). Since short-term debt normally carries a lower interest rate than permanent, this strategy may make sense under certain circumstances.



Available State Programs 
Additional borrowing options for communities offered by the Commonwealth include state qualified bonds and the State House Notes program. State Qualified Bonds – A financing alternative unique to Massachusetts, qualified bonds are for municipalities with marginal credit ratings. The State Treasurer pays the debt service for GO bonds directly from the community’s local aid, thereby reinforcing the security of the bond and improving its marketability, thus reducing the borrowing cost. Qualified bonds are only authorized by the Municipal Finance Oversight Board upon application by a city, town, or regional school district under M.G.L. c. 44A.

posted by Jeff Bennett