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