Newport City Council on Wednesday approved a $2,725,000 non‑revolving line of credit and related tax‑exempt paperwork to cover the city's current expenses.

City counsel Dave Rue explained the loan package and the bank's term sheet to the council, saying the paperwork is designed to keep the borrowing tax‑exempt and to document the bank's conditions for the loans. The council voted, by voice, to accept the term sheet subject to Vermont law; to approve the city's tax certificate for tax‑exempt borrowing; to adopt a resolution stating the city's need to borrow for current expenses; and to approve the promissory note for the $2,725,000 line of credit.

The term sheet and related documents presented at the meeting describe four separate borrowings that the bank grouped together for administrative purposes. The items noted in the packet and read into the record were: a previously approved vehicle loan of $53,917 for a Chevy Tahoe; the $2,725,000 non‑revolving line of credit before the council; a proposed $1,800,000 loan described as financing a deficit tied to a tax anticipation note; and a proposed $1,000,000 loan intended to repay general funds used for water and sewer deficits. Council members and counsel made clear during the meeting that the council was acting only on the $2,725,000 line of credit that night and that the larger proposals (the $1.8 million and $1.0 million loans) would require voter approval before the city could finalize them.

The bank's documented conditions, as read into the record by Dave Rue, include: that the city maintain its operating general fund at the bank for the life of the loans; that the city provide a legal opinion confirming authority to borrow under the proposed structure (for the larger loans); that bank counsel be allowed to review the city's legal opinion; that the city provide quarterly balance sheets and statements of financial activities; that the city remain under contract with NEMREC for services while significant deficiencies appear in audit work; that the city develop a five‑year water and sewer projection before any funding of the $1,000,000 sewer loan; that the city provide certified meeting minutes showing council approval of the line of credit and of any voter approvals for the other loans; and that the city reimburse the bank for customary out‑of‑pocket costs (including legal fees) incurred documenting the loans. Rue warned that if requested documentation is not received, the bank could deem the commitment letter null and void.

Council members also discussed sequence and timing. Dave Rue advised the council to approve the tax certificate and resolution before approving the promissory note. The promissory note framed at the meeting is payable by June 30, 2026, and the packet lists an interest rate of approximately 5.24 percent. Several council members said they would sign documents in person or by DocuSign the following day. Rue said he expects to prepare similar resolutions and materials for a Monday meeting and that the city expects to warn a special election on the larger borrower items; the packet mentioned a target date of Aug. 12 for voter action on the other proposed borrowings.

Actions taken at the meeting were recorded as voice votes with no roll‑call tallies in the minutes: the council approved the bank's term sheet (subject to Vermont law), approved the tax certificate for tax‑exempt borrowing, adopted the resolution finding a necessity to borrow for current expenses, and approved the promissory note for the $2,725,000 non‑revolving line of credit. The council directed staff to provide certified meeting minutes and other documentation the bank requested, and counsel said he would issue a legal opinion as soon as he could after review of the minutes and materials.

Background: city counsel explained that because municipalities can issue tax‑exempt obligations, the council must certify that the borrowed funds will be used only for permissible public purposes (in this case, to pay current expenses) and that none of the proceeds will be used for private activities. The packet and discussion repeatedly emphasized that the larger loans in the bank's combined paperwork cannot proceed until the voters approve them and required further documentation and projections.

The council closed the special meeting after signing the available documents and agreed to complete additional signatures by DocuSign and in person the next day.