Vermont Bond Bank tells Appropriations fund could cut municipal borrowing costs to about 1%

Michael Gaughan, executive director of the Vermont Bond Bank, told the House Appropriations Committee on March 10 that the bank could use a proposed Vermont Sustainable Infrastructure Fund to provide very low‑cost loans — targeting roughly 1% interest — to municipalities and to leverage larger pooled bond financings for infrastructure projects.

The bond bank briefing explained how a relatively small fund (committee discussion has cited figures such as $9.1 million or $15 million) could be deployed in three ways: direct low‑rate loans to units of government, interest‑rate buy‑downs layered with the bank’s larger pooled loan program, or as a corpus used for credit enhancement to attract additional capital. Committee members and the bank discussed how the fund could help bridge financing gaps for small‑scale infrastructure that enables housing and local development.

The Vermont Bond Bank, created in 1970, issues tax‑exempt pooled bonds that carry a state‑grade credit enhancement and a high rating, which the bank…