Council approves bond financing to build Dorsey Street water tank

The South Burlington City Council on Feb. 18 approved the resolution to close financing for a new water tank on Dorsey Street and authorized staff to sign the documents needed to complete the Vermont Bond Bank loan.

The council voted unanimously to “accept and approve the resolution and certificate” enabling the city to proceed with the Vermont Bond Bank (VBB) financing. The council also designated City Manager Jesse Baker, Director of Finance and City Treasurer Martha Machard and City Attorney Colin McNeil to act on the city’s behalf related to the bond transaction and authorized the city manager to execute the authorized-representative documents.

Bond counsel Robert (Bob) Fletcher told the council the financing will be structured as a general-obligation loan purchased by the Vermont Bond Bank and that the city will not know the final interest rate until the bond bank prices its bonds next week. Fletcher also noted that the VBB financing includes a state-intercept provision: if the city fails to make debt-service payments but is entitled to money from the state, the bond bank may collect directly from the state.

Public Works Director Tom DiPietro said the project is moving quickly: the council approved the contract award Feb. 3, the pre-construction meeting is imminent, and construction is expected this summer into the fall. DiPietro told the council the team expects to reach substantial completion in the next construction season and that the bond-bank rule requiring 85% of proceeds be spent within three years should not pose a problem.

Councilors asked for an update on schedule after the pre-construction meeting; DiPietro agreed to provide one. The council’s action authorizes staff to finalize and sign closing documents later this week so the financing can proceed.

The council also discussed logistics for signatures and agreed staff would arrange execution of the documents before the bond bank’s closing.