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Newport Council approves $2.603M bond via Vermont Bond Bank for east-side water tower
Summary
The Newport City Council on March 9 approved a resolution to borrow $2.603 million through the Vermont Municipal Bond Bank to fund the east-side water tower project, authorized city officials to sign closing documents, and heard that the city’s interest rate is 4.276 percent.
The Newport City Council voted March 9 to approve a resolution authorizing a $2,603,000 loan through the Vermont Municipal Bond Bank to finance the east-side water tower project, and authorized city officials to sign the closing documents.
Legal counsel David Rue told the council the city’s pricing arrived the day of the meeting, reporting that “the city's interest rate on the bonds ... came back today at 4.276.” He said the Bond Bank aggregates many small municipal borrowings into a larger pooled bond to secure better market pricing and then loans the pooled proceeds back to individual borrowers.
Rue summarized the structure: the Bond Bank will loan Newport $2.603 million and the city will repay in annual installments, with the first interest-only payment in May and principal-and-interest payments thereafter. “There’s an interest-only payment in May and then there’s principal and interest in November,” he said when fielding council questions about the payment schedule.
Council members moved and approved the resolution and certificate authorizing the bond issuance. In a second motion, the council authorized the mayor, the clerk-treasurer and the city’s finance staff to sign documents on the city’s behalf and to requisition loan funds as necessary to pay off the existing bond anticipation note.
Clerk Treasurer Jim Johnson was present to attest to signatures and was instructed to keep the signed packet and to coordinate overnight delivery to the city attorney’s office for closing logistics.
The council and counsel also discussed mechanics of receiving proceeds: Rue advised that requisitioned bond proceeds are typically delivered by ACH into the city’s bank account and then used to retire the bond anticipation note rather than being paid directly to the lender.
Next steps: staff will sign the prescribed signature page(s) for the resolution packet and overnight the materials to the bond counsel’s office for the March 18 closing in Boston, per the timeline Rue described.
