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Council hears bond counsel on $100M school bond‑anticipation notes; effective borrowing cost reported at 2.59%
Summary
In a pre‑meeting work session, bond counsel explained the town’s bond‑anticipation note refinancing for school projects, MSRB/EMMA disclosures, tax compliance and closing logistics; staff said the notes’ yield is 4% but the effective cost to the town after premium is 2.59% and funding is scheduled to occur on June 24.
At a June 22 work session preceding the regular council meeting, the town’s bond counsel briefed the Town Council on the mechanics and schedule for issuing bond‑anticipation notes tied to school construction and related capital work.
The counsel said these are one‑year notes designed to be rolled into longer‑term financing when sufficient portions of the project are completed and state school construction reimbursement is triggered. The attorney walked the council through the disclosure documents on EMMA (the MSRB repository), the tax‑compliance certificate (which limits private business use of proceeds), continuing disclosure obligations and timing for signatures at closing.
The financing structure includes bond premium that reduces the town’s effective cost. "The yield is 4%, but because of the bond premium we're getting, yes, it's effectively 2.59%," Finance Director Brian Sylvia explained during the work session.
Bond counsel and finance staff said funding will occur June 24, with approximately $45 million used to retire last year’s notes and the remainder available for the coming year’s project work. Counsel noted that ARG arbitrage/tax compliance rules require documentation of how proceeds are used and that continuing disclosure statements will be posted on EMMA for investors.
Council members thanked bond counsel and finance staff for the explanation. No formal vote was required at the work session; staff will proceed with required signatures and closing steps this month.
