2013-01-17-AC-min - Laserfiche WebLink

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January 17, 2013 4. Wright Farm Debt Financing: Mr. Addelson reviewed the process for issuing debt and presented a table that identifies estimated available CPA funds for Fiscal Year 2014 appropriations. There is just under $2.2 million in excess of the current claims on CPA funds before factoring in debt service costs required to purchase Wright Farm or acquisition costs related to a purchase at 33 Marrett Rd. Town Meeting approved $2,950,000 in debt financing for purchasing Wright Farm. The Town usually issues a bond in February each year, but it is currently premature to prepare a bond that includes Wright Farm because there isn't enough information relating to the other potential CPA fund needs that would inform the choice of a bond term, including the Cary Memorial Building and the potential purchase at 33 Marrett Rd. Mr. Addelson recommends issuance of a Bond Anticipation Note (BAN) for Wright Farm rather than a bond. This will be good for one year, during which the Town only pays interest, no principal. When transitioning to a bond, it would be possible to pay down some of the debt using CPA available funds. When the Town knows the direction that is being taken on the various projects, it will be better able to determine appropriate terms for a bond, including its duration. 5. Committee's Report to the 2014 Annual and Special Town Meeting: • Warrant Articles: ➢ Article 15 (Appropriate Bonds and Notes Premiums): Mr. Addelson explained that this is a placeholder, and it may be combined with Article 25 in the final Warrant, which covers supplemental appropriations for previously authorized capital improvements. The Department of Revenue, Division of Local Services has recently proposed new rules that would allow towns to appropriate bond premiums received in connection with the issuance of excluded debt and apply them immediately to project funding, effectively reducing the total amount that must be borrowed. Currently, such bond premiums must be reserved and applied over time to offset future debt service on the bonds. (Bond premiums on within -levy debt flow to free cash at the end of the fiscal year.) Under current market conditions, bond offerings tend to be structured with up -front premiums and higher coupon rates for marketing reasons. The Town will be going to market in a week or so with a major bond issue that covers, among other things, excluded debt funding for the Bridge, Bowman and Estabrook school projects, and it is anticipated that the Town will receive substantial bond premiums, totaling several million dollars. Appropriating the premiums would reduce the amount of future borrowings required to complete the projects. ➢ Article 22 (Appropriate from Debt Service Stabilization Fund): This is a boilerplate article permitting annual appropriations of state matching funds received for school construction projects undertaken a number of years ago that have been reserved in a specified stabilization fund; the funds appropriated must be applied to offset the excluded debt service for these proj ects. ➢ Articles 16 and 17: These articles would allow an increase in the benefits payable by the pension fund to certain widows, and the Committee should take a position. 3