2017-03-12-AC-STM-rpt - Laserfiche WebLink

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has the option either to: (i) appropriate the premium up front to lower the amount of the borrowing; or (ii) reserve the funds for future appropriation to another, similar capital project for which borrowing may be authorized for an equal or longer term. Premiums from February 16, 2017 Bond and Note Issuance At the recommendation of the Town's finance staff and bond counsel, it is proposed that option (i) be fol- lowed for all premiums received in connection with the Town's most recent sale of bonds and notes on February 16, 2017, whether for exempt or non - exempt debt, i.e., that the premiums, net of issuance costs, be applied up front to lower the amount of the associated borrowing for which the premiums are received. This is a cleaner and simpler approach, and helps to assure that legal obligations are satisfied without the need for inordinate tracking and paperwork. Thus: • The low bid for a proposed bond issue of $47,423,000 included a premium of $2,041,133, for a TIC of 3.06 %. After applying the bond premium, net of issuance costs, the amount borrowed is reduced to $45,423,000. • The low bid for proposed BANs totaling $13,426,052 included a premium of $38,956, for a TIC of 0.96 %. After applying the premium, the amount borrowed, net of issuance costs, is reduced to $13,387,096. It is anticipated that all future warrant articles authorizing within -levy debt will include a clause providing for the application of option (i) to bond premiums if so recommended by the Board of Selectmen. In ad- dition, option (i) will be used for in -levy debt that has been previously authorized by the 2016 Town Meeting but for which bonds /notes have yet to be issued. When option (i) is applied to borrowing that includes both exempt and non - exempt debt, the premiums will be applied strictly pro rata to all borrow- ings, both exempt and non - exempt, for which they are received. The Committee unanimously recommends approval of this article (9 -0). 9