Bonding Strategy for the Municipal Building Renovation

If you’ve been to or watched our recent public hearings, you would hear me talking about how the bonding would likely go out in two tranches, and that voting on the two bonds now was necessary even though we wouldn’t be borrowing all the money in FY2014 (which ends June 30, 2014).

The bonding strategy is driven by three facts:

1. The Vermont bond bank issues bonds once a year. Municipalities have
to commit by May, and get the money in August.

2. If we were to bond now we would need to take out the full 4.9
million for the Municipal Buildings; if we bond next year we only need to bond exactly the amount
we need, which may well be less. When you combine having to pay a
year’s interest on money you aren’t using, and 20 years interest on
money you might not need to borrow, interest rates would have to jump
5 or 6 percent to justify rushing ahead now.

3. The town has never, never spent any money really getting firm
numbers on this project. Yes, David Laurin has done some sketches and
we’ve gotten some estimates, but that is nothing like (a) doing a
detailed programming document describing all the requirements for the
renovation (b) presenting that for competitive bidding by qualified
architectural firms in order to (c) discover the most satisfactory
combination of design and cost for the town. The “politics” of the
situation is that we did not want to just say, what the hell, let’s
just give David Laurin a design/build contract and get ‘er done. We
wanted a more formal process, and that is what we have now. Where the
architect is from has nothing to do with it.

You can’t “use the excess to start retiring the bond” — these bonds
are not like mortgages, redeemable early by paying more faster. The VT
bond bank aggregates bonding needs from many municipalities and puts
it into one or more larger bonds. The town doesn’t control the terms
of the bonds. In return for giving up that control we save a lot of
administrative cost and we get much better interest rates, but we
can’t pay things down in advance.

As for the explanation of why we aren’t going to jump into a
design/build, I suppose that I could add something to that, so here
goes. As a citizen watching stuff happen in town I was often
dissatisfied with the way projects like the municipal building were
approached. In particular, I didn’t think much of the way the
Selectboard put the renovation on the ballot the first time around,
without any good answers about alternatives such as moving to a
different building or building new. I didn’t think the Selectboard was
approaching the problem the right way in the spring of 2011, when the
idea that had support was to throw down a slab in front of the
existing building, put up a two story steel building fast and
inexpensively, and then tear down the old building. These were
motivations for running for the Selectboard — that I could help get a
better process, help make a better case, help deliver a better

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