When a municipality has had a successful bond vote and needs funds before the Vermont Municipal Bond Bank sale, interim financing can be obtained from commercial lenders. Other state and federal programs may be available to assist municipalities with project funds.
Below are several interim or alternate financing options:
| Available Cash/Cash Flow |
Under some circumstances, the municipality may use available cash to pay for such project costs and reimburse itself from the proceeds received from the VMBB.
See your local bond counsel for more information. |
| Bond Anticipation Note |
A short-term note issued in anticipation of the later issuance of bonds, usually paid from the proceeds of the sale of the bonds.
See your banker or financial adviser for more information. |
| Capital Improvement Note |
This type of short-term indebtness requires voter approval, but the approval process is not as complicated as a bond election. These notes are issued through a local bank and generally finance low-cost capital improvements or those with a short useful life. |
| Qualified Zone Academy Bonds (QZABs) |
QZABs allow local communities to finance school improvement or renovations (not new construction) at little or no interest cost by giving bond buyers federal tax credits in lieu of interest. There are specific criteria that a school district must meet in order to qualify. Contact the Vermont Department of Education for more information.
For more information go to http://www.edfacilities.org/search/index.cfm |
| Municipal Lease |
Municipal leases tend to be structured as installment contracts for the purchase of a piece of equipment or other asset. Interest rates are typically higher than bond rates and the payback period tends to be much shorter. However, they usually have minimal up front issuing costs and sometimes can provide a lower net cost than issuing bonds.
See your banker or financial adviser for more information. |
| State Aid Anticipation Note |
A short-term note issued in anticipation of the receipt of State Aid. Typically the note is paid back from the proceeds of the State Aid.
See your banker or financial adviser for more information. |
| Tax Anticipation Note |
A short-term note issued in anticipation of future tax collections.
See your banker or financial adviser for more information. |
| Qualified School Construction Bonds |
QSCBs are tax credit bonds for school capital projects. The tax credit and maximum term is set by the U.S. Treasury. These bonds are issued at little or no cost to the school district. Contact the Vermont Department of Education for more information. |
| Recovery Zone Economic Development Bonds |
RZEDBs are taxable bonds with an interest rebate feature, making them less expensive than tax-exempt bonds. Municipal and project eligibility is the same as tax-exempt bonds. The authority to issue these bonds expires on December 31, 2010. Contact the Vermont Municipal Bond Bank for more information. |
| Vermont Municipal Equipment Loan Fund |
Low or no interest loan program administered by the State Treasurer's Office for the purchase of "heavy equipment". 29 V.S.A §§1601-1603.
Telephone the Treasurer's Office at 802-828-2772 or 1-800-642-3191 or email Treasurers.Office@state.vt.us |
| USDA Rural Development |
Financial programs to support essential public facilities and services such as water and sewer systems, housing, health clinics, emergency service facilities, and electric and telephone service.
For more information visit www.rurdev.usda.gov |
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