Municipalities and Regional Government

Sponsored Legislation

S.1335 An Act relative to proceeds from the sale of bonds

This bill would make technical corrections to the changes made by the Municipal Modernization Act to M.G.L. c. 44, § 20 related to a municipality’s treatment of premiums (net of issuance costs) received when issuing debt. The bill would:

  • require that premiums from temporary debt such as bond anticipation notes (BANs) be reserved for payment of the first interest payment on the BANs;
  • remove the current requirement that each premium be appropriated for a capital purpose for which the municipality could borrow for an equal or greater term than the borrowing that generated the premium; instead, it would allow the premiums to be appropriated for any borrowable purpose; and
  • require that premiums received on a borrowing, for which a Proposition 2½ debt exclusion has been approved, be used for project costs and to reduce the borrowing; this would eliminate the need for the Division of Local Services (DLS) to adjust the debt exclusion to reflect the true interest costs of the borrowing.