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.