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Home My Public Portal AboutFY2019 Debt ServiceDEBT SERVICE The Town of Brewster has an ongoing responsibility to create and maintain their capital assets including the Elementary Schools and a portion of the Nauset Regional School System. The Capital Program Committee reviews a five year capital and special project forecast on an annual basis. Decisions are vetted and made based upon the forecast. The Capital Program Committee analyzes departmental requests and prioritize requests based upon the community needs. It is the treasurer’s responsibility to maintain sufficient cash balances to meet the spending demands of departments within the limits of appropriations. Occasionally, some communities find themselves in need of a short-term infusion of cash for capital or operating purposes. For these and other reasons, Massachusetts General Law authorizes cities and towns to issue debt under certain circumstances and for various durations. Short Term Debt Short-term debt can be classified best as borrowing through the issue of notes in anticipation of either paying them off or permanently financing the debt. Short-term borrowing also allows communities to make interest-only payments. However, such debt usually has a maturity date of no more than two years, though in some cases, statute dictates a shorter time frame. Additionally, a community might choose to reissue short-term debt and/or to make principal payments under certain circumstances. The various types of short-term debt vehicles used in Massachusetts include the following: Revenue Anticipation Notes (RANs) – These notes, issued for a maximum of one year, are used to stabilize cash flow when the treasurer’s cash balances are low or forecasted to go negative (M.G.L. c. 44, §4). These notes are issued to fill a cash need, usually until receipt of quarterly or semiannual tax payments or local aid distributions from the Commonwealth. Due to the Collector / Treasurer’s high collection rate, the Town of Brewster typically does not issue revenue anticipation notes as the cash flow to meet the Town’s obligations is sufficient. Federal and State Aid Anticipation Notes (FAANs and SAANs) – These notes are issued to fund spending in anticipation of grant receipts, with the expectation that the note will be paid off upon receiving federal, state or other funds (e.g., Chapter 90 highway project reimbursements). Bond Anticipation Notes (BANs) – These notes are issued to provide funding for capital improvements. BANs are usually paid off with the proceeds of long-term financing instruments, such as general obligation bonds. However, state law allows for the reissue of a BAN for up to five years if principle payments are made in accordance with an amortization schedule that would be required if the outstanding balance were financed as long-term debt (M.G.L. c. 44, §17). Since short-term debt normally carries a lower interest rate than permanent, this strategy may make sense under certain circumstances. Long-term Debt Permanent financing vehicles (i.e., municipal bonds) are typically issued when market conditions make it advantageous to lock in a fixed interest rate or when further refunding of short-term debt is no longer an option due to statutory time limits. The various purposes for which borrowings are permitted are expressly outlined by M.G.L. c. 44, §7 and §8. Nationwide, general obligation (GO) bonds are by far the most prevalent form of long-term municipal debt, and this is especially true in Massachusetts. GO bonds are backed by the full faith and credit of a municipality and are issued for periods ranging from five to thirty years, depending on limitations established by state law. Additional vehicles for long-term debt do exist. Examples include pension obligation, revenue, conduit, special tax, and limited obligation bonds. However, these complex options, while more common in other states, are almost never issued by Massachusetts communities. Such debt vehicles are suited to very specific or unique financing purposes that, in most instances, require special legislation or state approval. Excerpt: Massachusetts Department of Revenue “Understanding Municipal Debt”. http://www.mass.gov/dor/docs/dls/mdmstuf/technical-assistance/best- practices/understandingmunicipaldebt.pdf GENERAL FUND DEPT HEAD TOWN ADMINISTRATOR SELECTBOARD FINANCE COMMITTEE EXPENDED APPROPRIATED REQUESTED RECOMMENDED RECOMMENDED RECOMMENDED EXPENSE Road Betterment Prin.-$ 90,000$ $ - $ - $ - $ - -100.0% $ (90,000) Road Betterment Int.-$ 13,913$ $ - $ - $ - $ - -100.0% $ (13,913) Water Betterment Prin.-$ 5,000$ $ - $ - $ - $ - -100.0% $ (5,000) Water Betterment Int.-$ 1,090$ $ - $ - $ - $ - -100.0% $ (1,090) Bond-Town Principal 1,363,504$ 470,400$ $ 1,345,400 $ 1,345,400 $ 1,345,400 $ 1,345,400 186.0% $ 875,000 Bond-Town Interest 399,527$ 162,326$ $ 653,813 $ 653,813 $ 653,813 $ 653,813 302.8% $ 491,487 Bond-Water Principal 560,113$ -$ $ - $ - $ - $ - 0.0% $ - Bond-Water Interest 231,128$ -$ $ - $ - $ - $ - 0.0% $ - Temp Int Well 6 & Copelas -$ -$ $ - $ - $ - $ - 0.0% $ - Temp Note paydown (Eddy)-$ -$ $ - $ - $ - $ - 0.0% $ - Road Betterment Prin (Currently Short-Term)-$ 30,062$ $ - $ - $ - $ - -100.0% $ (30,062) Road Betterment Int (Currently Short Term)-$ 12,025$ $ - $ - $ - $ - -100.0% $ (12,025) Town Principal (Currently Short Term)391,103$ 204,600$ $ - $ - $ - $ - -100.0% $ (204,600) Town Interest (Currently Short Term)15,483$ 91,840$ $ - $ - $ - $ - -100.0% $ (91,840) Issuance Costs 68,837$ 30,000$ $ 30,000 $ 30,000 $ 30,000 $ 30,000 0.0% $ - Short Term Note Paydown 50,000$ $ 50,000 $ 50,000 $ 50,000 $ 50,000 0.0% $ - Nauset Regional Debt Assessment -$ 114,632$ $ 115,162 $ 115,162 $ 115,162 $ 115,162 0.5% $ 530 GRAND TOTAL 3,029,695$ 1,275,888$ 2,194,375$ 2,194,375$ 2,194,375$ 2,194,375$ 72.0% $ 918,487 Vote 5-0-0 Vote 6-0-0 % CHANGE YR / YR $ CHANGE YR / YR Previous bond issuance costs were paid from bond premiums, however bond premiums are only a one-time source. If issuance costs are paid from bond premiums in FY2018, the recommendation is to reallocate the funds to paying down additional short term notes. Road and Water Betterments are a paid by the taxpayer benefiting from the updates. (Self Imposed Tax). *Note: Water and Golf Debt moved to Water and Golf Opearting Budgets DEBT SERVICE FY2017 FY2018 FY2019 Debt Service 3/23/2018