New Hampshire Municipal Bond Bank.

According to RSA 33:2, bonds can be issued up to 30 years, but the term of the bonds cannot exceed the life expectancy of the project.

For example, if the bond was for equipment with a life expectancy of 10 years, a bond could not be issued for more than 10 years.

Another factor which effects the term is that bonds are generally sold in amounts divisible by $5,000. Note: One time odd amounts can be allowed in the first maturity. A bond in the amount of $50,000 would not be issued for more than 10 years because the maturities each year would not be divisible by $5,000.

A $51,000 bond could be issued with the first principal payment of $6,000 and the remaining 9 payments at $5,000.

Recommendation: Allow one extra year when determining the term of the bonds to allow for timing issues with the bond bank sales. Do not include the term in the warrant article. If the board is allowed to select the term, they can make the best decision at the time of issuance depending upon market conditions.

There are two basic structures available:

Level Principal:

The principal payments are equal every year
Usually results in the lowest interest cost
Generally results in higher impact on the tax rate in early years

Level Debt:

The total principal plus interest payments are equal every year
Usually results in higher interest cost
Results in constant impact on the tax rate throughout the term

Capital Projects. See RSA 33:3

Permanent bonds should be issued when you are reasonably sure that all of the proceeds will be expended in a timely manner. If the timeline, amount of project, or other revenue sources are uncertain, Bond Anticipation Notes (BANs) should be issued on a temporary basis to provide the necessary start up cash for the project.

Bond Anticipation Notes (BANs) are short term notes issued to provide interim financing for the project until the permanent bond is issued. The bond authorization at the annual meeting includes the authority to issue BANs.
Per RSA 33:7-a BANs can be issued up to 5 years, but principal payments must start after 3 years.

Bonds issued through the NHMBB cannot be prepaid. The NHMBB combines all of the borrowers together to issue bonds in the market. Each maturity consists of several governmental entities.
The NHMBB bonds can be called at certain dates by maturity when the market is conducive to a refunding. In the past, when the rates dropped, the NHMBB called maturities and shared the savings with the borrowers participating in the maturities that were called.

If the district issues its own bonds or borrows from a bank, terms can be determined for prepayment. In general, the rates will be higher, if prepayment is allowed.

Rates tend to be higher

Prepayment often allowed at minimal cost

Recommendation: Contact three to five banks to keep the rates competitive. Call the NHMBB before you award the bid to be sure the rates are reasonable in the current market.

There will be a bond counsel fee, paid by the municipality directly to the bond counsel.
If you are issuing bonds on your own, the following fees are required in most instances:
Bond Counsel, Financial Advisor, Rating Agency, Printer, and Paying Agent