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Whitco

An 'unusual' bond method may save cash



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Christopher Clark. (click for larger version)
August 08, 2010
SOUTHBRIDGE — The idea of municipal bonding may make many people's eyes glaze over, but an "unusual" process Town Manager Christopher Clark hopes the council will accept tonight could save taxpayers a bundle.

Specifically, he's referring to the ongoing $6.5 million industrial park access road project, which Casella has agreed to fund via annual payments. To the IRS, however, that arrangement is unusual.

"Casella is going to get a benefit, so we couldn't use traditional borrowing," Clark said, adding that his goal has long been "to make sure taxpayers don't have to pay for the borrowing."

To smooth out "a couple bumps in the tax code" created by the arrangement, Bond Counsel Richard Manley of Boston's Edwards Angell Palmer & Dodge said the town has to use a different method of bonding the project than it would to build a typical public road and still keep it a tax-free bond.

"This style of transaction is unusual. You have a very favorable arrangement in the landfill transaction," he said. "… It's nice to get a resolution that gets the town where it wants to be."

The kind of bond Clark's trying to use is something towns don't normally do, but Manley said it's "a common technique" used by state agencies involved in development. One quirk of the law he's using, however, is that it requires both this week's public hearing and a second vote by the Town Council, which already approved bonding in 2008.

For more on this story, please see Monday's Southbridge Evening News.

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