June 12, 2002

APPROVED – June 18, 2002






Mr. Hal Lynde, Mr. William McDevitt, Mr. Jean-Guy Bergeron, Mr. Richard Derby


Also present:



Mr. Pat MacQueen, Interim Town Administrator


Mr. Greg Farris


Vice Chairman Lynde opened the meeting at approximately 4:00 pm. 




Follow up meeting with Zions Bank


Mr. Lynde said the Selectmen had asked the Zions Bank Representative to meet once again as a follow up to discuss the proposal for financing of the Municipal Building Project.  He noted that at the last meeting the proposal called for a twenty-year package that had a ten-year rate of 4.9% with the last ten years being at 12%.  He said during the initial fifth year that the 12% rate could be reopened.  He said the interest rate was based upon the Seattle Home Loan Bank. 


Ms. Susan Winshall, Zions Bank met with the Selectmen.  She said that at the previous meeting, the Selectmen had expressed interest in financing 5.7 million over a twenty-year term.  She said that since the last meeting the attorneys at Nixon Peabody had researched New Hampshire State law and determined that there was no variability allowed for interest rates for general obligation bonds for town or school districts in New Hampshire.  Nixon Peabody viewed the Zions financing reset structure and believed that it constituted variability.  Ms. Winshall said that since the determination by Nixon Peabody, Zions had to come up with a different solution. 


Ms. Winshall went on to explain the new proposal drawn up by Zions Bank.  She said that the 5.7 million dollars would still be raised, but in order to accommodate the legal structure, they have broken it into two series (A & B).  She said that series A carried a fixed rate of interest for ten years at the rate of 4.95% and series B was interest only for the first ten years, and had an interest rate of 4.95% for the first five years, and 12% thereafter.  She said since Zions Bank was not comfortable giving the market rate for more than ten years and provided the 12% interest rate as a cap and would never expect to be paid the 12%.  She said that Zions recommended and encouraged that the rate be refinanced after five years.  She said that at anytime after the initial five years either series could be prepaid at par.  She noted that at the end of five years Zions Bank would refinance and re-advertise another five years of level principal payments at the prevailing interest rates. 


Mr. Lynde reviewed the principal payments and the rates.  Ms. Winshall discussed the two options the Town had as follows: 1) private purchase by the bank for its own portfolio; and 2) public sale through the underwriting department.  She said that Zions Bank was still not comfortable with the public offering. 


Mr. McDevitt discussed the difference between the Zions Bank terms and the Bond Banks terms because he believed the nature of municipal lending was long-term with stated interest rates.  Ms. Winshall said that such terms were standard in the public market and what Zions was proposing was a private purchase of their bank. 


There was a discussion regarding the schedule of payments and the flexibility of refinancing due to the two-series structure provided.  Ms. Winshall noted that the debt service payments would essentially level out based upon the RSA’s.  The assumption was that the Town would refinance the rate before being charged the 12%.  The Zions Bank representative explained advance refunding and what steps the Town could take within the initial five years if rates raised incredibly.  Ms. Winshall ended by informing that the attorneys had approved the structure internally and if the Town wanted to proceed Zions Bank could close within a couple weeks. 


Ms. Winshall noted that if the Town wanted a ten-year term the interest rate could be at a fixed rate of 4.95%.  Mr. Lynde explained that the reason the Town wanted a twenty-year term was because the design of the building was prepared to meet the requirements for the next twenty-year and therefore would be paid for by the people getting the benefit.  Mr. McDevitt said that the Town had been informed of the tax rate impact for twenty years.  Mr. Bergeron discussed what the payments would be if the Town opted for a ten year term. 


There was a brief discussion regarding the pending law suit (that affected SB 2 towns) and what other towns were doing for bonds and the type of structure they were proceeding with. 


Mr. McDevitt asked what the disadvantage was to wait until the last week in July to see what would happen with the pending lawsuit.  Ms. Winshall said that Zions Bank would not hold the interest rate until July, but they would provide the market rate.  There was an additional discussion regarding how the Town would proceed if an appeal to the lawsuit were not submitted. 


Mr. Lynde thanked the representatives for coming back to discuss the financing.  He said the Selectmen would need to discuss further before making a decision.  Ms. Winshall said they had received a credit package and would proceed to pre-approve the Town in case it was decided to move forward.  She said once the Town was pre-approved, it would take two to three weeks until the money could be received. 




MOTION:           (Derby/Bergeron) To adjourn the meeting.


VOTE:                 (4 - 0 - 0) The motion carries. 


The meeting was adjourned at approximately 4:56 pm.


                                                                                          Respectfully submitted,


                                                                                          Charity A. L. Willis

                                                                                          Recording Secretary