Bond Banks 101: Exploring the First—The Vermont Bond Bank

In this episode of Full Disclosure, our hosts Tyler Traudt and Nina Enholm explore the unique role of bond banks with Michael Gaughan, Executive Director of the Vermont Bond Bank. Michael shares his expertise on how bond banks provide critical access to capital for small and rural communities, ensuring they can fund essential infrastructure projects without the complexities of direct market access.

Michael takes us through the origins of the Vermont Bond Bank, the first of its kind in the nation, and explains how it continues to evolve, offering innovative financing solutions that help municipalities manage challenges like rising interest rates, disaster recovery, and sustainability projects. From a small town rebuilding after a devastating fire to statewide efforts to address climate resilience, listeners will gain valuable insights into how bond banks operate, the challenges of financing public projects in rural areas, and why access to equitable, long-term capital is crucial for the sustainability and growth of small communities. 

Featured Guest:

Michael Gaughan is the Executive Director & Secretary of the Vermont Bond Bank, where he has led efforts to support municipal financing and infrastructure development across the state since 2018. In this role, Michael oversees lending programs that enable local governments, school districts, and other public entities to secure funding for essential projects. He also serves as the Executive Director of the Vermont Educational and Health Buildings Financing Agency, further advancing access to cost-effective capital for educational and healthcare institutions.

Michael represents the Bond Bank on the State of Vermont’s Capital Debt Affordability Advisory Committee, providing expert insight on the state's long-term borrowing capacity. His extensive experience in public finance includes serving as a Director at the National Development Council (NDC), where he worked on community development finance initiatives nationwide, and as a public finance banker at PNC, specializing in governmental, housing, and community facilities transactions.

In addition to his leadership roles, Michael is actively involved in public finance and economic development organizations. He is a board member of the Northeast State Government Finance Officers Association (NESGFOA), an advisor to the Government Finance Officers Association’s (GFOA) Committee on Economic Development and Capital Planning, and a member of the Executive Committee for the City of Burlington’s Planning Commission.

 

Top Takeaways from Episode 02:

1. How Bond Banks Level the Playing Field – The Vermont Bond Bank provides small and rural communities with access to affordable financing, ensuring that even towns with just a few hundred residents can fund essential infrastructure projects at the same rates as larger municipalities.

2. A History of Innovation – Vermont was home to the first bond bank in the U.S., created to address a capital crunch in the 1970s. Since then, the model has evolved to meet modern financial challenges, offering solutions beyond traditional municipal bonds.

3. Bridging the Gap for Disaster Recovery – Vermont’s Municipal Climate Recovery Fund is a forward-thinking initiative that helps communities s