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Another
pooled bond
The first option is a pooled bond program that offers fixed rate financing. Tumage pointed to the Ibwn of Middleburg, Orange, and other Virginia towns that had used the pooled bond program to finance their own water system and wastewater projects.
The VML combines capital
projects together with other localities and issue bonds together, sharing the costs.
The VML also pointed out that their program simplifies the financing process for localities, by only requiring a three page application. They also handle all negotiations with the service providers.
Tumage said that many towns have been pleased with the streamlined financial process of the VML’s bond program.
Commercial paper
The second option proposed by the VML was a commercial paper loan.
Commercial paper has a short maturity, 30 days, and may be continually rolled-over (“re-marketed”) in order to fund longer-term projects.
Tumage said that the result of this type of financing is an extremely low, but variable interest rate,
These loans are projects pooled and financed with shortterm 30 day tax exempt notes. It allows localities to receive flexible financing whenever necessary. Repayment of the loan is without penalty.
Since the commercial paper program is a variable rate service, the annual debt service payment would be based on current interest rates at the time of renewal.
91.5%