Bond Financing Options
Transcript of Bond Financing Options
BOND FINANCING OPTIONS
USING ASSESSMENTS
Legal basis for issuance of
Assessment Bonds 2
Special Assessment Districts
Improvement Act of 1911
Municipal Improvement Act of 1913
Used in combination with the Improvement Bond Act of 1915
Improvement Act of 1972
Business Improvement District Law of 1994
Bond Financing Options Using Assessments
Why do Public Agencies issue
Assessment District Bonds? 3
It is a tool to finance infrastructure and to have the costs paid by those who benefit from the
improvements
In other words, infrastructure provided without City general tax dollars or existing resident’s tax
dollars
And in most cases it allows the City to get more infrastructure sooner and at a lower costs than
if it was built under the City’s typically Capital Improvement Program and available funding sources
Bond Financing Options Using Assessments
Usual Sequence of Events 4
1. Local Agency / Property Owner Petition Initiated
2. Actions Taken by Legislative Body
3. Legislative Body Commences Assessment Proceedings
4. Public Hearing
5. Assessment Balloting and “Majority Protest” (Proposition 218)
6. Final Actions Taken by Legislative Body
7. End of Cash Collection / Statue of Limitations
8. Bonds Issued
9. Annual Assessments levied to pay debt service on the Bonds
10. Project Costs Funded/Reimbursed
11. Public Agency administers the District until Bonds mature
Bond Financing Options Using Assessments
5
Assessment District Bond
Issuance
Bond Financing Options Using Assessments
Bond Issuance steps 6
How do we do it? 1. Financing team drafts financing, legal and financing
documents including:
Resolutions
Bond Indenture
Preliminary Official Statement/Official Statement (includes appraisal/Market Analysis/Engineer’s Report)
Continuing Disclosure Agreement
Bond Purchase Agreement
2. Issuer approves financing documents and present reports to
the policy makers
3. Issuer sells bonds to underwriter
4. Underwriter sells bonds to investors
Bond Financing Options Using Assessments
Bond Issuance steps - continued
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How do we do it? (continued)
5. Issuer receives $’s from investors in exchange for
bonds
5. Net proceeds used to pay for capital projects
6. Annual Assessments levied and collected to pay
debt service on the Bonds per Engineer’s Report
Bond Financing Options Using Assessments
Financing Team Members 8
Public Agency – presents report, documents and
recommendations to the policy-makers for their
deliberation
Bond Counsel – prepares all required bond documents
and provides legal opinion
Financial Advisor – fiduciary responsibility to issuer to
protect their financial interests and provide
independent financial advice related to the issuance of
bonds
District Administrator – assists Issuer in preparing tables
for the disclosure documents and administering the
Assessment District Bond Financing Options Using Assessments
Financing Team Members continued
9
Appraiser – estimates value of assessed property subject to the assessment lien
Underwriter – buys the bonds from the issuer
and them sells them to investors
Disclosure Counsel – prepares bond sale
financing documents (Official Statement, Bond
Purchase Agreement, Continuing Disclosure Agreement)
Fiscal Agent – holds, invests and disburses funds
at direction of Issuer
Bond Financing Options Using Assessments
Initial Bond Disclosure 10
Preliminary Official Statement
Tell the truth, the whole truth and nothing
but the truth
Requirements continue to evolve and are becoming more stringent
Bond Financing Options Using Assessments
Administering the Assessment District Bonds
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It is important to know your Assessment District
Make sure you ask a lot of questions and
get good answers from your Financing
Team
In most cases, the Public Agency is the
only one there for the full term of the
Assessment District Bonds
Bond Financing Options Using Assessments
Basic Steps of Assessment District Bond Administration
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Manage the Bond Funds
Meet the annual administrative
requirements
Customer Service with impacted property
owners and others
Delinquency Management
Continuing Disclosure
Investment of Bond Proceeds
Arbitrage Rebate Calculations
Bond Financing Options Using Assessments
Are Governmental Agencies issuing
Assessment District Bonds? 13
Yes, on average over the last 10 years there have been approximately 49
Assessments Bonds issued in California
each year
The average dollar amount of Assessment
District Bonds sold in California over the last
10 years is approximately $335 Million per
year
Bond Financing Options Using Assessments
Assessment District Issuance History for last 10 Years
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45
7168
45
39
20
34
4546
76
0
10
20
30
40
50
60
70
80
$0
$100
$200
$300
$400
$500
$600
$700
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*
Nu
mb
er o
f A
sses
smen
t D
istr
icts
per
yea
r
Par
Am
oun
t (i
n M
illi
ons)
Assessment District Issuance History
Total Par Amount Number of AD's per year
Source: California Debt and Investment Advisory Commission
* In 2012, the Western Riverside Council of Governments (“WRCG”) issued 189 series of Residential Energy Conservation bonds across 22 sale dates. These 22 dates are shown as separate issuances and represent all series of bonds issued by WRCG.
Bond Financing Options Using Assessments
Breakdown of CY 2012 Assessment District Bonds
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Cities
23 issues
30.3%
Counties
24 issues
31.6%
Special
Districts
7 issues
9.2%
Joint Powers
Authority
22 issues
28.9%
Water supply,
storage,
distribution
$91.5 million
17.9%
Residential
Energy
Conservation
Improvements
$5.8 million
1.1%
Power
generation/
transmission
$18.9 million
3.7% Multiple
capital
improvements
$325.0 mlillion
63.4%
Other
$71.1 million
13.9%
CY 2012 Assessment
District Bonds by Issuers
CY 2012 Assessment
District Bonds by Purpose
Total par: $512.4 million
Source: California Debt and Investment Advisory Commission
Bond Financing Options Using Assessments
~HELDMAN IROLAPP .=- & ASSOCIATES
Propeny Owner Petition Iniriated
District Actions by Legislative Body Legislative Body Conmtences Assessment
ProceedingsPil~ Adopt lt..e:ol~:Landowuec o(60"/. o (
t...Dd-.reawai'ft1931
Act requireme.ae
H ~:::n:: ~ 1. ApproWlc Boua.duy Yap• t· ·- · ·· """"""':
L..;.~~~...J .__2_. _~_·~_.~_·_...._· In_::_.:..._··_· ...._· -_ :._-;_· _::-_·_ ...~a.~:.~~ Adopt B.Holutio.a.:::
1. PrdilniD.sry ~ Ea.ciacu':: B.epon
Local Agency Initiated District
Adopt re:oluticm::: 1. Approrinc Boundary Map•
2 . Decbzinc lnte~• aad dUectinc p«pt~.~a~ o(eitber:
a . 1931 Act 1lepon b . Combined 1931/1913 Act lt.epon f"""Fii~ ·· ·1
by U\ple DUIIjoriry o(lqi::lati'ft body -l 1913 !-+
'--=-----------' l..~?.~.J*Tunme o(• dopnon of Bouncbry M~tp .ad R.e::olution of Intention vuie::
Usual Sequence of Events for 1913 Act Special Assessment
D istrict Mter P roposition 218
~!wUdpal improvement Act of1913 Conunencing -with Section 10000 of the Streets
and Highways Code)
1. Sd1 & d elin.r bond:: & «:ce iv<e bon d proc-eed :: 2. lnitU.t e con::trucrion or llc:qui::ition
File combined 1931/1913 Act R.epon
Actions by Legislative Body
1. Conduct 1931 Act Hnna.c 2.. Proceed aad dUect prepUiltion o(
1913 Ace 1lepon if:
a. No MajoDty prot e::t AND b . Either adequate l"AAue:: o r 4/ S vote
2. Senia.c Pub& HHriDc due
3. CslliDc (or c:on::trucrion bid:: 4.Malcinc~anenn
I,.................................. l Within 1S d:ly:: l 8ound:ll"Yl\bp! i.:: filed in th~
c o-;:;:,.~
·l·ll*,a:....., ..biU.&
Public Hearing
1. PreHsn e npeer>:: 1lepon
2. lt.ecein te:timo.ny
3 . Commence llcti.vi.tie:: t o lldntini:: t~r debt. le \1)" ~m.d collect ll::::c::::m ent:: ll.nd contp!y with c:onrinu;ine di::do::ur~ «:qui:rem~nt::
3. U DO DUIIjoriry prote:t, leci::l• tin body DUllY
• dopt re:oluciol:l con.&mUa.c a::w::::~nenu••
End of Cash Collections/ Statute of Limitations
2.. Authorize:: i::~u.ance o(bcmcb•••
3. Appro<ft: Prellzniau.ry O&ieUl St.atemeat and Co.atiauia.c
4 . Adopn re:.olutio.a •W11.1dia.c me c:on::tru.cti.o.a c:onuact
•••t91S Act Bond:: = Section 8500 ~ ,-----L------, 19U Act Bond::= S<ection 6400 ~
FRA100351
Not le.:.:: th :Ul JO
with th~
Sup erint c.ndcn t o( Sue~t::
1..~::e::~nten.t R.oll~md Di.:lrunt
recorded ll.ti.tb Supuintend~n.t of Stnct::
2. Dillf1"1lm 11.nd Notic~ of
.~::e::~nu·n.t reco rded with"' County lt<ecordu
3 . St:lte.nt~nt ofA.:.::e: ::.:ment m ll.ilcd
t o pro~rty ownu-; ~m.d pub lbhed (on c.c llll~~k Cor two ::ucce -:m~
week :: :lt :lt le :c.t S dlly:: :lplUt)
F~ldman, R.ob.pp & A.~~oeiue~ • 19900 Mac.Anhut Bttrd., Suitc 1100 • ~. CA 92612 • Pboc.e: 949.6®.7300 • Fu : 949.·H 4.S773 • - .fieldour..eom• C 2004
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Ll OR A
DEBT AND
INVESTMENT
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Questions?
Bond Financing Options Using Assessments