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TEETER 101. Paul McDonnell April 23, 2009. Teeter Defined. Teeter is a method for distributing taxes which guarantees that participating agencies receive 100% of levied taxes as opposed to the actual amount of taxes collected.

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Paul McDonnell

April 23, 2009

Teeter Defined

  • Teeter is a method for distributing taxes which guarantees that participating agencies receive 100% of levied taxes as opposed to the actual amount of taxes collected.

  • Each year the amount of taxes actually collected is less than the amount levied.

  • Rather than wait for delinquent tax payments, penalties and interest, to be collected; revenues are advanced to the Teeter participants by the county.

  • Once the outstanding taxes, penalties and interest are collected, the Teeter advance is repaid.

Why Should You Care?

  • The TTC is a key player in the Teeter process.

  • Your tax sale strategy could be affected if the process is not managed effectively.

  • Teeter can be a significant county revenue source.

  • Your Pool in many cases is a key component of the funding strategy

History of Teeter in Riverside County

  • The County of Riverside adopted the Teeter Plan in 1993.

  • The advance of unpaid funds was made by selling a note to the Treasurer’s Pooled Investment Fund.

  • In 1997 the County replaced the note with the issuance of tax-exempt commercial paper (TECP).

  • TECP has cut the County’s cost by over $8 million since 1997.

  • The Plan has been a strong source of revenue for the County. In the last five years alone, over $125 million has been transferred to the General Fund.

Teeter Financing Program

  • The County finances the advance of tax receivables, much like a bank finances credit card receivables, yet the County has a secured first lien position.

1. Estimated. Includes 10% penalty and 24 months of interest at 1.5% per month per California Law. 2. Set aside is a function of tax sale experience.

3. Represents average cost of funds on Teeter Notes.

Teeter Cash Flows

Taxing Entities






Tax Collections


Program Revenues

General Fund

Teeter and Tax Sale

  • The County takes on the collection risk in exchange for the penalties and interest.

  • Our ultimate collection tool is the tax sale.

  • The downturn of the 1990’s “stress tested” the viability of our Teeter Program.

  • The total write-down during the last cycle was relatively small.

Riverside County Properties Subject to Tax Sale

  • Regular tax sales have allowed us to manage the growth of our inventory

*Excluding timeshares

Observations from 2008 CACTTC Survey

  • Virtually all counties participate in Teeter.

  • Six to Ten have “stand-alone” programs selling notes to the Pool or to the Public.

  • Most other programs rely on some form of advance from the Pool or the General Fund.

  • In some cases sufficient balances have accumulated to fund additional advances.

Observations (cont.)

  • For larger programs an externally funded stand-alone program is the most cost effective.

  • Internal programs are cost effective for small counties, given legal and underwriting expenses, not to mention staff time.

  • No matter what shape the program takes, a consolidated summary of Teeter activities should be develped for reporting and forecasting purposes.


  • Most Counties have been well served by their Teeter Programs.

  • Program sizes should grow with increased delinquencies, allowing for greater revenue to the General Fund.

  • Credit enhancement capacity and costs are real concerns for CP programs.

  • Being knowledgeable about Teeter can help you contribute to solving your counties’ revenue shortfall.

Thank You!

  • Questions?

  • Contact:

  • Paul McDonnell

  • pmcdonnell@rceo.org

  • 951.955.1110

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