Local Government Finance

1. Local Government Finance Realistic Solutions for your Community

2. Money, money, money

3. Financing Options

4. Financing Options • General Obligation Bonds

5. Financing Options • General Obligation Bonds • Revenue Bonds

6. Financing Options • General Obligation Bonds • Revenue Bonds • Full Faith and Credit Obligations

7. Financing Options • General Obligation Bonds • Revenue Bonds • Full Faith and Credit Obligations • Tax Anticipation Notes

8. Financing Options • General Obligation Bonds • Revenue Bonds • Full Faith and Credit Obligations • Tax Anticipation Notes • Lines of Credit

9. Financing Options • General Obligation Bonds • Revenue Bonds • Full Faith and Credit Obligations • Tax Anticipation Notes • Lines of Credit • Pension Obligation Bonds

10. Financing Options • General Obligation Bonds • Revenue Bonds • Full Faith and Credit Obligations • Tax Anticipation Notes • Lines of Credit • Pension Obligation Bonds • Local Improvement District Bonds

11. Financing Options • General Obligation Bonds • Revenue Bonds • Full Faith and Credit Obligations • Tax Anticipation Notes • Lines of Credit • Pension Obligation Bonds • Local Improvement District Bonds • Urban Renewal Bonds

12. Now Let’s Play…..

13. Now Let’s Play….. What

14. Now Let’s Play….. What should

15. Now Let’s Play….. What should you

16. Now Let’s Play….. What should you issue?

17. Case Study One

18. Case Study One • City of 9,000 people needs to rebuild its police station.

19. Case Study One • City of 9,000 people needs to rebuild its police station. • Cost is estimated to be $4,000,000.

20. Case Study One • City of 9,000 people needs to rebuild its police station. • Cost is estimated to be $4,000,000. • Debt Service to be $300,000/year.

21. Case Study One Would you issue…. • City of 9,000 people needs to rebuild its police station. • Cost is estimated to be $4,000,000. • Debt Service to be $300,000/year.

22. Case Study One Would you issue…. • City of 9,000 people needs to rebuild its police station. • Cost is estimated to be $4,000,000. • Debt Service to be $300,000/year. • General Obligation Bond

23. Case Study One Would you issue…. • City of 9,000 people needs to rebuild its police station. • Cost is estimated to be $4,000,000. • Debt Service to be $300,000/year. • General Obligation Bond • Full Faith and Credit Obligation

24. Case Study One Would you issue…. • City of 9,000 people needs to rebuild its police station. • Cost is estimated to be $4,000,000. • Debt Service to be $300,000/year. • General Obligation Bond • Full Faith and Credit Obligation • Urban Renewal Bond

25. Case Study One Would you issue…. • City of 9,000 people needs to rebuild its police station. • Cost is estimated to be $4,000,000. • Debt Service to be $300,000/year. • General Obligation Bond • Full Faith and Credit Obligation • Urban Renewal Bond • Revenue Bond

26. Case Study One Would you issue…. • City of 9,000 people needs to rebuild its police station. • Cost is estimated to be $4,000,000. • Debt Service to be $300,000/year. • General Obligation Bond • Full Faith and Credit Obligation • Urban Renewal Bond • Revenue Bond

27. If you said….

28. If you said…. • General Obligation Bond

29. If you said…. • General Obligation Bond • You are right!

30. If you said…. • General Obligation Bond • You are right! • Least expensive financing available

31. If you said…. • General Obligation Bond • You are right! • Least expensive financing available • New property tax levy generates new revenue to pay back the loan

32. If you said…. • General Obligation Bond • You are right! • Least expensive financing available • New property tax levy generates new revenue to pay back the loan • Unless…..

33. If you said…. • General Obligation Bond • You are right! • Least expensive financing available • New property tax levy generates new revenue to pay back the loan • Unless….. • You can’t get voter approval

34. What about…

35. What about… • Full Faith and Credit Obligation

36. What about… • Full Faith and Credit Obligation • You are right!

37. What about… • Full Faith and Credit Obligation • You are right! • Voter approval not needed

38. What about… • Full Faith and Credit Obligation • You are right! • Voter approval not needed • Flexibility of timing and expenditure

39. What about… • Full Faith and Credit Obligation • You are right! • Voter approval not needed • Flexibility of timing and expenditure • Unless….

40. What about… • Full Faith and Credit Obligation • You are right! • Voter approval not needed • Flexibility of timing and expenditure • Unless…. • Current tax revenues cannot support the annual debt service without deep service cuts

41. Okay then, how about….

42. Okay then, how about…. • Urban Renewal Bond

43. Okay then, how about…. • Urban Renewal Bond • You are right!

44. Okay then, how about…. • Urban Renewal Bond • You are right! • Debt service to be paid by the tax increment revenues

45. Okay then, how about…. • Urban Renewal Bond • You are right! • Debt service to be paid by the tax increment revenues • Unless…

46. Okay then, how about…. • Urban Renewal Bond • You are right! • Debt service to be paid by the tax increment revenues • Unless • Building police station with urban renewal dollars is not politically feasible

47. Okay then, how about…. • Urban Renewal Bond • You are right! • Debt service to be paid by the tax increment revenues • Unless • Building police station with urban renewal dollars is not politically feasible • Tax increment revenues aren’t sufficient to support debt service

48. Fine, then it must be…

49. Fine, then it must be… • Revenue Bond

50. Fine, then it must be… • Revenue Bond • Wrong!