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Session Two: The Economics of Good Decision Making

Session Two: The Economics of Good Decision Making. Richard Deprospo Managing Director, Wedbush Securities Inc. The California Debt & Investment Advisory Commission’s Pre-Conference to CSMFO ANNUAL CONFERENCE 2012. Capital projects provide opportunities for community:

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Session Two: The Economics of Good Decision Making

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  1. Session Two: The Economics of Good Decision Making Richard Deprospo Managing Director, Wedbush Securities Inc. The California Debt & Investment Advisory Commission’s Pre-Conference to CSMFO ANNUAL CONFERENCE 2012

  2. Capital projects provide opportunities for community: Safety enhancements Economic Growth Efficiency Recreation and lifestyle Projects may also be mandated or critical upgrades Water quality or effluent treatment Issuing Debt: Knowing When is as Critical as Knowing How…

  3. Issuing Debt: Knowing When is as Critical as Knowing How… • Analyzing projects from a framework of goals and objectives leads to reasoned decisions about financing • If enterprise enhancement or regulatory compliance • Debt service costs can be factored into rate base • If a new police station will enhance public safety and is strongly supported • Does a voter-authorized general obligation bond or parcel tax make sense?

  4. Issuing Debt: Knowing When is as Critical as Knowing How… • Analyzing goals and objectives • If core street and landscape improvements will enhance retail sales and sales tax receipts • Should they be financed with an assessment bond on local businesses deriving the greatest benefit?

  5. Issuing Debt: Knowing When is as Critical as Knowing How… • With Redevelopment Agencies dissolved, cities must be more aggressive in economic development • Can a new auto dealership be “financed” with a rebate of sales or property taxes? • Can city assets be sold, leveraged, leased or partnered? • Parking garages, administrative buildings, community centers, sports facilities

  6. Issuing Debt: Knowing When is as Critical as Knowing How… • Key Questions • If a project meets none of the city’s key goals, should it be financed at all? • If truly desired, can a revenue stream be created to fund it? • Are other non-debt financing tools available? • Debt capacity is finite and, where possible, should be tied to revenue enhancements

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