Yesterday, 10 June, Rick Current met with Alan T. Matlosz, First Vice President, Public Finance, George K. Baum & Company. Alan will be providing the Roads Committee with precise information regarding General Obligation Bonds and planning benchmarks in the next two days. Rick will forward this information to members of the Roads Committee when he receives it. Alan is also available to participate in our town meetings as a public service to the community.
Rick's primary purpose is to facilitate direct communication from an expert, versus him telling the Roads Committee what he think he heard.
A General Obligation Bond is a highly controlled process which allows towns to increase debt at the best interests rates available due to the manner in which the bond is allowed, statutory limits, and the requirement that repayment only be made through a mill levy.
Under the law this levy must be equal for all participants. Assume for a moment that the project cost is $3 million. All those who pay property taxes will then be assessed an annual levy, the total of which equals the cost for repayment of the bond on an annual basis. The levy amount is equal, however, as you know, all levies are applied to the assessed value of your home and or property. If you live in a $600,000 home you will pay a bit more than someone who lives in a $500,000 home, and you both will pay more than the taxpayer who only owns a lot.
There is a statutory limit?—3% of the actual value of the town (versus the assessed value).
The town will require the services of a bond attorney?—framing the question, Tabor restrictions, etc. Bond attorneys and those who construct the deal, like Alan, are only paid if the deal is done. There are no up front costs, and we should walk away from anyone who wants to be paid in advance.
There is no personal obligation, as repayment is regulated through the tax process. Whoever owns the land pays the bill.
Alan crunched a few numbers for Rick. Rick learned a couple things. If we extend repayment to 20-25 years versus the 5-10 we have been talking about it will go substantially easier on those in our community on fixed incomes. Additionally, if you roll in the associated tax advantages and the homestead exemption the issue becomes a function of cash flow versus cost.
A certain percentage of the bond can be used for some anticipated maintenance costs. Maintenance costs are ?“generally?” a separate bond issue.
If we do develop income for the town the town can reduce and/or eliminate the mill levy as the bond company only wants their money at the appointed time.
Rick's primary purpose is to facilitate direct communication from an expert, versus him telling the Roads Committee what he think he heard.
A General Obligation Bond is a highly controlled process which allows towns to increase debt at the best interests rates available due to the manner in which the bond is allowed, statutory limits, and the requirement that repayment only be made through a mill levy.
Under the law this levy must be equal for all participants. Assume for a moment that the project cost is $3 million. All those who pay property taxes will then be assessed an annual levy, the total of which equals the cost for repayment of the bond on an annual basis. The levy amount is equal, however, as you know, all levies are applied to the assessed value of your home and or property. If you live in a $600,000 home you will pay a bit more than someone who lives in a $500,000 home, and you both will pay more than the taxpayer who only owns a lot.
There is a statutory limit?—3% of the actual value of the town (versus the assessed value).
The town will require the services of a bond attorney?—framing the question, Tabor restrictions, etc. Bond attorneys and those who construct the deal, like Alan, are only paid if the deal is done. There are no up front costs, and we should walk away from anyone who wants to be paid in advance.
There is no personal obligation, as repayment is regulated through the tax process. Whoever owns the land pays the bill.
Alan crunched a few numbers for Rick. Rick learned a couple things. If we extend repayment to 20-25 years versus the 5-10 we have been talking about it will go substantially easier on those in our community on fixed incomes. Additionally, if you roll in the associated tax advantages and the homestead exemption the issue becomes a function of cash flow versus cost.
A certain percentage of the bond can be used for some anticipated maintenance costs. Maintenance costs are ?“generally?” a separate bond issue.
If we do develop income for the town the town can reduce and/or eliminate the mill levy as the bond company only wants their money at the appointed time.
