| Escrow Fund
- A fund that contains monies that only can be used to pay debt
Escrowed to Maturity (ETM) - An
Advanced Refunded bond. When interest rates fall, an issuer
may chose to sell a new issue called a refunding issue and
use the proceeds of the second issue to pay off the original
issue, much the same as a home owner refinancing a mortgage
in an effort to save interest costs. The proceeds of the refunding
issue are used to structure a portfolio of U.S. government
securities, the principal and interest payments of which exactly
match the principal and interest payments of the refunded
bonds. The portfolio is placed in escrow at the paying agent
and the bond issue is said to be fully defeased and escrowed
to maturity. In actual practice the bonds are usually called
on the first call date. Because of the U.S. Treasury backing,
ETM bonds are considered the safest municipal bonds available.
Fees/Charges - Types of levies
that can appear on property tax bills; not including special
taxes, ad valorem taxes, or special assessments.
Feasibility Study - A financial
study provide by the issuer of a revenue bond that estimates
service needs, construction schedules, and most importantly,
future project revenues and expenses used to determine the
financial feasibility and creditworthiness of the project
to be financed.
Financial Advisor - Generally
a bank, investment-banking company or independent consulting
firm that advises the issuer on all financial matters pertaining
to a proposed issue and is not part of the underwriting syndicate.
Fiscal Agent - Also known as the
Paying Agent, the bank, designated by the issuer, to pay interest
and principal to the bondholder.
Fiscal Year - A 12 month time
horizon by which state and local governments annually budget
their respective revenues and expenditures. Usually not the
calendar year, January to December, but often July to June.
Fixture - An improvement to property
that through its function directly improves the process of
a trade, industry or profession.
Flow of Funds - The annual legal
sequence by which enterprise revenues are paid out for operating
and maintenance costs, debt service, sinking fund payments,
and so on.
Foreclosure - A legal proceeding
that bars or extinguishes a mortgagor's equity of redemption
in mortgaged real property.
Full Cash Value - If you owned
your property before March 1, 1975, the "full cash"
value will be the value as it appeared on the 1975-76 assessment
roll increased by 2% per year in accordance with Proposition
13. If you acquired or constructed the property since March
1, 1975, the "full cash" value is the value at the
time you took title or completed construction, plus 2% each
General Obligation Bond (GO BOND)
- A bond that is secured by the full faith and credit of an
issuer with taxing power. General obligation bonds issued
by local units of government are typically secured by a pledge
of the issuer's ad valorem taxing power; general obligation
bonds issued by states are generally based upon appropriations
made by the state legislature for the purposes specified.
Ad valorem taxes necessary to pay debt service on general
obligation bonds are often not subject to the constitutional
property tax mileage limits. Such bonds constitute debts of
the issuer and normally require approval by election prior
to issuance. In the event of default, the holders of general
obligation bonds have the right to compel a tax levy or legislative
appropriation, by mandamus or injunction, in order to satisfy
the issuer's obligation on the defaulted bonds.
General Taxes (Ad Valorem Taxes)
- Taxes based on the assessed value of land, improvements
and/or other personal property subject to property taxation.
See our Proposition 13 Fact Sheet for more information.
Gross Debt - The sum total of
a state's or local government's debt obligations.
Gross Revenues - Generally, all
annual receipts of a revenue bond issuer prior to the payment
of all expenses. Normally only Net Revenues are pledged to
the repayment of bonds.
Homeowner's Exemption - If you
own a home and occupy it as your principal place of residence,
you may apply for a homeowner's exemption of $7000 which will
reduce the taxable value of your property.
Improvements - This is the value
of any buildings or structures existing on land whether new
Indenture of Trust - A legal document
describing in specific detail the terms and conditions of
a bond offering, the rights of the bondholder, and the obligations
of the issuer to the bondholder; such document is alternatively
referred to as a bond resolution.
Industrial Development Bonds -
(IDBs) also called Industrial Revenue Bonds (IRBs). Used to
finance facilities for private enterprises, water and air
pollution control, ports, airports, resource-recovery plants,
and housing, among others. The bonds are backed by the credit
of the private corporation borrower rather than by the credit
of the issuer. Also known as Conduit Bonds. Private purpose
bonds are limited by federal law to $50 times the state's
population on an annual basis.
Interim Borrowing - (1) Short-term
loans to be repaid from general revenues or tax collections
during the current fiscal year (TRANs or RANs); (2) short-term
loans in anticipation of bond issuance or grant receipts (BANs).
Investment Banker - A firm engaged
in raising capital for an issuer. Participates as the middleman
in purchasing securities from the issuer and in selling the
same securities to investors.
Improvement Act of 1911
This is an act of legislation that authorizes local governmental
agencies to impose assessments on benefited property to the
finance the construction of various public capital improvements.
This act also authorizes the local governmental agencies to
issue public bonded indebtedness to help pay for any or all
of the costs of the public capital improvements.
Improvement Bond Act of 1915
This is an act of legislation (Streets & Highways Section
8500) passed in 1915 to provide for the issuing of bonds by
governmental agencies as a means of providing funds for the
improvement of public facilities.
Issuer - A state or local unit
of government that borrows money through the sale of bonds
Investment Grade - Bond issues
that the three major bond rating agencies, Moody's, Standard
& Poor's, and Fitch rate BBB or Baa or better. Many fiduciaries,
trustees, and some mutual fund managers can only invest in
securities with an investment grade rating.
Junk Bonds - Most non-rated bonds
and bonds rated below investment grade.
Joint Powers Authority (JPA) -
A JPA is formed when it is to the advantage of two or more
public entities with common powers to consolidate their forces
to acquire or construct a joint-use facility. Their bonding
authority and taxing ability is the same as their powers as