12/01/1997 Park Board Packet - Laserfiche WebLink

Home Search

The Trust for Public Land TPL FINANCE/ CERTIFICATE OF PARTICIPATION PROGRAM PUBLIC FINANCING OF.OPEN SPACE ACQUISITIONS Purpose of Program: Provide a convenient, cost-effective alternative to bond sales, at tax- exempt interest rates, through which state and local governments can finance acquisition of land from the Trust for Public Land. Program Description: At the request of a local public agency such as a city parks department, TPL purchases a threatened open space parcel. The public agency would then execute a lease/purchase with TPL which would enable the public agency to purchase the property over a 5-15 year period. Simultaneously with the Lease execution, TPL would assign the property and Lease to a trustee bank (Trustee), which would issue certificates of participation (COPs) in the Lease to investors and forward annual lease payments from the public agency. Proceeds from the sale of the COPS would be used by TPL to purchase the property from the private landowner. Lease payments would be passed through by the Trustee to investors as principal and interest on COPS, generating a tax-exempt return on the investment. ,.� Characteristics of the Lease: ■ Principal amount equal to value of land, plus COPS reserve fund and COPS issuance costs (estimated to be 3-5% of principal amount, depending upon size). ■ Term, determined by needs of the public agency, that allows full amortization of principal amount with no balloon principal payment at end (range expected to be 5 15 yam) ■ Interest rate equal to rate on COPs, which is based upon credit rating of the public agency and current market conditions (it would normally be slightly higher than bond interest rate). ■ Payment schedule that requires 20% down payment at commencement, annual installments of principal and semi-annual payments of interest. TPL is willing to work with the public agency to secure foundation or other private funds if necessary. Characteristics of COPS: COPs would be book-entry securities sold in $5,000 denominations to individual investors by Underwriters chosen by TPL. COPs would be rated by a rating agency such as Moody's Investors Service. ■ Prepayment permitted in accordance with optional redemption provisions of COPs, but generally allowed after half of Lease's term has elapsed. Defeasance permitted at any time, allowing the public agency to advance refund Lease.