Agenda Packets - 1983/10/24 - Laserfiche WebLink

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2, Composite Revenue Bonds The composite revenue bond option would permit a number of small issues to be financed in a single financing package to reduce issuance costs. This option would help make tax-exempt financing usable and available for smaller projects or smaller firms that otherwise would find bond issuance costs prohibitive. This option could be structured as a loans -to -lenders program whereby lending institutions, working with participating municipalities, distribute bond proceeds to approved applicants. 3. Metropolitan Reserve System Successful marketing of revenue bonds commonly requires that a reserve fund be maintained usually equal to one year of debt service. Under the reserve system, revenue bond issues would be backed by an additional secondary reserve for the payment of debt service. While primary reserve fund monies are maintained in separate accounts, each to be used only by the project for which it was created, the secondary reserve acts as a common reserve that holds monies available to all projects financed by the system. Every bond issue is secured equally by such funds. Therefore, the risk to a bondholder is dispersed among all projects participating in the Council"s reserve system. Funding for the primary reserve is provided through bond proceeds. "Funding for the secondary reserve would require an initial contribution from federal, state or local governments. Ongoing funding would come from program participation fees, investment earnings or guarantor's fees. Alternatively, the secondary reserve could work through the provision of a letter of credit. A third reserve, tailed a surplus reserve, would also be established consisting of funds remaining after the secondary reserve has been adequately maintained. This fund could be used to finance the maintenance and expansion of the system. Use of the reserve system will make financing available to an increasing number of companies, particularly new or small companies. Reserve system bond programs can provide a financing vehicle for firms without the size or credit history necessary to participate in a more conventional IRB program. 4, Taxable Bond The taxable bond option is an alternative method of municipal financing that is not tax exempt. The federal government has placed considerable limits on the use of tax exempt bonds. Issuance of taxable bonds would allow a means of broadening an IRB program beyond the restrictions of the federal government. 5, Equity Position Revenue Bonds The Council intends to actively pursue state and federal grant funds to spur economic development or aid projects identified as having region -wide benefits, such as resource recovery or sludge abatement. Funds available to the Council for such a purpose could be used in concert with IRB financing solely as a loan to reduce other capital financing requirements. Alternatively, such funds might be used to fund an initial or secondary 22