Bond Basics
What is a Bond?
Bail Bond
Gold Bond
James Bond
Municipal Bond
What is a Bond? A Bond is a legal contract to make payments • A Loan • An I.O.U. • “Borrowing Money”
General Obligation Bonds • Requires Voter Approval • Pledge of Unlimited Property Tax Levy for Repayment of Debt Service • Can be issued in public market sale or placed privately with a bank or other private lender
What Can GO Bonds Pay For? • Can pay for capital costs and the costs associated with issuing the bonds • Capital Costs can be for any asset with useful life greater than one year • Weighted average life of bonds cannot be longer than weighted average life of the project • Only projects listed in ballot measure
How is a Bond Paid Back? • District levies property tax annually • Bond levy is not restricted by Oregon’s property tax limits
How Do We Get Approval? • GO Bond Levy is Approved by Local Ballot Measure – March/September require double majority • Majority Turnout • Majority Approval – May/November require only majority approval
What’s on the Ballot? • Caption – 10 words which reasonably identifies the subject of the measure • Question – 20 words which plainly phrases the chief purpose of the measure • Summary – 175 words which concisely and impartially summarizes the measure and its major effect – a not-to-exceed amount of bonds – a not-to-exceed maturity – a list of identified projects • Explanatory Statement – 500 words in voters’ pamphlet
RE CE NT BMCC BOND CAMPAI GN
L OSI NG CAMPAI GN
WI NNI NG CAMPAI GN
“ We put in the time . We put in the e ffo rt. We put o ut the info rma tio n. All we c o uld do wa s ho pe pe o ple wo uld se e the b e ne fit o f wha t we ” wa nte d to do . E d T a b o r, Bo a rd Cha ir, BMCC Ca mpa ig n wa s suc c e ssful b e c a use : F o rme d a ‘ supe r” a nd 4 re g io na l F rie nds o f BMCC po litic a l a c tio n • c o mmitte e s Pre se nte d mo re tha n 100 info rma tio n se ssio ns in 6 we e ks • F a c ulty a nd c la ssifie d a sso c ia tio ns c a me o ut in stro ng suppo rt • Stude nts did vo te r re g istra tio n drive s, c a nva ssing , vide o & ra dio , • so c ia l me dia
Plan B
Financing Alternative • Does not require voter approval • Pledge of all legally available revenues • Can be issued in public market sale or placed privately with a bank or other private lender • S&P rating equivalent to GO security
Financing Alternative • Identify Grant Opportunities • Analyze Debt Capacity • Consider New Revenue Options • Scale Project
Umpqua Example • $8.5 million State match • $5.5 million in grant expectation • Finance $5.5 million over 10 year with prepayment option in 5 years • Finance $2.5 million over 20 years • $7/credit fee to cover interest payments for five years; ~300k per year
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