Bond Basics What is a Bond? Bail Bond Gold Bond James Bond - - PowerPoint PPT Presentation

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 .

Ca mpa ig n wa s suc c e ssful b e c a use :

• F
• 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

E d T a b o r, Bo a rd Cha ir, BMCC

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