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7: 2 Munies & Options > 3 Revenue Bonds > Flashcards

3 Revenue Bonds Flashcards

1
Q

Revenue Bonds

A

finance muni facility that generates revenue

  • utility
  • housing
  • transport (tolls, airport)
  • education (dorms, loans)
  • health (hospitals, retirement ctrs)
  • industrial
  • sports
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2
Q

REV Bonds

collatorial

tax payer protection

A

not backed by taxes - NO FFC

no debt limits, no voter approval

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3
Q

Double Barreled Bonds

A

Rev bonds w/ characteristics of GOs

2 backing sources - int & principal

  1. facility earnings
  2. taxes
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4
Q

Trust Indenture / Bond Resolution

A

Empowers trustee to act on behalf of bond holders

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5
Q

Trust Indenture / Bond Resolution

Standard Provisions (7)

A
  1. rate covenant - maintains rate to pay bond
  2. maintenance covenant - maintain equip & facilities
  3. insurance covenant
  4. additional bonds test - defins if more bonds same prop.
  5. sinking fund
  6. catastrophe clause - mandatory call to repay bonds
  7. flow of funds - who paid 1st
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6
Q

Trust Indenture / Bond Resolution

Optional ?

GO vs. REV

A

Yes

GO - Trust Indenture

REV - Bond Resolution

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7
Q

Types of Revenue Bonds

  1. Industrial Development Rev Bonds
  2. Lease Rental Bonds / Lease Back
  3. Certificates of Participation (COP)
  4. Special Tax Bonds
  5. Special Assessment Bonds / Special District Bonds
  6. New Housing Authority (NHA) / Public Housing Authority (PHA)
  7. Moral Obligation Bond
A

Industrial Development Rev Bonds

IDR or IDB

For corp benefit not public

  • build facility
  • lease equip to corp

bonds are for corp so lose tax exempt, subject to Alternative Min Tax (AMT)

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8
Q

Types of Revenue Bonds

  1. Industrial Development Rev Bonds (IDR or IDB)
  2. Lease Rental Bonds / Lease Back
  3. Certificates of Participation (COP)
  4. Special Tax Bonds
  5. Special Assessment Bonds / Special District Bonds
  6. New Housing Authority (NHA) / Public Housing Authority (PHA)
  7. Moral Obligation Bond
A

municipality financing construction for itself

build school, lease to school district

lease pmts made through taxes, tuition or fees

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9
Q

Types of Revenue Bonds

  1. Industrial Development Rev Bonds (IDR or IDB)
  2. Lease Rental Bonds / Lease Back
  3. Certificates of Participation
  4. Special Tax Bonds
  5. Special Assessment Bonds / Special District Bonds
  6. New Housing Authority (NHA) / Public Housing Authority (PHA)
  7. Moral Obligation Bond
A

COP

aquisition of land or facilities

by municipality

rev from lease, loan pmts

  • not viewed as a debt, lease pmts go to govt
  • cert holders can foreclose on facility
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10
Q

Types of Revenue Bonds

  1. Industrial Development Rev Bonds (IDR or IDB)
  2. Lease Rental Bonds / Lease Back
  3. Certificates of Participation (COP)
  4. Special Tax Bonds
  5. Special Assessment Bonds / Special District Bonds
  6. New Housing Authority (NHA) / Public Housing Authority (PHA)
  7. Moral Obligation Bond
A

no supported by ad valorem (prop)

special taxes - tacacco, licenses

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11
Q

Types of Revenue Bonds

  1. Industrial Development Rev Bonds (IDR or IDB)
  2. Lease Rental Bonds / Lease Back
  3. Certificates of Participation (COP)
  4. Special Tax Bonds
  5. Special Assessment Bonds / Special District Bonds
  6. New Housing Authority (NHA) / Public Housing Authority (PHA)
  7. Moral Obligation Bond
A

finance constuction

sidewalks / sewers

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12
Q

Types of Revenue Bonds

  1. Industrial Development Rev Bonds (IDR or IDB)
  2. Lease Rental Bonds / Lease Back
  3. Certificates of Participation (COP)
  4. Special Tax Bonds
  5. Special Assessment Bonds / Special District Bonds
  6. New Housing Authority (NHA) / Public Housing Authority (PHA)
  7. Moral Obligation Bond
A

develop & improve low income housing

FFC

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13
Q

Types of Revenue Bonds

  1. Industrial Development Rev Bonds (IDR or IDB)
  2. Lease Rental Bonds / Lease Back
  3. Certificates of Participation (COP)
  4. Special Tax Bonds
  5. Special Assessment Bonds / Special District Bonds
  6. New Housing Authority (NHA) / Public Housing Authority (PHA)
  7. Moral Obligation Bond
A

if not enough rev,

legislature can authorize funds

issed in times of financial distress

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14
Q

Flow of Funds

Gross vs. Net Revnue Pledge

A
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15
Q

Coverage Ratio

A

how many times annual rev covers debt

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16
Q

Coverage Ratio ?

30 MM Annual Rev

18 MM Operating & Maintence

4 MM Interest

2 MM Princiapl

A
17
Q
A
18
Q

Types of Revenue Bonds

  1. Industrial Development Rev Bonds
  2. Lease Rental Bonds / Lease Back
  3. Certificates of Participation (COP)
  4. Special Tax Bonds
  5. Special Assessment Bonds / Special District Bonds
  6. New Housing Authority (NHA) / Public Housing Authority (PHA)
  7. Moral Obligation Bond
A

Industrial Development Rev Bonds IDR or IDB - corp bene, lose tax exempt, AMT

Lease Rental Bonds / Lease Back finance contruction to lease to itself - school

<strong>Certificates of Participation (COP) </strong>aquisition of land or facility - no debt since lease pmts

<strong>Special Tax -</strong> cigs

Special Assessment Bonds / Special District Bonds sidewalks/sewers

<strong>New Housing Authority (NHA) / Public Housing Authority (PHA</strong>) FFC

<strong>Moral Obligation Bond</strong> fin distress

7: 2 Munies & Options (9 decks)

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