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CMFO Exam > Bond Law > Flashcards

Bond Law Flashcards

1
Q

Power to incur indebtness

A
  • by bond ordnance incur indebtedness, borrow money, authorize and issue negotiable obligations for financing for capital improvement or property which it may lawfully make or acquire
  • any purpose for which it is authorized or required by law to make an appropriation, except current expenses, as may be defined by LFB, any payment of obligation
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2
Q

Payment of Obiligations

A
  • The power and obligation to pay any and all bonds and notes issued shall be unlimited
  • local unit shall levy taxes for the payment of principal and interest without limitation
  • limit is on debt authorized not on they amount you pay
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3
Q

Authorization as appropriation

A

-by Bond Ordinance: authorization of obligations shall constitute an appropriation of the proceeds and the purpose

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4
Q

Debt Limitation

A

2% - County of net debt

3.5% - Municipality of net debt

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5
Q

Debt Limitation Exceptions

A
  • expenditure for fire, flood or other disaster’
  • fund, renew, extend or retire note
  • expenditure to protect public health and prevent a present menace to the public health
  • public interest and for health, welfare, convenience or betterment of inhabitants and are not unreasonable or exorbitant and obligations will not impair credit of municipality
  • prevent encroachment of sea
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6
Q

Issuance of BAN

A
  • not to exceed one year
  • mature on 1st day of the 5th month of te close of te 10th fiscal year
  • First legal principal payment - 3rd anniversary date
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7
Q

Supplemental Debt Statement

A
  • Submitted prior to first reading of bond ordinance
  • financial officer shall swear and execute a SDS then filed in the office the clerk.
  • Prior to final passage, executed duplicate filed with Director
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8
Q

Down Payment

A

5% of obligations authorized
-Available prior to final adoption of bond ordinance from provision in adopted budget (Capital Improvement Fund), moneys held by local unit which were previously contributed (developer); or an emergency appropriation

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9
Q

Bond Ordinance Contents

A
  • Authorization for the issuance of obligations, stating brief and general terms; estimated maximum amount of bonds and notes; estimated cost of purpose
  • period of usefulness; if several purposes, then average useful life
  • determination that SDS was filed; statement that shows gross debt; obligations are within in debt limitations
  • statement of soft costs
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10
Q

Multipurpose Bond Ordinances

A

-2 or more purposes may be on one bond ordinance

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11
Q

Local Improvement Obligations

A
  • Bond Ordinance for local improvement shall contain provisions that a determination of the amount or percentage of the cost which the local unit will contribute to the payment of the cost of the local improvement
  • Statement # of annual installments not to exceed 20 or the average if more than 1 local improvement to be financed
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12
Q

Revenue Bonds

A

-Any bond ordinance to finance any cost or expense of a municipal utility shall pledge revenues of the utility to the debt of the utility.

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13
Q

Introduction of Bond Ordinance

A

Introduced in writing and passed at first reading by title

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14
Q

Publication, hearing and adoption of Bond Ordinance

A
  • Published (can be in summary form) after 1st reading; 10 days after first reading wit the time and place of for final passage
  • If in summary form, clear and concise prepared by clerk setting forth the purpose, amount of indebtedness being authorized and time and place where copy of ordinance can be obtained by public
  • Publication must be 1 week prior to date of further consideration
  • Must post ordinance or summary one week prior to date of further consideration or must be read in full at the date it will be further considered
  • After SDS is filed with the Director, and after hearing, governing body may proceed to amend the bond ordincance or finally adopt or reject
  • Adopted by 2/3 vote of the full membership
  • Must publish final bond ordinance
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15
Q

Bond Ordinance Amendments

A
  • If amendment is adopted that substantially alters matters, bond ordinance shall not be finally adopted until at least one week after amendment adoption
  • summary of amendment must be published at least two days prior to date for further consideration
  • can be read by title if at least one week prior the bond ordinance is posted in the municipality and copies are available for the public
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16
Q

Estoppal Period

A

-Bond ordinance does not take effect until 20 days after the first publication of the ordinance or summary after final adoption

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17
Q

Publications of Ordinance

A

-In a newspaper published and circulated in municipality and if there is not one, then a newspaper published in the county and circulated in the municipality

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18
Q

Section 20 Expenses

A
  • Cost of improvement may include interest and obligations for architect fees, accounting, engineering, legal, etc
  • Soft Costs
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19
Q

Minimum Period of usefulness

A

5 years

20
Q

Maximum Bond Terms

A

-Not greater than the average period of usefulness

21
Q

Execution and delivery of obligation

A

-Executed in the name of the local unit by manual or fax signatures of officials, including CFO.

22
Q

Maturities of Bonds

A
  • Determined by Bond Ordinance
  • Shall mature within average period of usefulness
  • Shall mature in annual installments, first payable not more than one year from the date of the bonds
  • No annual installment shall exceed by more than 100% of amount of the smallest prior installment
23
Q

Non-Conforming Schedule

A

-If annual installments would adversely affect the financial position of the local unit, they may make written application to LFB to change maturity schedule

24
Q

Combined Ordinances

A
  • By resolution, may provide for a single and combined issue of bonds not exceeding the aggregate amount of the bonds authorized by two or more bond ordinances.
  • Bond will have average useful life of the ordinances
25
Q

Sale of Bonds, methods

A
  • Sold at public sale through sealed bids or through electronic proposals
  • If electronic proposal, can be through open or closed auctions conducted through a nationally recognized electronic securities bidding services
26
Q

Private Sale of Bonds

A
  • Issue is $1,000,000 or less
  • Sold to other government entity
  • If no bids are received at public sale, then can have private sale 30 days after advertisement for public bidding
  • purchaser, other then government entity, must deposit a certified or cashier’s check equal to 5% of bonds purchased
  • confirmed by resolution of 2/3 of full membership
27
Q

Sale of BAN or Capital Notes

A
  • May be sold at private sale pursuant to resolution from governing body or by CFO if authority is designated
  • If CFO is selling notes, shall report in writing to the governing body at the next meeting as to the principal amount, interest rate, maturities, price obtained and name of purchaser
28
Q

Minimum Price for Obligations

A

-No less than value plus any interest accrued to the date of delivery

29
Q

Advertisement of Public Sale

A

-7 days prior in a newspaper qualified for publication of a bond ordinance, nationally recognized local government bond marketing publication or electronic information service carrying municipal bond notices and devoted primarily to financial news

30
Q

Contents of Notice of Public Sale

A
  • Principal amount, date, denomination and maturities, and authorization for any adjustments to maturities
  • Rate or rate of interest
  • Postponement provisions
  • Type of sale to be conducted
31
Q

Bidding Requirements

A
  • Bidders must deposit a certified or cashier’s check equal to not less than 2% of bonds
  • All sealed bids shall be publicly opened and announced
  • All electronic bids shall be received and announced
  • All bids may be rejected
  • Bonds of two or more issues may be sold on the basis of combined maturities or maturities of each issue offered at sale
32
Q

Interest Rates for Bonds

A

-Offered at different rates of interest for the same issue or different rates of interest of different issues

33
Q

Net Interest Cost

A

-Adding total principal amount of bonds and the total interest cost to maturity and deducting amount of premium

34
Q

True Interest Cost

A

-Interest Rate, compounded semi-annually excluding interest accrued to the delivery date

35
Q

Power of CFO to sell Bonds

A
  • By resolution designate CFO to sell and award bonds
  • Shall report in writing to governing body at next meeting, principal amount, interest rate, maturities of bonds sold, price obtained and name of purchaser
36
Q

Prohibited Agreements

A
  • Unlawful to pay or agree to pay any bonus commission, fee or other compensation for the issuance for the sale of obligations
  • make an agreement with purchaser or bidder regarding the deposit or disposition or any moneys received
  • to make an agreement pertaining to the sale of obligations which contains provisions as to any other matter
  • make agreement or service contract with respect to publication of notice of sale and printing bonds or notes
37
Q

Financial Advisor

A

-Municipal bond dealer, banker or financial expert may be engaged or employed as a financial adviser to provide financial services with sale of obligations

38
Q

Application of Proceeds

A

-the proceeds of the sale of obligations shall be applied only to the purposes for which the obligations were authorized

39
Q

Annual Debt Statement

A

-CFO at the end of the first month of each fiscal year, file ADS in the office of the clerk and Director

40
Q

Contents of Annual Debt Statement

A
  • Gross Debt
  • Deductions
  • Net Debt
  • Equalized valuations of taxable real estate for last 3 years
  • Net Debt expressed as a percentage of average equalized valuations
41
Q

Supplemental Debt Statement

A
  • Net Debt from ADS
  • Amount net debt has increased and decreased
  • Amounts and purposes separately itemized of obligations to by authorized with any deductions
  • New net debt with above points factored in
  • Equalized valuations of taxable real estate for last 3 years
  • net debt expressed as a percentage of average equalized valuations
42
Q

Gross Debt

A
  • includes all bonds and notes issued and authorized or guaranteed by local unit, except tax anticipation notes, emergency notes, special emergency notes, and utility revenue notes.
  • include total of all bonds and notes issued by any school district including the area of the municipality
43
Q

Deductions from Gross Debt

A
  • School Districts
  • Regional School
  • Purposes which are Self-Liquidating
  • Principal and interest guaranteed by local unit for another public body
  • BANs
  • Sinking funds
44
Q

Self Liquidating Purposes

A

-Cash Receipts sufficient to meet operating expenses and debt service

45
Q

Self Liquidating during construction

A

-self liquidating during the period of construction or acquisition and until is shall have been operation for at least one fiscal year

46
Q

Fiscal Year Adjustment Bonds

A
  • Require money for the purpose of assuring against adopting a budget which sets forth a deficit
  • Proceeds considered as anticipated revenue applicable to the expenditures for which appropriations are made in the transition year budget.
47
Q

Refunding Bonds

A
  • Authorized by refunding bond ordinance
  • No down payment required
  • Bonds paid, funded or refunded and not otherwise deductible from gross debt shall be deducted from gross debt

CMFO Exam (12 decks)

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