Director

Municipal Advisory

Municipal advisory services for local governments

Economic development for local governments

Municipal advisory services for utilities

Municipal advisory services for schools

Municipal advisory services for libraries

Principal, CIPMA

State & Local Government

Partner, CPA

Consulting

Director, Ed.D.

Director, MBA

When financing a project through bond issuance, one of the most important early steps is developing the professional team. From developing the scope of the project, to undertaking the legal requirements, to selling the bonds and collecting the proceeds, each complex, important step in the process requires a coordinated team effort.  Under the direction of the issuer, the professionals on these teams, often referred to as “working groups,” work in tandem with one another. Typically, the roles on a bond issuance working group include: Owner – The public entity (i.e. – school, county, city, utility, etc.) that issues the bonds to make improvement to its facilities. Architect/engineer – Develops construction project scope and design Project manager and/or construction manager – Develops cost estimates and oversees project Local attorney – Helps facilitate local approvals, publications, recording of documents, etc. Municipal advisor – Develops plan of finance and assists with bringing bonds to market Bond counsel – Outlines legal requirements for the project and provides legal opinion for the financing Trustee, registrar and paying agent – May hold bond proceeds and make payments to contractors throughout project; assists with making bond payments to bondholders (investors) Underwriter – purchases the issuer’s bonds to sell to its clients (investors) The above list is only a brief summary the working group’s roles; some may be expanded or limited depending upon the needs of each project. Depending on the project, you may require more or fewer professionals in your working group.  Stay tuned for more articles in this series as we discuss the bond issuance process and considerations when issuing bonds. View part 1 of this series  here. For more information on project financing or capital planning, please contact us.

Bonds 101: Part 2 – developing the working group

This article is part of a series to provide an overview of the bond issuance process. Let’s start with the basics. What are bonds? A debt security providing external funds for current expenditures.  Bonds are similar to a mortgage in that dollars are borrowed upfront and repaid over a fixed term. The governmental entity is commonly referred to as the issuer or borrower and the investor is known as the bondholder, lender or purchaser. When bonds are issued, a repayment source is pledged and certain bond covenants are outlined for the issuer to follow through the repayment term. More specifically, what are some basic characteristics of municipal bonds? Repayment is matched with the useful life of the asset so debt is not outstanding beyond the life of the asset. Depending on the source of repayment, the issuance of bonds can provide tax rate management and stability, and assist with financial management and capital planning. Bonds can also help free up operating dollars for other needs. Bonds can provide a relatively low-cost way to borrow over a long term, helping an entity to "pay as they use" rather than "pay as they go" where appropriate. Interest charged is often tax-exempt, which can translate to a lower interest rate paid by the issuer. Communities issue bonds to pay for capital expenditures ranging from vehicles and technology to infrastructure, economic development and renovation and construction of public facilities. Stay tuned for more articles in this series as we dive into the bond issuance process and considerations when issuing bonds. For more information on this topic, or to learn how Baker Tilly municipal specialists can help, contact our team. Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm.

This article is part of a series to provide an overview of the bond issuance process.

Bonds 101, part 1

Utilities in the Midwest and across the country are facing ever increasing pressure on utility rates. The rate pressure is the result of a variety of factors, including long-term control plan implementation, asset management replacements, operating increases and declining usage because of water conservation. These mandates and other increases in requirements are pushing the affordability limits of water and sewer utility rates. What can be done to help? When facing necessary utility rate increases, reducing your fixed bond payments by paying off the bonds may be a valid consideration. Assuming you have been diligently setting aside revenues and saving cash, one option might be to redeem or pay off your bonds early. However, most municipal bonds have standard call provisions which will not allow for the bonds to be paid off until they have been outstanding for a certain period of time. There also may be some redemption premium. When considering this option, an important consideration is the need to keep adequate cash balances. Most bond documents have cash balance requirements for outstanding bonds and there should be adequate funds set aside for unforeseen capital expenditures and contingencies. Many things must be considered before you payoff bonds, so you should ask your municipal advisor to provide you with the information needed to make this decision. For more information on this topic, or to learn how Baker Tilly municipal specialists can help, contact our team. Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm.

Reduce rate impact by paying off bonds

Tax Increment Financing (TIF) is traditionally viewed as a resource for funding infrastructure, downtown redevelopment or incentives to promote economic development in a community. TIF funds are not generally viewed as a possible source for funding educational programs or projects, but that is changing.  Communities across Indiana are finding opportunities to partner with their local school corporations and educational institutions to allocate TIF funds in support of educational programs and capital projects. Some redevelopment commissions have begun to utilize a state law that allows for up to 15% of TIF revenues generated in an allocation area to be used for programs that provide job training and re-training for residents of the community. Eligible organizations include local school corporations, nonprofit organizations whose primary purpose includes job training and re-training, and institutions of higher education that offer these types of programs, such as Ivy Tech Community College of Indiana. Many redevelopment commissions also are exploring opportunities to collaborate with local school corporations on capital projects. Such projects may be eligible for TIF funding as long as they are (1) located in or directly benefit the area and (2) included in the area’s economic development plan. Examples of successful TIF-Education partnerships in Indiana include: The Whitley County Redevelopment Commission is contributing $7.5 million to the Whitley Consolidated School Corporation over a three-year period to a new high school project. The Gibson County Redevelopment Commission contributed $600,000 to Ivy Tech to fund a local welding program. The Town of Plainfield is utilizing TIF funds to make debt payments on the school transportation center bonds. The City of Lebanon used TIF to fund a multi-use training room at Lebanon High School. Another tool available to redevelopment commissions is the pass-through of incremental assessed value for the benefit of overlapping taxing districts, including school corporations. Redevelopment commissions typically use the time leading up to the June 15th TIF excess incremental assessed value notification deadline to evaluate opportunities for such pass-through determinations. Along with monitoring and carrying out the economic development plan(s) for your community, exploring partnership opportunities with local education providers and other taxing units should be part of your annual analysis of your community’s TIF areas. Engagement with these units can be a part of a larger economic development strategy in your community. Baker Tilly can assist you with evaluating potential opportunities to utilize your TIF dollars to support local education efforts or collaborate with other taxing units. For more information on this topic, or to learn how Baker Tilly municipal specialists can help, contact our team. Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm. The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax advice, if any, contained in this communication was not intended or written to be used by any taxpayer for the purpose of avoiding penalties.

Municipal advisory services for libraries

Bonds 101: Part 2 – developing the working group

Bonds 101, part 1

Reduce rate impact by paying off bonds

Utilizing TIF to support education in your community

Consulting

Municipal Advisory

Libraries have needs that are different from other units of government. Baker Tilly Municipal Advisors is experienced with library projects – from bond issues to property tax projections. We consider it very fulfilling to help libraries through all the financial aspects of completing a project.

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