2010 Debt Report - Volusia County Government

TYPES OF DEBT ISSUED BY VOLUSIA COUNTY
Local government bonded debt is
usually divided into three different
types: general obligation bonds, nonself-supporting
revenue bonds and selfsupporting
revenue bonds.
• General obligation (“G.O.”) bonds
are backed by a pledge of the full
faith and credit of the issuing entity.
The full faith and credit is a pledge
of the general taxing powers for the
payment of the debt obligation.
Because of the impact on property
owners, the issuance of general
obligation debt in Florida requires
the consent of the voters through a
referendum.
• Non-self-supporting revenue bonds
- Bonded debt for which local
government has pledged its general
revenues. These revenues may
include either ad valorem (property
tax) and/or non-ad valorem (building
and zoning permit fees, franchise
fees, gas taxes, sales tax, etc.)
• Self-supporting debt – Bonded debt
that the local government has
pledged to repay with revenues
generated from operations.
Examples would include a water
bond that is repaid from water utility
income, and special assessment
bonds that are repaid from fees
levied on properties within a special
assessment district.
Other Financing Instruments:
Short-term tax-exempt financing
instruments are often used to partially
fund the capital outlay and capital
improvement programs. This type of
financing offers low interest rates,
flexible repayment terms, and minimal
issuance costs. Additionally, there are
no underwriter fees, rating agency fees,
printing costs or reserve funds. These
loans are generally subject to annual
appropriation.
• Commercial Paper Loan Program –
The Florida Local Government
Finance Commission (FLGFC) was
established to provide short-term
borrowing for a term of up to five
years. The program provides shortterm
variable interest rates, to
participating counties, cities, school
boards and special districts in
Florida. The program offers very
low interest rates, low fees and the
repayment terms are very flexible.
With the current low interest rate
environment, this program has
offered interest rates that is
unmatched by private sector lenders.
• SRF Loans – The State of Florida,
pursuant to Section 403.1835,
Florida Statutes, makes low cost
loans to local governments for the
construction of wastewater pollution
control facilities. Loan repayments
can be recycled into additional loans.
• Fixed or Variable Rate Loans –A
fixed rate loan is one in which the
interest rate does not fluctuate with
general market conditions. A
variable rate loan has the interest rate
tied to a rate that is adjusted upward
or downward each time the base rate
changes. The County uses fixed rate
loans when the borrowing is
relatively small and it is
advantageous to lock in a fixed rate
for a longer term.
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