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144 | FINANCEexcise or other specified non-ad valoremtaxes. Generally, voter approvalis not required prior to issuance ofsuch obligations. The rating and costof capital varies greatly on the qualityof the revenue source and the level ofprojected debt service coverage.■ General Obligation Bonds. Generalobligation bonds are secured by thefull faith, credit, and taxing power ofan issuer. General obligation bonds issuedby local units of government aretypically secured by a pledge of the issuer’sad valorem taxing power. Ad valoremtaxes necessary to pay debt serviceon general obligation bonds arenot often subject to the constitutionalproperty tax millage limits (an “unlimitedtax bond”), although in somecases such limit may exist (a “limitedtax general obligation bond”). Suchbonds constitute debts of the issuerand often require approval by electionprior to issuance. In the event of default,the holders of general obligationbonds have the right to compel a taxlevy or legislative appropriation. Thisgenerally is the lowest borrowing costfor local governments.■ State Moral Obligation Bonds (MississippiDevelopment Bank). Moralobligation bonds are issued by a stateagency or authority that is securedby a non-binding covenant that anyamount necessary to make up anydeficiency in pledged revenues availablefor debt service will be includedin the budget recommendation madeto the state legislature or other legislativebody, which may appropriatemoneys to make up the shortfall. TheMississippi Development Banks issuessuch debt in the state. The legislatureor other legislative body, however,is not legally obligated to makesuch an appropriation.Mississippi’sCurrentFinancialSituationWhile the state faces noliquidity concerns in thenear term, it expects tolose approximately $300million in revenue overfour months. The Bureauof Buildings has reportedlosses at state universitiesand community collegesto be approximately$176 million. Damage toother state-owned buildingsis estimated to be$345 million. Even afterreimbursement from theFEMA, the state expectsto require $400 million forinfrastructure repairs.Source:Mississippi Department of Finance andAdministration. Bureau of Buildings, 2005.■ State General Obligation Bonds. Issuedby states, these bonds are generallybased upon appropriations madeby the state legislature for the purposesspecified. The state’s generalobligation credit, rated in the “AA”category, is very attractive to creditsensitiveinvestors and can be soldwith a very low cost of capital.Public Entity PossibilitiesPost-Katrina■ Mississippi Development Bank HurricaneKatrina Relief Program. Localgovernmental units affected by HurricaneKatrina—such as counties,municipalities, school districts, utilitydistricts, public hospitals—may beeligible to participate in the MississippiDevelopment Bank HurricaneKatrina Relief Program. Currentlythis Program has approximately $100million in available funds to offer inloans. These loans offer a variable interestrate with no principal or interestpayment for two years (capitalizedinterest), and loans may be prepaid atany time with 30-days notice. Thereis a mandatory redemption for suchloans at the end of two years. Theloan proceeds may be used to financecapital projects, equipment, workingor operating capital, and debt serviceneeds. There is no requirement for abond issue at the local level, but thelocal governmental unit executes theloan agreement pursuant to a resolutionadopted by the governmentalentity approving the loan and taxintercept agreement. This program isdesigned to take one week to completethe process from the local actionto the closing of the loan and deliveryof proceeds.■ Advance Refunding. Congress haspassed legislation that will in part al-
THE GOVERNOR’S COMMISSION REPORT | 145low an additional advanced refundingfor bonds issued by the state, a localgovernment or any political subdivisionif such bonds were issued tofinance facilities located within theGulf Opportunity Zone. This allowsany eligible governmental entity anopportunity to take advantage oflower interest rates.■ FEMA Loan Programs. In additionto the 500 plus programs currentlyoffered by FEMA, the FEMA CommunityDisaster Loan Act of 2005 wassigned by the President on October7, 2005, authorizing up to $1 billionin direct loans to local governments.The Community Disaster Loan Programprovides operational fundingto help local governments that haveincurred a significant loss in revenuedue to a federally declared nationaldisaster that has or will adversely affecttheir ability to provide essentialmunicipal services.■ Local governments must show asubstantial loss (greater than 5 percent)of tax and other revenues forthe current or succeeding year as aresult of a major disaster.■ The disaster must have adverselyaffected the level of essential municipalservices previously provided.■ State law must not prohibit localgovernments from incurring indebtednessresulting from a federalloan.■ The loan amount cannot exceedthe lesser of 25 percent of the applicant’soperating budget for thefiscal year of the disaster, or a cumulativeestimated revenue loss forthe fiscal year of the disaster andthe subsequent three fiscal years.■ Capital outlays and debt service(interest and principal) for capitalitems will be excluded in the calculationof the applicant’s operatingbudget.■ The term of the loan is five years,and can be extended to 10 years,with the applicant selecting thepayment schedule.■ The interest is the rate for five-yearmaturities as determined by the Secretaryof the Treasury on the date thepromissory note is executed. If anapplicant can demonstrate unusualcircumstances involving hardship, theAssociate Director may approve a rateequal to the five-year maturity rateplus 1 percent, adjusted to the nearest1/8 percent, and further reduced byone-half.■ FEMA will execute a promissorynote to the applicant cosigned by thestate. If the state cannot legally cosignthe note, the local government mustpledge collateral security. Funds willbe dispersed in accordance with theterms of the note.■ Funds must be used to carry on existinglocal government functions ofa municipal operation character orto expand such essential functions tomeet disaster-related needs.■ FEMA will provide technical assistanceto expedite the application andapproval process.■ To initiate the process, the local governmentshould complete the Certificationof Eligibility for CommunityDisaster Loan form and submit it tothe governor’s authorized representative.Private EntitiesExisting Authority and IncentivesIndustrial Development Bond Programs.The Mississippi Business FinanceCorporation (MBFC) serves as a statewidefinancing source, which allowscompanies to consider financing andincentive alternatives through a single
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Governor’s Commissionon Recovery,
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THE GOVERNOR’S COMMISSION REPORT
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INFRASTRUCTUREThe four subcommittee
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12 | LAND USE■ City land use plan
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14 | LAND USEgional level, coastal
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16 | LAND USElored for South Missis
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18 | LAND USEThe qualityof life and
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20 | LAND USEand building requireme
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22 | LAND USEThroughout the Renewal
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24 | LAND USEapproval process for c
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26 | INTERMODAL TRANSPORTATIONINTER
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28 | INTERMODAL TRANSPORTATIONson C
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30 | INTERMODAL TRANSPORTATIONOn pu
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32 | INTERMODAL TRANSPORTATIONOn th
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34 | INTERMODAL TRANSPORTATIONOn th
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36 | PUBLIC SERVICESPUBLICSERVICESK
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38 | PUBLIC SERVICEStic tank use; a
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40 | PUBLIC SERVICESsources. The go
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42 | PUBLIC SERVICESBefore Katrinan
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44 | PUBLIC SERVICEScoverage capabi
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46 | PUBLIC SERVICESThe methods by
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48 | AFFORDABLE HOUSINGAFORDABLEHOU
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50 | AFFORDABLE HOUSINGTable 1, bel
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52 | AFFORDABLE HOUSINGlived below
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54 | AFFORDABLE HOUSINGthat about 6
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56 | AFFORDABLE HOUSINGbe helpful.
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58 | AFFORDABLE HOUSING[I]t would a
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60 | AFFORDABLE HOUSINGcities or co
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62 | AFFORDABLE HOUSINGand heavy tr
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64 | AFFORDABLE HOUSINGInvestment A
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66 | AFFORDABLE HOUSINGmendations i
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68 | AFFORDABLE HOUSINGadvice on th
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70 | AFFORDABLE HOUSINGAs insurance
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72 | AFFORDABLE HOUSINGRecommendati
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ECONOMICDEVELOPMENTIn this section
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Reports - Mississippi Renewal

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