LMR April 2021
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There Are Options When Borrowing Funds
BY DAVID MEDLIN, GOVERNMENT CONSULTANTS, INC.
Many municipalities have essential projects that they simply
cannot afford without obtaining a loan, and this applies to
both small and large entities. These projects include new or
improved streets and roads, roundabouts, water and sewer
facilities, or buildings, just to name a few. The opportunity to
refinance those loans to obtain better rates or extend the term
when necessary are also very important.
Depending on the size of the financing and the number of years
needed to repay the debt, there are multiple options relative
to accessing funds. Banks, the Louisiana Community Development
Authority (LCDA), and the bond market are the primary
lenders that meet the needs of municipalities.
GOVERNMENT CONSULTANTS, INC.
Specializing in Bond Issues and Financing
A bank will typically make loans for 15 years or less. If you have
a good banking relationship, and particularly one where you
have a depository relationship and handles most of your banking
needs, this is a good place to start. If you would like to expand
the number of participating banks, a request for proposals
may be sent to numerous banks. They can help with smaller
loans up to about $15,000,000.
The LCDA has some special legal abilities that allow a borrower
to pledge all lawfully available funds for repayment of the loan.
Lawfully available funds include all funds of a municipality,
except those that are restricted by law or a vote of the people
for specific purposes. This gives a lender a broader source of
repayment than just a particular tax or fee. The LCDA is also a
frequent issuer of debt and is well established in the financial
industry. This is particularly helpful to governments that do not
often issue debt and are not well known to lenders. The LCDA
actually issues the debt and enters into a loan agreement with
the municipality.
CONTINUED PAGE 23
L. Gordon King
Dede Riggins
Nnamdi I. Thompson
Shaun B. Toups
David M. Medlin
James R. Ryan
Stephen Holley
(MSRB Registered Municipal Advisors)
700 North 10 th Street Annex Bldg.
Baton Rouge, LA 70802
(225) 344‐2098 (Phone) (225) 344‐5952 (Fax)
gcla@gc‐la.net (email)
OVERVIEW
Modern day government has become a large financial
enterprise, handling millions of dollars and facing
service and revenue pressures. The governing
authority and Administrator(s) face complex financial
decisions ranging from the impact of property and
sales taxes to the financing of capital improvements.
As government finance has become more complex,
the need for financial advice to base decisions upon
has. The services of an expert Municipal Advisor are
being used by more and more grown governmental
units.
A Municipal Advisor (or “MA”) serves as a
consultant advising the governing authority on
matters relating to the following:
Financial feasibility of projects;
Total cost analysis of financing alternatives;
Review of capital improvement financing
programs;
Advice on the structuring and marketing of debt
securities.
The MA is an integral member of the governing
authority’s management team, providing advice and
analysis to assist in financial decision‐making.
ECONOMIC DEVELOPMENT
FINANCE ANALYSIS
• Analyzing available alternatives in relation to
cost to the governing authority and providing
financial guidance and recommendations;
• Analyzing from a cost/benefit standpoint the
use of incentives (free land, subsidy of bond
issues, utility improvements) to attract
industry;
• Providing a detailed upfront and long‐term
financial analysis of costs to the governing
authority versus benefits of the specific
project; and
• Serving as an economic development finance
resource for the Governing Authority.
We Have The Experience!
Page 22
LMR | APRIL 2021