Minutes - Council Work Session - 03/14/1984 - Workshop

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at the time of issue, the municipality either (i) levys a tax equal to 105% of annual debt service on the bonds and then eaneels all or a part of the levy if tax increment has been received or (ii) estimates will be covered by tax increment receipts. the bonds are not subject to net debt limitations because of the tax incremen.t pledge just as if special assessments were pledged for the repayment of the bonds. 2. Revenue bonds payable exclusively from the revenues pledged, which might include: (i) anticipated tax inerement, (ii) land sale or lease revenues, (iii) developer guarantees, (iv) . assessments, (v) reserve funds. if pledged revenues are inadequate to meet debt service, the bond buyer is at risk since the issuer is statutorily prohibited fro'm paying debt service from other, nonpledged revenue sources. interest rate tends to be approximately 2% higher than general obligation rate. de issuer can be housing and redevelopment authority, port author-. ity, municipality or county. 3. Agency general obligation bonds. Although not yet done in Minnesota, if the tax increment district administration is a housing and' redeve]opment, authority or port authority (other than a municipality or county) the bonds may be general obligations of that agency. These bonds differ from tax increment revenue bonds o~ly in that they are secured by a promise of the agency 'to pay them from any and all unencumbered agency revenue sources and assets. Since such agencies do not have independent taxing powers, an agency general obligation will generally not be any more mar- ketable than.a tax increment revenue bond. Bonds may be "industrial development bonds" for federal tax law purposes if a certain level of guarantees are provided by the .developer and therefore be subject to all of the IDB exempt small issue capital expenditure rules.