§ 102508 Bond Proceeds Allocation Rules

This law tells where the money from selling bonds has to go: interest and extra fees go to a fund that pays back the bond, and the rest goes to a special fund for the project the bond was meant to pay for.

Key Takeaways

•Interest and premiums must go to a fund that pays back the bond.
•All other money from the bond sale goes to a fund that can only be used for the project the bond was meant to fund.
•When the project is finished, any leftover money can be moved to the bond‑payment fund or used to buy back and cancel bonds.

Example

A city sells $10 million of transit bonds and also receives $200,000 of accrued interest and $100,000 of premium fees.

The $300,000 (interest + premium) must be put into the bond‑payment fund. The remaining $10.2 million goes into the improvement fund to be used only for the transit project. When the project is finished, any leftover money can be moved to the payment fund or used to buy back and cancel some of the bonds.

How to Calculate

Payment Fund = Accrued Interest + Premiums Improvement Fund = Total Proceeds – (Accrued Interest + Premiums)

Find the total amount of interest and premiums that came with the bond sale.
Put that amount into the Payment Fund.
Subtract the amount from Step 1 from the total money received from the bond sale.
Put the remainder into the Improvement Fund.

City sells bonds and gets $10,500,000 total, including $200,000 interest and $100,000 premium.

Result: Payment Fund = $200,000 + $100,000 = $300,000 Improvement Fund = $10,500,000 – $300,000 = $10,200,000

All accrued interest and premiums received on the sale of bonds shall be placed in the fund to be used for the payment of principal of and interest on the bonds and the remainder of the proceeds of the bonds shall be placed in the treasury to the credit of the proper improvement fund and applied exclusively to the purposes for which the debt was incurred (which purposes shall be in conformity with an approved general transit plan or element thereof then in effect); provided, however, that when such purposes have been accomplished, any moneys remaining in such improvement fund (a) shall be transferred to the fund to be used for the payment of principal of and interest on the bonds, or (b) shall be placed in a fund to be used for the purchase of outstanding bonds of the district from time to time in the open market at such prices and in such manner, either at public or private sale or otherwise, as the board may determine. Bonds so purchased shall be canceled immediately. (Added by Stats. 1971, Ch. 1374.)

Key Takeaways

•Interest and premiums must go to a fund that pays back the bond.
•All other money from the bond sale goes to a fund that can only be used for the project the bond was meant to fund.
•When the project is finished, any leftover money can be moved to the bond‑payment fund or used to buy back and cancel bonds.

Example

A city sells $10 million of transit bonds and also receives $200,000 of accrued interest and $100,000 of premium fees.

How to Calculate

Payment Fund = Accrued Interest + Premiums Improvement Fund = Total Proceeds – (Accrued Interest + Premiums)

Find the total amount of interest and premiums that came with the bond sale.
Put that amount into the Payment Fund.
Subtract the amount from Step 1 from the total money received from the bond sale.
Put the remainder into the Improvement Fund.

City sells bonds and gets $10,500,000 total, including $200,000 interest and $100,000 premium.

Result: Payment Fund = $200,000 + $100,000 = $300,000 Improvement Fund = $10,500,000 – $300,000 = $10,200,000

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 102508 Bond Proceeds Allocation Rules

Key Takeaways

Example

How to Calculate

Key Terms

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References