Landscape Lighting Act of 1972 - This is the act of
legislation (Streets & Highways Section 22500) that allows local
governmental agencies to form Landscape & Lighting Maintenance Districts
for the purpose of financing the costs and expenses of operating, maintaining,
and servicing landscaping, lighting and appurtenant facilities located within
the public areas of the district.
Lease-Rental Bond - Bonds whose principal and
interest are payable exclusively from rental payments from a lessee. Rental
payments are often derived from earnings of an enterprise that may be operated
by the lessee or the lessor. Rental payments may also be derived from taxes
levied by the lessee.
Legal Opinion - A written opinion from bond counsel
that an issue of bonds was duly authorized and issued. The opinion usually
includes the statement, "interest received thereon is exempt from federal taxes
and, in certain circumstances, from state and local taxes."
Letter of Credit - A form of supplement or, in some
cases, direct security for a municipal bond under which a commercial bank or
private corporation guarantees payment on the bond under certain specified
Level Debt Service - Principal and interest payments
that, together, represent more or less equal annual payments over the life of
the loan. Principal may be serial maturities or sinking fund installments.
Lien - A claim on property as security for debt or
Limited Tax Bond - A bond secured by a pledge of a
tax that is limited as to rate or amount.
Marks-Roos Bonds - The State Legislature enacted the
Marks-Roos (named after its legislative sponsors) Local Bond Pooling Act of
1985 to facilitate the financing of local government facilities by bond bank
pools funded by bond proceeds. The pool, formed under a Joint Powers Authority,
can buy any type of legally issued debt instrument within or without its
geographic area. The idea was to save money through economies of scale by
selling one large bond issue to finance several small projects. This in fact
has not always happened. Many issues were high yielding, unrated, junk bonds
that benefited no one but the bond underwriter. Several Marks-Roos issues have
defaulted and are under investigation by the Securities and Exchange
Commission. Prospective investors should find out what sort of loans the pooled
fund will make before buying such deals.
Maximum Special Tax - When a new Mello-Roos Community
Facilities District is formed, a maximum special tax amount is assigned to each
type of land use. The actual amount of special tax levied against any one
property cannot exceed the maximum special tax. See our Mello-Roos Fact Sheet
for more information.
Maximum Annual Debt Service - The maximum amount of
principal and interest due by a revenue bond issuer on its outstanding bonds in
any future fiscal year. This is sometimes the amount to be maintained in the
Debt Service Reserve Fund.
Mello-Roos (Bonds) - The Mello-Roos (named for its
legislative sponsors) Community Facilities District Act of 1982 established
another method whereby almost every municipal subdivision of the state may form
a special, separate district to finance a long list of public facilities by the
sale of bonds and/or to finance certain public services on a "pay-as-you-go"
basis. These Community Facilities Districts are formed and bond issues are
authorized by a two-thirds vote of the property owners in the district.
Mortgage Revenue Bond - A bond backed by a lien on
the monthly payments of a large pool of mortgages, usually issued by a state or
local housing authority.
Municipal Bond - Bonds issued by any of the 50
states, the territories and their subdivisions, counties, cities, towns,
villages and school districts, agencies, such as authorities and special
districts created by the states, and certain federally sponsored agencies such
as local housing authorities. Historically, the interest paid on theses bonds
has been exempt from federal income taxes and is generally exempt from state
and local taxes in the state of issuance. There are approximately $1.3 trillion
municipal bonds outstanding and they generate about $50 billion tax-free
interest income each year.
Municipal Notes - Short-term municipal obligations,
generally maturing in one year or less. The most common types are (1) bond
anticipation notes (BANs), (2) revenue anticipation notes (RANs), (3) tax
anticipation notes (TANs), (4) grant anticipation notes, (5) project notes, and
(6) construction loan notes.
Municipal Securities Rulemaking Board (MSRB) - An
independent self-regulatory organization established by Congress in 1975 which
is charged with primary rulemaking authority - under the SEC - over dealers,
dealer banks, and brokers in municipal securities.
Net Bonded Debt - Gross general obligation debt less
self-supporting general obligation debt, housing bonds, water revenue bonds,
Net Interest Cost (NIC) - Generally speaking, issuers
award competitive bond sales to the underwriter bidding the lowest NIC. It
represents the average coupon rate weighted to reflect the time until repayment
of principal and adjusted for the premium or discount.
Net Revenue Available for Debt Service - Usually,
gross operating revenues of an enterprise less operating and maintenance
expenses but exclusive of depreciation and bond principal and interest. Net
revenue as thus defined is used to determine coverage on revenue bond issues.
Notice of Special Tax - In 1990, legislation was
passed requiring that all sellers of property in Mello-Roos districts disclose
to buyers the presence and certain features of the Special Tax. The disclosure,
known as a Notice of Special Tax, is the legal responsibility of the seller of
property. See our Notice of Special Tax fact sheet for more details.
Official Statement (OS) or Offering Circular (OC) - A
document (prospectus) circulated for an issuer prior to a bond sale with
salient facts regarding the proposed financing. The final OS must be sent to
the purchaser before delivery of the bonds.
Overlapping Debt - The proportionate share of the
general obligation bonds of local governments located wholly or in part within
the limits of the reporting unit of government that must be borne by property
owners within the unit.