Par Value - The face value or principal amount of a bond, usually $5,000 due the holder at maturity. It has no relation to the market value. For pricing purposes it is considered 100.

Parity Bonds - Revenue bonds that have an equal lien on the revenues of the issuer.

Paying Agent - Generally a bank that performs the function of paying interest and principal for the issuing body.

Premium - The amount, if any, by which the price exceeds the principal amount (par value) of a bond. Its current yield will be less than its coupon rate.

Primary Market - The new issue market.

Principal - The face value of a bond, exclusive of interest.

Proposition 13 - (Article XIIIA of the California Constitution) Passed in 1978, this proposition enacted sweeping changes to the California property tax system. Under Prop. 13, property taxes cannot exceed 1% of the value of the property and assessed valuations cannot increase by more than 2% per year. Property is subject to reassessment when there is a transfer of ownership or improvements are made. See our Proposition 13 Fact Sheet for more information.

Proposition 218 - (Article XIIID of the California Constitution) This proposition, named "The Right to Vote on Taxes Act", filled some of the perceived loopholes of Proposition 13. Under Proposition 218, assessments may only increase with a two-thirds majority vote of the qualified voters within the District. In addition to the two-thirds voter approval requirement, Proposition 218 states that effective July 1, 1997, any assessments levied may not be more than the costs necessary to provide the service, proceeds may not be used for any other purpose other than providing the services intended, and assessments may only be levied for services that are immediately available to property owners.

Qualified Legal Opinion - Conditional affirmation of the legal basis for the bond or note issue. The average investor should avoid any but the strongest opinion by the most recognized bond approving attorneys.

Rate and Method of Apportionment (RMA) – This is a feature of a Mello-Roos Community Facilities District. The RMA document describes the formula for determining the annual charge an individual property receives. Typically, the RMA categorizes property by land use type, building square footage, acreage, etc. Each of these categories is then assigned a maximum special tax rate. The actual amount of special tax levied against any one property is determined by the apportionment methodology in the RMA and cannot exceed the maximum special tax.

Ratings - Various alphabetical and numerical designations used by institutional investors, Wall Street underwriters, and commercial rating companies to give relative indications of bond and note creditworthiness. Standard & Poor's and Fitch Investors Service Inc. use the same system, starting with their highest rating of AAA, AA, A, BBB, BB, B, CCC, CC, C, and D for default. Moody's Investors Services uses Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C, and D . Each of the services use + or - or +1 to indicate half steps in between. The top four grades are considered Investment Grade Ratings.

Red Herring - A preliminary offering statement, subject to final change and update upon completion of sale of bonds.

Redemption - Process of retiring existing bonds prior to maturity from excess earnings or proceeds of refunding bonds. It also refers to redeeming shares in a mutual fund by selling the shares back to the sponsor.

Redevelopment Agency (Redev.) - A legislatively established subdivision of government established to revitalize blighted and economically depressed areas of a community and to promote economic growth. Tax Allocation Bonds are issued to pay the cost of land and building acquisition and their redevelopment and are repaid by the incremental increase in tax revenues produced by the increase assessed value of the area after redevelopment. Redev. Agencies may also sell Housing Mortgage Revenue Bonds to finance housing units within the area, a fixed percentage of which must be for low-cost housing.

Refunding Bond - The issuance of a new bond, usually at a lower interest rate, for the purpose of retiring an already outstanding bond issue. Usually done to save interest costs, just as a property owner will attempt to refinance a mortgage when interest rate drop.

Registered Bond - A non-negotiable instrument in the name of the holder either registered as to principal or as to principal and interest.

Revenue Bond - A municipal bond whose debt service is payable solely from the revenues derived from operating the facilities acquired or constructed with the proceeds of the bonds.

Secured Property - Property on which the property taxes are a lien against real estate.

Special Assessment - A charge imposed against property in a particular locality because that property receives a special benefit by virtue of some public improvement, separate and apart from the general benefit accruing to the public at large. Special assessments must be apportioned according to the value of the benefit received, rather than the cost of the improvement, and may not exceed the value of such benefit or the cost of the improvement, whichever is less.

Self Supporting Bonds - Bonds payable from the earnings of a municipal utility enterprise.

Serial Bond - A bond of an issue that features maturities every year, annually or semi-annually over a period of years, as opposed to a Term Bond, which is a large block of bonds maturing in a single year.

Sinking Fund - Money set aside on a periodic basis to retire term bonds at or prior to maturity.

Sinking Fund Schedule - A schedule of payments required under the original bond resolutions to be placed each year into a special fund, called the sinking fund, and to be used for retiring a specified portion of a term bond issue prior to maturity.

Special Assessment Bond - A bond secured by a levy of special assessments, as opposed to property taxes, made by a local unit of government on certain properties to defray the cost of local improvements and/or services that represents the specific benefit to the property owner derived from the improvement. In California these are usually 1915 Act or 1911 Act Bonds.

Special Districts - Single-purpose or limited-purpose units of government formed under state enabling legislation to meet certain local needs not satisfied by existing general purpose governments in a given geographical area. In some states, special districts (such as school districts) may be granted taxing powers.

Supplemental Tax - An adjustment in real property valuation resulting from upward changes in assessed value due to changes in ownership or completion of new construction. A secured property supplemental tax bill retroactively taxes the supplemental assessment of a property on a pro-rata basis as a result of the assessor's reappraisal of property at its full cash value on the date that a change in ownership occurs or new construction is completed.