Debt Types

Environmental Improvement Fund*


Debt Type General Obligation Notes and Bonds (GO) [ch. 67, Wis. Stats.] Revenue Bonds
[s. 66.0621, Wis. Stats.]		 Special Assessment B-Bonds
[s. 66.0713(4), Wis. Stats.]		 Hybrid Revenue Bonds (include a Pledge of Special Assessment Revenue)
Repayment Source primarily property tax revenue users charges from specified activity, e.g., sewer charges or water charges revenue from special assessments levied against benefiting properties in the municipality combination of user charge revenue and special assessment revenue
Municipal Limit aggregate limit is 5% of equalized value of real estate in the municipality none, however practical limit is amount of revenues available to pay deb service none, however practical limit is amount of special assessments that can be levied on properties same as revenue and special assessment B-Bonds
Advantages most common debt type,

simpler than other debt types, and

typically lowest cost		 preserves GO capacity and

encourages utilities to be self-supporting enterprises		 preserves GO capacity,

keeps user charge lower,

raises money from undeveloped properties,

may qualify low income households for grants		 flexibility in allocating debt burden between user charge and amount of special assessments levied
Impact on Households debt burden is spread based on property value depends on structure of user charge i.e. whether debt cost is on a fixed part of user charge bill or variable part of bill depends on methodology of special assessments, e.g. flat amount per property or front footage or other

Higher payments in early years with level principal payments and interest on balance 		depends on split between debt costs put on user charge and special assessments and methodology for both
Other Comments people that itemize income taxes can deduct property taxes so, in effect, debt service becomes deductible for these people revenue bonds have priorities similar to mortgages and typically have a debt coverage requirement of up to 140% of annual debt service special assessments must equal the bond amount and match the bond payment schedule.

Assessments are for capital costs not operating costs. 		this is the structure the Clean Water Fund uses on all projects with special assessments pledged as a primary source of loan repayment

*The Land Recycling Loan Program allows General Obligation Notes and Bonds only.

Last Revised: Thursday February 28 2008