§ 5881 Bond Repayment Schedule Requirements

This law says that bonds must be paid back each year with at least 1/40 of the total amount owed, plus interest on whatever is still unpaid.

Key Takeaways

•The board decides the exact payment date and place and writes it on the bond.
•Each year you must pay at least 1/40 of the total bond amount.
•Interest is charged on any part of the bond that hasn't been paid yet.

Example

A town issues a $1,000,000 bond to build a new park.

Each year the town has to pay at least $25,000 (which is 1/40 of $1,000,000) plus interest on the balance that hasn't been paid yet. The exact payment date and place are set by the town board and written on the bond.

How to Calculate

Annual principal payment ≥ Total principal ÷ 40

Find the total amount of the bond (the whole indebtedness).
Divide that total by 40 to get the minimum yearly principal payment.
Add the interest that has built up on any unpaid balance as of the payment date.

Town bond of $1,000,000 with 5% yearly interest.

Result: First-year payment = $25,000 (principal) + $48,750 (interest) = $73,750

All bonds issued under this part shall be payable substantially in the following manner: A part to be determined by the board of supervisors, which shall be not less than one-fortieth part of the whole indebtedness, shall be paid each year on a date, and at a place to be fixed by the board of supervisors, and designated in the bonds, together with interest on all sums unpaid at that date. (Enacted by Stats. 1937, Ch. 368.)

This law says that bonds must be paid back each year with at least 1/40 of the total amount owed, plus interest on whatever is still unpaid.

Key Takeaways

•The board decides the exact payment date and place and writes it on the bond.
•Each year you must pay at least 1/40 of the total bond amount.
•Interest is charged on any part of the bond that hasn't been paid yet.

Example

A town issues a $1,000,000 bond to build a new park.

How to Calculate

Annual principal payment ≥ Total principal ÷ 40

Find the total amount of the bond (the whole indebtedness).
Divide that total by 40 to get the minimum yearly principal payment.
Add the interest that has built up on any unpaid balance as of the payment date.

Town bond of $1,000,000 with 5% yearly interest.

Result: First-year payment = $25,000 (principal) + $48,750 (interest) = $73,750

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 5881 Bond Repayment Schedule Requirements

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