§ 105207 Bond Proceeds Allocation Rules

This law tells where the money from selling bonds goes: 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 fund.

Key Takeaways

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

Example

A city sells $1 million of bonds to build a new park. The buyers also pay $25,000 in accrued interest and premiums.

The $25,000 is put into the “bond‑payment” fund to help pay back the bond later. The remaining $975,000 is put into the park‑improvement fund to actually build the park. If the park is finished and there’s still money left in that fund, the city can move it back to the bond‑payment fund or use it 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 money received from selling the bonds.
Separate out the accrued interest and any premiums that were paid.
Put the interest and premiums into the Payment Fund.
Subtract the interest and premiums from the total proceeds; the leftover goes into the Improvement Fund.
Step 5 (later): If the Improvement Fund still has money after the project is done, move it to the Payment Fund or use it to buy back bonds.

City sells bonds and gets $1,000,000 total, with $20,000 interest and $5,000 premiums.

Result: Payment Fund = $20,000 + $5,000 = $25,000 Improvement Fund = $1,000,000 – $25,000 = $975,000

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; provided, however, that when those purposes have been accomplished any moneys remaining in the 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 the prices and in the manner, either at public or private sale or otherwise, as the board may determine. Bonds so purchased shall be canceled immediately. (Added by Stats. 2002, Ch. 341, Sec. 4. Effective January 1, 2003.)

This law tells where the money from selling bonds goes: 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 fund.

Key Takeaways

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

Example

A city sells $1 million of bonds to build a new park. The buyers also pay $25,000 in accrued interest and premiums.

How to Calculate

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

Find the total amount of money received from selling the bonds.
Separate out the accrued interest and any premiums that were paid.
Put the interest and premiums into the Payment Fund.
Subtract the interest and premiums from the total proceeds; the leftover goes into the Improvement Fund.
Step 5 (later): If the Improvement Fund still has money after the project is done, move it to the Payment Fund or use it to buy back bonds.

City sells bonds and gets $1,000,000 total, with $20,000 interest and $5,000 premiums.

Result: Payment Fund = $20,000 + $5,000 = $25,000 Improvement Fund = $1,000,000 – $25,000 = $975,000

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 105207 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