Yesterday I talked about Public financing of infrastructure, today I want to continue the thought and get a little more specific.
The issuance of municipal bonds only occurs when the public agency known as the issuing agency offers their support to the project, By support they are the sponsor of the project, that does not necessarily mean that they are putting up their bonding authority, no they are just sponsoring the bond financing. The bonds that we are discussing in this blog are not general obligation bonds which would be supported by the full faith and credit of the sponsoring agency, nor are they revenue bonds, but they are bonds issued for a specific purpose.
In the state of California for example they are are known as either Assessment Districts or Community Facilities Districts or as they are affectionately known as CFD's. These two type of bonding districts are a developers best friend. They allow the developer to finance all their public infrastructure such as public streets, sewers, lighting, water, maintenance for the streets, drainage, public utilities and even school, police and fire fees.
In addition to the above there are also bonds that can be issued by an RDA or Redevelopment Agency known as tax increment bond financing. There the property tax base is frozen and the increment, which represents the difference between the frozen tax base and the new tax base is pledged and bonds are sold against that increment.
Lastly there are public and private joint ventures. This occurs where a private developer creates a participation venture with the public agency and they share in the income stream of the project and at the end of the lease term the developer is able to buy the property back, For more on Public Financing
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