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• Funds needed for capital projects can vary significantly from year to year creating <br /> peaks and valleys in your budget <br /> Advantages to bonding: <br /> • The cost of the project is spread more equally among the citizens because those who <br /> receive the benefit of the project in future years are the one's paying the cost of the <br /> project <br /> • Should higher rates or inflation be a concern,financing now at historically low rates <br /> may be less financially burdensome than using cash today <br /> • With higher rates or inflation comes higher investment yield for the cash in your <br /> capital fund <br /> • Bond payments may enhance the structural integrity of the budget given the fact they <br /> are fixed and predictable <br /> • Debt can be structured to provide flexibility to refinance or redeem in the 7th year of a <br /> 10 year term,or sooner with a front-end loaded principal structure <br /> • Bond payments do not have to be levied but can be paid from the capital fund <br /> thereby managing the taxpayer impact and delaying depletion of the capital fund. <br /> Disadvantages of bonding: <br /> • Added costs of the project in financing and interest <br /> • Inflexibility to use a defined amount of future revenues other than for bond repayment <br /> Page 2 <br />