Description of Bonds
General Obligation (GO) bonds are backed by the full faith and credit of the issuing municipality. The bonds are secured by the ad valorem (property tax) taxing power of the city and are limited in size only to the amount of bond capacity which is based on the city's secondary (unlimited) assessed valuation. In order for GO bonds to be used for a specific public project, the bond issue must first be approved by the voters of the city.
Municipal Property Corporation (MPC) is a non-profit corporation created by the city as a financing mechanism for the purpose of financing the construction or acquisition of capital improvement projects for lease to and use by the city. The MPC is governed by a board of directors consisting of citizens from the community approved by the City Council. MPC bonds are secured by the city's lease payments which are in turn secured by city excise tax and other undesignated general fund revenues. These bonds may be issued without a vote of the citizens.
The Scottsdale Preserve Authority (SPA) is a non-profit corporation formed in February 1997 for the purpose of acquiring land for the McDowell Sonoran Preserve. The SPA is governed by a board of directors consisting of citizens appointed subject to the approval of the Scottsdale City Council. SPA bonds are secured by lease payments which are, in turn, secured by the city's .2% transaction privilege sales and use tax which was approved by voters in May, 1995 for a duration of 30 years. These bonds may be issued without a vote of the citizens.
Similar to GO bonds, Water and Sewer Revenue bonds must also be approved by the voters. Revenues from the project or system are pledged and used to pay the debt service. However, unlike GO bonds, there is not a limitation on the amount of Revenue bonds that may be issued. Each issue is required to have annual revenues equal to 1.25 times annual debt service.
Highway User Revenue Fund (HURF) bonds are special revenue bonds issued specifically for the purpose of constructing street and highway projects. These bonds are secured by gasoline tax revenues collected by the State and distributed to cities and towns throughout the State based on a formula of population and gas sales within the county of origin. These bonds require approval by the voters.
Improvement District (ID) bonds are sold by districts that are formed by property owners in a designated area within the city who agree to be assessed for the repayment of the costs of constructing improvements which benefit their property. The city is the repayment source of last resort to a bondholder should a property owner default on his assessment. ID bonds are secured by a lien on the property and improvements of all parcels in each district. ID bonds are typically issued to finance local street, water or sewer improvements; or to acquire an existing water or sewer operation.
Community Facilities Districts (CFD) are special purpose districts created specifically to acquire and improve public infrastructure in specified land areas. Currently, the four CFDs formed within the city have issued general obligation bonds which are secured by ad valorem taxes levied by the districts. The city has no liability for community facilities district bonds.