The city receives most of its revenue on a seasonal basis. Property taxes are collected in November - January and again in May - July. This money must last the city for the entire year. Usually, the city will have enough cash on hand to be able to meet its regular monthly bills and still have enough cash to “front-fund some capital projects. When bonds are eventually sold, the cash that was used to front-fund projects is reimbursed to the city from the bond proceeds.
This procedure is in the best interest of the city as it maximizes the use of the city’s available cash. Bond sales are timed to market conditions (interest rates) and actual cash needs. Actual cash needs are determined by the amount of funds that have been expended on individual capital projects.
If the CIP is approved, the financing process can be summarized as:
If you have any questions, please email the Department of Budget and Evaluation.
- A funding mechanism is approved which generally is bonds (the bond authorization)
- Projects receive funding (an appropriation) on an individual basis
- Project costs are paid for from existing city cash (front-funded)
- Bonds are sold to re-pay any city funds that were used and for the remaining costs of the projects
- The funds borrowed are paid off usually over 20 years (debt service payments)