Given the State of California’s fiscal crisis, municipalities and districts entitled to tax revenues were this year given the option of selling eight percent of funds due them. The option available was to contract with the Proposition 1A securitization program, wherein these districts could sell the future funds through the California Communities bond option. For entities that made this choice, the amount of tax funds due them will be paid by California Communities—otherwise, funds would be held, or borrowed, by the State and not paid until 2013, though with the incentive of two percent interest. The Big Bear Municipal Water District, just one local agency that would otherwise have to hold out for a portion of tax revenues due them until 2013, opted to participate in the Prop 1A bond option and, as General Manager Scott Heule shares with KBHR, they can now expect 50% of their distribution on January 15, 2010 and the second portion on May 3, 2010. The MWD was not the only local district to participate in the program; other Boards that voted in favor of the bond option are the Big Bear Airport District, the City of Big Bear Lake, and the Big Bear City Community Services District, bringing the total number to 804 special districts from throughout California to sign on for the program. Though forfeiting the potential, eventual two percent interest offered by the State, districts will receive funds due them now (or in January) rather than in 2013 which, as CSD reasoned, would serve them as, say, these funds could be utilized for capital improvements before that time or in another, more immediate fund with returns that could be greater, or at least assured, in a timely way.
City of Big Bear Lake, CSD, MWD and Airport District to Receive Proposition 1A Receivables in January; Districts Choose Bond Option Over State Payment in 2013
Posted on 11/24/2009 Written by