School Bonding Program and Bond Debt Service Discussion
Rhode Island's School Bond Program
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The structure of the program is beneficial in two important ways -
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it provides for a strong credit rating, and
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the bonds issued through the program are not considered State net tax supported
debt.
The main reason the bonds are not considered net tax supported debt of the State, is
bonds are backed by the local entity's loans which carry a general obligation - a "full
faith and credit" pledge includes a first lien on ad valorem taxes and general fund
revenues of the municipality.
The program is structured to provide a strong credit rating for all municipalities through
an additional security structure - a State Aid Intercept requirement:
RIHEBC's ability to intercept the borrower's State Basic Education and School
Housing Aid and certain other appropriations of State aid and meal, beverage and
hotel tax
The program has a standing rating of Aa3 from Moody's Investors Service.
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