1. Local Agency Bonds

2. Issuing a Bond
The county decides they need an influx of cash and decide to sell bonds in order to achieve this.
Working with their financial advisor the bond issue process begins
Determine everyone’s roll; What account will the money be deposited in? Who gets any interest revenue? Who will pay the bond payments? Sometimes there is more than one fund or office.

3. Types of Bonds Local Agency Bonds General Obligation (G.O.) Bonds
The State of Minnesota is not a party to the bond issue, but the county can pledge repayment with it’s available annual State Aid Construction & Maintenance Allotments.
General Obligation (G.O.) Bonds
Backed by a pledge of the full faith & credit of the county and generally repaid with property tax levies

4. MN Statute
State Aid Rule Subp. 11
Things to Remember
Bond Issue cannot exceed the total of the preceding two year’s allotments.
The sum of the annual interest & principal payments due in any calendar year of the obligation for all funds loaned from the transportation revolving loan fund plus local agency bond funds is limited to 90% of the amount of the county’s last annual construction allotment preceding the bond issue.

5. STATE AID MUST RECEIVE
Within 30 days of the bond issue the bond company or the county must provide State Aid Finance with:
A copy of the complete amortization (repayment) schedule
A copy of the county’s resolution authorizing the bond sale and containing language pledging & creating a sinking fund (debt service fund) to repay the bonds.

6. Bond Payment Due The county must verify each payment as it comes due.
The “Affidavit of Annual Bond Payment Request” must be completed and submitted to State Aid Finance at least 30 days prior to the payment due date, this allows processing time. Affidavits received too far in advance (more than 90 days) will be returned.
The affidavit can be ed to John Fox at

8. Bond Set Aside - Construction
After the new allotment is determined the new year is “rolled over”. In this process the following happens:
Construction
Any advance of construction funds from the previous year is repaid first.
Second from the remaining balance, if there is any, the bond principal due in the current year (Mar – next Feb) is “set aside” from the available allotment balance and held until it is needed.
If there are insufficient funds to make the bond principal payment, funds will not be automatically advanced from the future year’s allotment. If an advance is needed you must send in an Advance Resolution.

9. Bond Set Aside – Maintenance
Interest payments due (for Mar thru Feb of the next year) are “set aside” from the available maintenance balance.
If there are insufficient funds to make the bond interest payments the interest payment will be paid short, leaving the unpaid balance due the responsibility of the county.
If maintenance funds become available the next year, a written request can be submitted and the unpaid portion from the previous year can be released.
Maintenance funds are NEVER advanced.

10. Apply Bond Funds
May be spent on anything that your State Aid Construction Allotment can be spent on.
On the SAPR use the “State Aid Bonds Applied” line to enter the entire amount you want funded from your bond.
If using bond funds for engineering, right-of-way, or force account work enter “State Aid Bond” in the funding column.
No money will be paid to the county because you will be using your bond proceeds.
Costs are applied to the oldest bond first.

11. The bond principal is 100% repaid
The bond remains a liability to the county on the county’s State Aid records until both:
The bond principal is 100% repaid
The bond principal is 100% applied to projects
If the county repays any portion of the bond with local funds that amount does not need to be “applied”, but State Aid must be notified to make the adjustment.
It is HIGHLY recommended that you apply your bond principal BEFORE issuing another bond to be repaid from State Aid allotments.
Find your bond balances on our webpage: PW: reports1
Unpaid Principal & Payment Schedule: SAAS Report Bond Loan Schedule
Current Principal & Interest Due: SAAS Report Bond Principal & Interest Due for 20XX
Projects Bonds are Applied to: SAAS Report Bond Applied Projects

12. Refunding a Bond
Over the life of a bond the interest rate or the need to reorganize debt may cause the county to refund the bond.
The process is essentially the same as an initial bond issue.
Within 30 days of the new bond issue the bond company or the county must provide State Aid with the new amortization schedule (for both the new and old bond) and another authorizing resolution or auditor’s certificate.

13. Changes to Local Agency Bond Procedures
In Order for you to receive your Bond Principal & Interest you must fill out our form called “Affidavit of Annual Bond Payment Request”. Payments are no longer released automatically the month prior to the due date.
Must include the amount of principal and interest to be paid, which will be verified against the payment schedule we have on file. This needs to be sent in at least a month before each payment is due.
We no longer automatically advance funds for the principal payments if you do not have enough money in your account. An Advance Resolution is required if you want to receive the payment.

14. ?????