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40 CITY OF SOUTH BEND OFFICE OF THE CLERK revenue that the waste-water treatment plant and sewer is bringing in. Same with water works, secured by water revenue. He continued, So, those are bonds. We generally, from a bond's perspective, these are fifteen to twenty(15-20) year obligations. So,they are longer term. We try not to issue too many bonds that are over twenty(20) years. I don't think we have any that are over twenty(20). Twenty(20) years is pretty much the longest bond that we get into. So, if you think about the bonds that were issued last year, the longest maturity date of our bonds is out to 2038. Committeemember Voorde asked, The State still says you can't borrow more than two percent (2%) of your issue? Mr. Parker replied, Yep, and we'll get into that in just a second. Absolutely. He continued, Other types of debt that the City issues are loans and capital leases. We don't go out and get a whole lot of loans. We don't go out and borrow from a bank that often, but we can, and we have in the past where we just go out and borrow some money for a particular project. More often, what we do is we do a capital lease and we just completed one (1) through the Board of Public Works a few weeks ago. A capital lease is a certain equipment or vehicles that we want to purchase on a capital program. We go to a bank and we get the bank to finance that equipment. We then pay the bank generally over a period of about five (5) years, and at the end of those five (5) years we own the equipment. Committeemember Voorde stated, Some years ago we used tax anticipation loans, I think. Mr. Parker replied, Yea, and we don't anymore. There's a variety of different vehicles: bond anticipation notes and tax anticipation notes. Basically, what that is, for a bond anticipation note, we know we are going to issue a bond in the future for a particular project, but we're waiting for interest rates to go down to where we want them to be, or we're waiting for something, but we need the money now. We'll go and get a loan called a Bond Anticipation Note, in this case, we'll go and get a loan from a bank and say "Hey, once we issue the bonds we will repay the loan with the bond proceeds." We generally don't do that too much anymore, partly because we don't need to because if we wanted to issue bonds, interest rates are pretty low, and we don't really need to wait, but partly because there is a certain degree of risk in terms of issuing that debt and that if the bond doesn't go through or the interest rates don't get to where you need them to be,then now you have this debt that you need to pay off, which is generally going to be a pretty high interest rate debt. Some municipalities in our State and elsewhere face the necessity of borrowing in a similar kind of context as a sort of bridge loan before they get their property tax proceeds. That of course, is something always to be avoided. We don't need to do that, given our reserves. Committeemember Voorde stated, I think there was a time that we did, though. Mr. Parker replied, There was a time that we did not have as healthy of reserves as we do now. I could see the gap between our expenditures being,you know,we spend money throughout the year on our operations and having the property tax proceeds only collected twice a year, I could see that being, if we didn't have the money to cover it, pretty tough. EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 1227 W.Jefferson BvId South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 10