1915 Act, 1911 Act Bonds - The
California name for Special Assessment bonds or Improvement
Bonds, named for the years in which the enabling legislature
was approved. An assessment district is formed, public improvements
(streets, curbs, gutters, water or sewer systems, etc.) are
constructed, and assessments are levied on all the properties
in the district in proportion to the benefit derived from
the improvement. Bonds are sold and are repaid from the special
assessments received. 1915 Act bonds are issued in a series
and are payable from all assessments collected, while individual
1911 Act bonds are payable from the assessments on one specific
Accrued interest - Coupon interest
accumulated on a bond or note since the last interest payment
or, for a new issue, from the dated date to the date of delivery.
Since interest on municipal bonds is payable semi-annually,
every six months, when you buy a bond in mid-term you are
only entitled to the interest the bond earns after you buy
it. The interest earned previously, referred to as the accrued
interest, belongs to the seller. Some first-time bond buyers
think this payment is a hidden charge or fee, not realizing
that they will get it back in full at the next interest payment
date as tax-free interest.
Ad Valorem Tax - A direct tax
calculated "according to value" of property. Ad valorem taxes
are based on an assigned valuation (market or assessed) of
real property and, in certain cases, on a valuation of tangible
or intangible personal property. In virtually all jurisdictions
the tax is a lien on the property enforceable by seizure and
sale of the property.
Advanced Refunded Bonds - A
municipality may sell a second bond issue at a lower interest
rate cost, placing the proceeds of the issue in an escrow
account from which the first issue's principal and interest
will be repaid when due.
Agency – Any county, city, joint
powers of authority, special district or other local or regional
Arbitrage - The interest rate
differential that exists when proceeds from a municipal bond
- which is tax-free and carries a lower yield - are invested
in taxable securities with a yield that is higher. The 1986
Tax Reform Act made this practice by municipalities illegal
solely as a borrowing tactic, except under certain safe-harbor
Assessment Appeal - If you disagree
with the assessed value of your property, you have the right
to an informal assessment review. If after discussing your
disagreement with the Assessor's Office, the matter is not
resolved to your satisfaction, you have the right to file
an appeal with the Assessment Appeals Board. Your application
will be heard before the Board or an Assessment Hearing Officer.
The results of the hearing will be based on the evidence provided
by you and the Assessor's Representative at your hearing.
Assessed Value – The value of
a house, for taxation purposes, as determined by the Assessor
using a formula based on recent sales prices of comparable
homes. The assessed value of a property consists of the value
of the land and improvements. The net assessed value would
be the value of the land and improvements less any exemptions
applicable to the parcel. The assessed value of a parcel is
subject to reassessment when a change of ownership occurs,
new construction is completed (and reported), there is a decline
in value, or upon request by the property owner.
Assessment District (AD) – An
Assessment District is a special financing district formed
by a local government agency (county, city, water district,
etc.) and includes property that will receive direct benefit
from the construction of new public improvements or from the
maintenance of existing public improvements. Typically, an
Assessment District will issue bonds, pursuant to the Improvement
Bond Act of 1915, to finance the improvements. The most common
types of public improvements financed include roads, sidewalks,
sewer facilities and water facilities. View the Adobe Acrobat
Assessor– The Assessor is one
of the three major governmental agencies that oversees property
taxation in California. The Assessor’s job is to annually
derive assessed values for all taxable property in the county
according to the California Constitution and the California
Revenue and Taxation Codes.
Assessor’s Parcel Number (APN)
– The Assessor’s Parcel Number is a unique number assigned
to each property in each county. This number ranges in size
from county to county, but is generally based on a “book,”
“page,” “number” ordering system. The APN will unmistakably
identify a property that has a duplicate or common street
Auditor-Controller - The Auditor-Controller
is one of the three major governmental agencies that oversees
property taxation in California. The Auditor-Controller provides
centralized accounting and financial reporting activities
for all county agencies and departments. This includes apportionment
of property taxes for all taxing agencies, payroll and accounts
payable processing, preparation of financial statements and
appropriation/budget control over county spending.
Authority (Joint Powers of Authority
& Public Financing Authority) - A unit or agency of government
established to perform specialized functions, usually financed
by service charges, fees or tolls, although it may also have
taxing powers. In many cases authorities have the power to
issue debt which is secured by the lease rental payments made
by a governmental unit using the facilities constructed with
bond proceeds. An authority may function independently of
other governmental units, or it may depend upon other units
for its creation, funding or administrative oversight. Examples
of authorities include health facilities authorities, industrial
development authorities and housing authorities.
Authorizing Ordinance - A law
that when enacted allows the unit of government to sell a
specific bond issue or finance a specific project.
B.A.N. (Bond Anticipation Note)
- A short-term security, one year or less, used for interim
financing to be repaid from the proceeds of a planned long-term
Base Point (or Basis Point)
- One one-hundreth of one percent ( 1/100 % or 0.01 percent).
Thus 25 basis points equal one-quarter of one percent, 100
basis points equal one percent.
Base Year - The assessment year
1975-76 serves as the original base year. Thereafter, any
assessment year in which real property is purchased, newly
constructed, or changes ownership shall become the base year
used in determining the full value for such real property.
Bearer Bond - A bond that has
no identification of the owner of the security. It is presumed
to be owned by the bearer or the person who holds it. It was
much sought after because of the ease of transferring or gifting.
All bonds issued prior to June 1983 were bearer bonds; since
then, they have been issued in Registered Bond form.
Benefit Assessment – This is
an assessment based on a special and/or extra benefit that
a parcel receives from the existence of certain services,
improvements, or facilities in either a district or other
area. See our Benefit Assessment fact sheet.
Benefit Assessment Act of 1982
– This is an act of legislation authorizing local governmental
agencies to impose assessments on benefited properties within
a Benefit Assessment District. To lean more, see our Benefit
Assessment Act fact sheet.
Bond - Bonds are financial instruments
of debt. An issuer borrows money from an investor and agrees,
by written contract, to repay the amount borrowed plus an
agreed upon rate of interest at a specified date (maturity
date). The amount borrowed or the amount of the bond is called
the principal. The interest on the bonds is simply referred
to as the interest. Interest and principal together are know
as debt service. Generally bonds are sold in amounts of $5,000
or $1,000 or integral multiples thereof. For more information
see our Bonds Fact Sheet.
Board of Equalization (BOE)
- State agency responsible for administration of the sales
and use tax, cigarette and alcoholic beverage taxes, insurance
gross premiums tax, gasoline use, fuel and transportation
taxes, and the energy resources surcharge. BOE also oversees
local administration of the property tax. BOE is directed
by five members: four elected by the public, and the fifth
being the state controller. BOE is a quasi-judicial body with
appellate functions in final actions of the franchise tax
Bond Counsel or Bond Approving Attorney
- A lawyer who writes an opinion on the bond or note as to
its tax exempt status and the authenticity of its issuance.
Bonded Debt/Bonded Indebtedness-
The portion of an issuer's total indebtedness represented
by outstanding bonds.
Bond Fund (Tax-Exempt) - A portfolio
of municipal bonds sponsored by registered investment companies
that offer shares to investors either through (1) closed-end
funds or unit investment trusts, which offer shares of a fixed
portfolio of municipal bonds; or (2) open-end or managed funds,
which offer shares in a managed portfolio of municipal bonds
whose size will vary as shares are purchased or redeemed.
Bond Insurance - Insurance issued
by a private insurance company for either an entire issue
or specific maturities that guarantees to pay principal and
interest when due. This will provide a credit rating of triple-A
and thus a lower borrowing cost for the issuer.
Bond Premium - The amount at
which a bond or note is bought or sold above its par value
or face value without including accrued interest.
Book Entry - A system of security
ownership in which the ownership is held as a computer entry
on the records of a central company for its owner. The bond
owner gets a computer printout as proof of ownership.
Broker - In reference to bonds,
technically a broker is a bond trader in the secondary market
buying from and selling to bond dealers. Its most common usage
is as a description of a bond salesperson.
Business and Parking Improvement
Area Law of 1985 – This act of legislation allows local
businesses to create a district to provide improvements they
will benefit from. The district pays for the costs of the
improvements with a special assessment that is levied on all
parcels within the Business Improvement District.