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 property only.

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 governmental entity.

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 conditions.

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 Fact-Sheet.

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 address.

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 bond issue.

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 board.

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.