Escrowed to Maturity (ETM) - An Advanced Refunded bond. When interest rates fall, an issuer may chose to sell a new issue called a refunding issue and use the proceeds of the second issue to pay off the original issue, much the same as a home owner refinancing a mortgage in an effort to save interest costs. The proceeds of the refunding issue are used to structure a portfolio of U.S. government securities, the principal and interest payments of which exactly match the principal and interest payments of the refunded bonds. The portfolio is placed in escrow at the paying agent and the bond issue is said to be fully defeased and escrowed to maturity. In actual practice the bonds are usually called on the first call date. Because of the U.S. Treasury backing, ETM bonds are considered the safest municipal bonds available.

Fees/Charges - Types of levies that can appear on property tax bills; not including special taxes, ad valorem taxes, or special assessments.

Feasibility Study - A financial study provide by the issuer of a revenue bond that estimates service needs, construction schedules, and most importantly, future project revenues and expenses used to determine the financial feasibility and creditworthiness of the project to be financed.

Financial Advisor - Generally a bank, investment-banking company or independent consulting firm that advises the issuer on all financial matters pertaining to a proposed issue and is not part of the underwriting syndicate.

Fiscal Agent - Also known as the Paying Agent, the bank, designated by the issuer, to pay interest and principal to the bondholder.

Fiscal Year - A 12 month time horizon by which state and local governments annually budget their respective revenues and expenditures. Usually not the calendar year, January to December, but often July to June.

Fixture - An improvement to property that through its function directly improves the process of a trade, industry or profession.

Flow of Funds - The annual legal sequence by which enterprise revenues are paid out for operating and maintenance costs, debt service, sinking fund payments, and so on.

Foreclosure - A legal proceeding that bars or extinguishes a mortgagor's equity of redemption in mortgaged real property.

Full Cash Value - If you owned your property before March 1, 1975, the "full cash" value will be the value as it appeared on the 1975-76 assessment roll increased by 2% per year in accordance with Proposition 13. If you acquired or constructed the property since March 1, 1975, the "full cash" value is the value at the time you took title or completed construction, plus 2% each year thereafter.

General Obligation Bond (GO BOND) - A bond that is secured by the full faith and credit of an issuer with taxing power. General obligation bonds issued by local units of government are typically secured by a pledge of the issuer's ad valorem taxing power; general obligation bonds issued by states are generally based upon appropriations made by the state legislature for the purposes specified. Ad valorem taxes necessary to pay debt service on general obligation bonds are often not subject to the constitutional property tax mileage limits. Such bonds constitute debts of the issuer and normally require approval by election prior to issuance. In the event of default, the holders of general obligation bonds have the right to compel a tax levy or legislative appropriation, by mandamus or injunction, in order to satisfy the issuer's obligation on the defaulted bonds.

General Taxes (Ad Valorem Taxes) - Taxes based on the assessed value of land, improvements and/or other personal property subject to property taxation. See our Proposition 13 Fact Sheet for more information.

Gross Debt - The sum total of a state's or local government's debt obligations.

Gross Revenues - Generally, all annual receipts of a revenue bond issuer prior to the payment of all expenses. Normally only Net Revenues are pledged to the repayment of bonds.

Homeowner's Exemption - If you own a home and occupy it as your principal place of residence, you may apply for a homeowner's exemption of $7000 which will reduce the taxable value of your property.

Improvements - This is the value of any buildings or structures existing on land whether new or old.

Indenture of Trust - A legal document describing in specific detail the terms and conditions of a bond offering, the rights of the bondholder, and the obligations of the issuer to the bondholder; such document is alternatively referred to as a bond resolution.

Industrial Development Bonds - (IDBs) also called Industrial Revenue Bonds (IRBs). Used to finance facilities for private enterprises, water and air pollution control, ports, airports, resource-recovery plants, and housing, among others. The bonds are backed by the credit of the private corporation borrower rather than by the credit of the issuer. Also known as Conduit Bonds. Private purpose bonds are limited by federal law to $50 times the state's population on an annual basis.

Interim Borrowing - (1) Short-term loans to be repaid from general revenues or tax collections during the current fiscal year (TRANs or RANs); (2) short-term loans in anticipation of bond issuance or grant receipts (BANs).

Investment Banker - A firm engaged in raising capital for an issuer. Participates as the middleman in purchasing securities from the issuer and in selling the same securities to investors.

Improvement Act of 1911 – This is an act of legislation that authorizes local governmental agencies to impose assessments on benefited property to the finance the construction of various public capital improvements. This act also authorizes the local governmental agencies to issue public bonded indebtedness to help pay for any or all of the costs of the public capital improvements.

Improvement Bond Act of 1915 – This is an act of legislation (Streets & Highways Section 8500) passed in 1915 to provide for the issuing of bonds by governmental agencies as a means of providing funds for the improvement of public facilities.

Issuer - A state or local unit of government that borrows money through the sale of bonds and/or notes.

Investment Grade - Bond issues that the three major bond rating agencies, Moody's, Standard & Poor's, and Fitch rate BBB or Baa or better. Many fiduciaries, trustees, and some mutual fund managers can only invest in securities with an investment grade rating.

Junk Bonds - Most non-rated bonds and bonds rated below investment grade.

Joint Powers Authority (JPA) - A JPA is formed when it is to the advantage of two or more public entities with common powers to consolidate their forces to acquire or construct a joint-use facility. Their bonding authority and taxing ability is the same as their powers as separate units.