Sarasota News Leader

10/19/2012

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Sarasota News Leader October 19, 2012 skipped the voters and sold certificates of par- ticipation to investors. These investors would have owned the police station, and they would have leased it to the city. Using the landlord's "1 percent rule," the city would pay $500,000 to the investors every month in rent to use the building. After 100 months (about eight years), the investors would have all their money back. Depending on the term of the certificates, any money the investors earned from the monthly payments beyond their initial investment would be prof- it. Thus, a 25-year certificate would have allowed the city to build the police HQ, then put $100 million into the pockets of investors over the duration of the deal. With either a bond or a COP, payback comes from property taxes, but no voter approval is necessary for a certificate of participation. Page 53 For communities with little or no bonding ability left, these certificates are an attractive way to build capital projects. However, be- cause the "lease income" is taxable, the gov- ernment body ends up paying more over the life of such a deal to make it attractive. Governments are increasingly careful to guard their bond ratings, because employee pen- sions are causing rating agencies to toughen their examinations of local government books. Certainly any issuance of certificates of partic- ipation would reflect the city's existing bond issue ratings. Voters who believe the City of Sarasota should have the flexibility to use certificates of de- posit to finance large capital projects will vote against this proposed charter change. Voters who wish to keep the right to vote on bond issues to finance large capital projects will vote in favor of this proposed charter amendment. Enter To Win A New iPad When our "Likes" on Facebook reach 1,000, we will randomly select one of our subscribers to receive a new iPad. The contest concludes when The Sarasota News Leader achieves 1,000 "Likes" on Facebook, One winner will be selected at random from among sub- scribers. Only subscribers are eligible to win the iPad, regardless of having "Liked" our page on Facebook. Contest is open only to residents of Sarasota County. Selected winners must provide a valid Sarasota County street address to receive the iPad. Contest is void where prohibited by law. 1 Click to Subscribe 2 Then Like Us On Facebook

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