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Front Page » April 19, 2007 » Local News » Board considers tax anticipation note
Published 2,799 days ago

Board considers tax anticipation note


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By LES BOWEN
Sun Advocate reporter


Jeff Richens

The board of trustees for the Price River Water Improvement District is expected to consider a $500,000 tax anticipation note next week.

Tax anticipation notes are short-term loans which allow government entities to borrow money based on what is expected in property taxes later in the year. By issuing a tax anticipation notice, PRWID will be able to bond for funds that will not actually be collected until later in the year.

Kathy Dahl, PRWID treasurer, explained to the board at a meeting on April 4 that unless more funds are acquired before May, the district will see a cash flow problem.

The problem exists because PRWID's main source of funds, its service fees, are collected throughout the year. And while Dahl said the district is within its budget, the funds to cover district expenses have not been collected. She said that without a tax anticipation note or some other source of funding, the district would be able to pay the debt service on its bonds, but would not have funds for regular expenses. She explained that the district would be able to cover bond payments or pay for operation and pay employees, but not both.

"We don't have all the proposals from the different funding agencies," said Jeff Richens, PRWID assistant manager.

On April 17, Dahl reported to the board that the district will not know what the interest rate for the bond will be until all bids are received. She said bids should be received by April 20, in time for a special board meeting on Monday.

A passage of the bonding resolution on Monday will provide a few days for the district to receive the funds in time for a debt payment which is due on April 30.

The district can then use the borrowed funds to cover its expenses. And when the district receives tax revenues in December, the bond will come due and the district will be required to pay back the $500,000 with interest.

The treasurer provided the board with a financial report reflecting the district's first quarter revenue and expenses.

She said through March, the district has collected 21 percent of the anticipated revenue from water fees and 24 percent of sewer fees. An increase in service fees passed at the end of 2006 is estimated to provide $8,000 per month more in water revenue and $6,000 per month in sewer revenues.

"If it keeps like that, I think we'll be okay," said Dahl.

And while the district appears to be on track to meet its annual budget, Dahl said the figures from the second quarter should show whether that trend will continue. Those figures will not be available until after the end of June.

"We might be looking at doing some other increases," cautioned Dahl. She added that the district's financial advisers are also concerned about the district's finances because the board increased rates by a lower amount than was suggested.

The board will likely revisit sewer and water rates in July to determine whether an additional rate increase will be needed.



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