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• whether property owners in the proposed LID are delinquent on tax payments and <br />the potential impact on financing; <br />distribution of the assessment load among the assessed properties and whether <br />or not the distribution indicates the need for credit enhancements; <br />• credit of the municipality and its potential impact on a lender's perceptions of the <br />ability of the mu nicipalityto make payments in the event of property owner default <br />and; <br />• if there is a need for credit enhancement, the options and the amount needed to <br />assure favorable marketability of the financing and to protect the municipality. <br />The financial advisor can help select the underwriter. The underwriter works on behalf of <br />the investor whom they sell the bonds to. The advisor will present the municipaiity's point <br />of view and needs to the underwriter when negotiating financing structure, credit <br />enhancement needs and other factors that represent financial risk to the municipality. <br />Alternatively, with a well -secured and structured LID, the financial advisor can help <br />prepare bid documents and take the financing to a competitive public bid, analyzing the <br />bids received and making recommendations for council or commission action. It should <br />be noted that, due to the unique nature of the LID, competitive bids are rare. <br />3. The Underwriter sells LID bonds to investors at the completion of the LID project <br />construction. The lender prov'.des a short term loan or interim financing for the <br />construction of the LID project. The credit quality of any LID is a balance of factors that <br />contribute to an investors' or the lender's confidence that the financing will be repaid. If, <br />after analyzing those factors, the financial advisor determines that the pending project <br />may represent a risk to the investor or the lender, the underwriter should become a <br />member of the financing team prior to formation of the LID. <br />As a member of the financing team and a representative of the interests of the investor, <br />It will be possible to negotiate directly with the underwriter to develop a financing <br />structure that will provide the credit level the investors require. The negotiations may <br />include among others, special creditenhancements, municipal contributions to the project <br />and unique repayment structures. in addition, the involvement of the underwriter may be <br />critical to the municipality's ability to obtain construction funding for the project as will be <br />described in more detail later. <br />If the underwriter requires special considerations, it is important to know those <br />requirements and their associated costs prior to formation of the assessment district so <br />that estimates of the costs can be included in the preliminary assessment roll. <br />4. Bond counsel works on behalf of the municipafty and guides the financing team through <br />the legal and tax issues facing the project and it's financing. Minor errors in actions taken, <br />documents written or statements made by municipal officials or representatives can have <br />significant or damaging impact on the legal framework necessary to achieve the desired <br />financing goal of the municipality. Bond counsel, in cooperation with the municipality's <br />own counsel, can help to avoid these pitfalls or correct mistakes, if made. <br />Bond counsel provides the legal and tax opinion required for financing. Also, if <br />agreements, credit enhancements or inr:ovative solutions to financing problems are <br />needed or proposed, Bond counsel provides advice on legality as well as the legal <br />Local and Road Improvement Districts Manual for Washington State Sixth Edition 45 <br />