Discussion Post
The city issues $20 million in 8 percent BANs, which it expects to refund approximately nine months after year-end, when, it hopes, long-term interest rates will drop. As part of an annexation agreement, the city constructs roads to an adjacent municipal utility district. The city funds the roads by issuing $15 million in bonds. The bonds are backed exclusively by assessments on the district's property owners. Although the city will collect the assessments and transmit the required payments to the bond trustee, the city is barred by both the state constitution and its own charter from assuming responsibility for the debt in the event of property owner defaults.