Tax and Revenue Anticipation Notes

Public agencies who are dependent on the collection of property taxes often find themselves spending down their general fund balances during the first few months of the fiscal year. Tax and Revenue Anticipation Notes (“TRANs”) are a short term financing technique that public agencies can use to maintain liquidity during the fiscal year without incurring finance charges for running their general fund negative. Capitol PFG represents a dozen different entities in the evaluation of their cash flow and issuance of TRANs to support their general fund during “dry periods”. Capitol PFG also has experience in developing and implementing cost effective interim financing solutions for construction projects. Depending on the anticipated cash flow short fall, Capitol PFG will either recommend dry period financing through the County or the issuance of TRANs. For example, school district’s who have general fund budgets in excess of $20 million, and who receive a majority of their revenue limit through local property taxes, may be eligible to issue a TRAN. In determining TRAN eligibility and size, Capitol PFG evaluates the lowest operating cash point from the prior fiscal year to get an indication of the school district’s cash flow needs. Capitol PFG analyzes the school district’s cash balance at the beginning of the fiscal year and considers the Budget for the current fiscal year. Once the TRAN is sized, Capitol PFG obtains a credit rating from one of the major credit rating agencies and conducts a competitive bid process for the TRAN sale. Based on our competitive bid process, Capitol PFG routinely receives better results than those obtained through an exclusive underwriting relationship. Capitol PFG’s clients receive the benefits of having a TRAN that will withstand scrutiny and yield the best possible economic return for its clients. Whenever possible, Capitol PFG uses economies of scale by using a joint marketing effort for TRAN issues that share similar characteristics. Our best example of the joint marketing effort is the annual TRAN issuance for school districts located in Placer County, California. Each year, approximately six school districts issue separate and distinct TRANs using a common Official Statement and terms of sale. By issuing the TRANs together, these school districts are able to reduce costs of issuance and obtain the best possible economic results.