In-substance defeasance is an accounting term for removing debt from an entity’s balance sheet though the debt itself is not cancelled. The debt is considered paid from an accounting standpoint if a dedicated sinking fund is created with a financial intermediary that is sufficient to extinguish the original debt over time. In the case of the City of Bay St Louis, the proposed Utility Fund refunding bonds would In-substance defease the previous refunding bonds that In-substance defeased the original bond issue.
In layman’s terms this would mark the second time the original Water and Sewer capital improvement bonds have been refinanced. Having a bit of experience with the back end of this type of transaction, I can say first hand that it is complex and carries hefty legal and professional fees as the Bay City Council found out first hand at last night’s meeting.
In other news:
Bay eyes cuts, new projects to fix budget ~ Dwayne Bremer
To the council’s credit, public input was welcomed, even on an impromptu basis, though the nice lady from Ward 6 that wore out Mayor Fillingame did end up being gaveled by Council President McDonald.
Overall, those assembled for yesterday’s budget workshop ended up pleased with the quality of the discussion that took place between the Mayor and City Council. The only thing that was missing was the September 2013 audit report and it was not discussed.
Those so interested in a more detailed account of the meeting can click here to access the first of many Tweets on the meeting from the Slabbed New Media Twitter stream. The workshop and council meeting went for six hours straight with a multitude of topics covered.