At the next City Council session, to be held on Wednesday, 25 April, councillors will vote on a draft resolution “on the issue of municipal bonds and the principles governing their sale, purchase and redemption”. The city authorities want to issue 10,500 bonds worth a total of PLN 10.5 million. The document’s justification states:
[...] Municipal bonds are securities issued by a local government unit. The local government unit receives funds from bond purchasers, while it is obliged to pay bondholders interest and redeem the bonds after a specified period.The bond issue is intended to finance the planned 2012 budget deficit related to the implementation of investment projects in the area of housing [podkreślenie – „ii”]. As part of these projects, PLN 10,500,000 will be contributed to Towarzystwo Budownictwa Społecznego w Bolesławcu Sp. z o.o. to increase its share capital. The funds will be used to finance the construction of two residential buildings in Bolesławiec. The building on Gdańska Street will contain 40 apartments, with the Municipality of Bolesławiec participating in 30% of the construction costs. The building on Staroszkolna Street will contain 80 apartments, with the Municipality of Bolesławiec covering 100% of the construction costs.
The current economic situation makes it necessary to seek external sources of financing for investments. The capital market offers the City two basic instruments: a commercial loan and municipal bonds.
Municipal bonds essentially serve the function of a loan, but they are more advantageous for the City than a traditional commercial bank loan. [...]
The financial analyses carried out showed that an issue worth PLN 10,500,000 would preserve the City’s financial liquidity and guarantee the safe repayment of the entire liability, while also complying with the provisions of the Public Finance Act. [...]
The issue of municipal bonds provides the funds necessary for the City’s further development.
We will return to this matter.
(information: UM Bolesławiec/ii)