An introduction to municipal finance for activists, organizers, and power researchers.

1. WELCOME
WIFI: CityCoho2
Password: cowork123
If you haven’t already,
please create a login at
EMMA.
Go to EMMA.MSRB.ORG,
click on “MyEMMA.”
On the pop-up, click “Sign
Up.”

2. ADA KASEJournalist at Acuris
@AdaKase
PHILLY POWER RESEARCH
Conducting research to support activism,
organizing, and progressive political candidates.
We work closely with Little Sis and 215 People’s
Alliance.
littlesis.org
215pa.com

3. Municipal debt has dramatically increased over time
Outstanding municipal bonds
in billions
From under $500 Billion in 1980 to nearly $4
Trillion in recent years!

4. Why has municipal debt dramatically increased?
What happens when….
You have less money coming in
But you have bills that you have
to pay?
You borrow.

5. Why do our cities have less money?

6. So, the same people...
Force us to cut and borrow by
not paying taxes…
…Then make profit when we
borrow from them…
…Then tell us we have to “live
within our means” and cut even
more!

8. Toxic swaps

9. Debt crisis in Puerto Rico

10. “Police Brutality Bonds”

11. OBJECTIVE
To learn how to use the Electronic Municipal Market
Access database to find financial information for
research to support activism and organizing, and to learn
how to interpret that information.

12. AGENDA
• We’re going to talk about municipal debt — what it is
and how it’s funded.
• You’ll learn how to navigate the EMMA database, and
how to find and read two types of documents: offering
statements and financial reports.
• We’re going to learn about revenues (income),
expenses, and debt repayment (amortization).
• To practice our new skills, teams will compete to find
information to win a sense of accomplishment.

13. WHAT IS A BOND?
• A debt security, or
investment vehicle, sold
to investors to raise
funds.
• An investor, who is like a
lender, buys the bond.
The seller, or issuer,
gets cash up front, and
repays the loan over
time with interest.

14. Bonds used to be issued on paper but now they are
electronic.
They can be purchased via private sale, or on a public
market.
Often one or more banks negotiate to buy an entire bond
issue. They are called underwriters.
Then they can sell pieces of the bond, called tranches,
to individual investors. They can make a profit on the

15. HOW BONDS ARE MADE - HIGHLY,
HIGHLY SIMPLIFIED• The government develops a plan, such
as a capital plan for infrastructure
improvement.
• The governmental unit decides to
issue the debt. Sometimes council
decides. Sometimes voters decide.
Sometimes, it’s a complete mystery
who decides.
• Lawyers and financial advisors
negotiate with banks for underwriting.
• They draft the documents.
• The transaction closes once the
legalities are confirmed, and the city
receives the bond proceeds.For more detail: https://www.slideshare.net/AmsaleBumbaugh/e-interactivestepstoamunicipalbond

16. ANATOMY OF A BOND
• Principal, interest, and costs of
issuance.
WHO PAYS?
LIFE CYCLE OF A BOND
• Once the bond is sold, the city receives the money. The
terms dictate how long it takes to pay back over time. Once
it’s paid off, it’s gone.
• Sometimes, a city can refinance a bond, either for a better
interest rate, or if payments are too high.

17. HELLO,
AVERAGE
PHILLY
TAXPAYER
Estimated population: 1.6 million
Median household income:
$36,770
Mean per capita income:
$23,696
Poverty rate: 25.9%
https://www.census.gov/quickfacts/fact/table/philadelphiacitypennsylvania/PST045
216
*

18. HOW MUCH DO YOU OWE?
• Total city general obligation debt was $5.312 billion in
FY17, and school district debt was $4.612 billion.
• Divided by 1.6 million residents (for simplicity’s sake, we
are not including businesses that pay taxes or other
revenue generators)
• Every resident is liable for roughly $6,203 in debt
• But the city’s debt story is much bigger and more
complicated than that…

19. WHAT DO YOU MEAN, I
OWE?• Anywhere you live, there
are government units that
can issue debt on your
behalf.
• Those units range from the
federal government to
states, counties, utility
districts, cities, and school
districts.
• Philadelphia issues bonds
for the city, school district,
airport, gas works, and
water department.

20. • Bonds are issued for the
public good, to build and
maintain infrastructure
such as school buildings,
highways, transportation
facilities, and public works
such as water treatment
plants.
• There are gray areas
where municipalities issue
debt for private
enterprises such as
hospitals, nursing homes,
and charter schools.

21. • Then you get deals such as stadiums and private
development, which clearly benefit private enterprises but
are touted as economic boosts for the area.
• Why fund public works with debt rather than saving money
for them? Infrastructure could fall into disrepair faster than
the time it takes to raise the money by saving. With debt,
the people who use the bridge or road are the ones who
pay for it.

22. ARE YOU SAYING
PEOPLE WHO RECEIVE
TAX ABATEMENTS
GET TO ENJOY SERVICES
AND INFRASTRUCTURE
EVEN THOUGH THEY
DON’T PAY FOR THEM?

24. TYPES OF DEBT
• General obligation = full faith and credit of the
taxing authority
• Revenue/lease = paid only by revenues from the
designated enterprise
Instruments can include bonds or short-term notes. For
example, every year Philadelphia issues tax
anticipation notes, which is a short-term loan that
covers expenses prior to tax revenue receipts. The city
pays costs of issuance and interest on these notes.

25. HOW DEBT IS FUNDED
• General obligation (GO) bonds are funded
with the city’s general fund revenues,
including property, wage, business, and sin
taxes; leases; fees; interest; and state and
federal aid.
• Revenues bonds are funded from the
proceeds of the enterprise they funded.
Examples include water rates, airport profits,
ticket sales, hospital profits.

26. A SAMPLE OF
INSTRUMENTALITIES HOLDING
DEBT• City of Philadelphia
• School District of Philadelphia
• Pennsylvania Intergovernmental Cooperation Authority
(PICA)
• Philadelphia Municipal Authority (PMA)
• Philadelphia Authority for Industrial Development
(PAID)
• Philadelphia Gas Works (PGW)

27. DEBT ISN’T FREE
• Borrowing money costs money - interest and fees.
• The people who loan the money, investors, receive
the interest. Underwriters are institutions who
purchase the bonds in bulk and sell them to individual
investors. On top of earning interest, they make
money in their markup, or spread, and frequently get
discounts on the bond price.
• The financial professionals and lawyers who put the
deals together get fees.

28. IS EVERYONE OK SO
FAR?Questions?

29. DISCLOSUR
ES
The entity selling the debt is called
the “issuer.” Issuers are legally
required to disclose a lot of
information to potential investors.
The contract laying out terms of a
debt deal and disclosing important
financial information is the “offering
statement.” After selling debt, the
issuer is required to supply
investors with periodic updates.
issue amount
type of debt
underwriter(s)

30. LET’S GO TO EMMA
city of philadelphia

31. OFFERING STATEMENTS

34. CONTINUING DISCLOSURE

35. PHILADELPHIA SCHOOL
DISTRICT

36. QUIZ

37. In FY17, how much did the city spend on
prisons?
$387,647,000

38. Did the city spend more, less, or the same
amount of money on prisons in FY17 as
FY16?
More: the city spent $381.6 million on prisons in FY16.

39. How much tax revenue was lost in FY17 due
to its rehabilitation and new construction tax
abatement for commercial properties?
$22,452,636

40. How much tax revenue was lost in FY17 due
to its tax abatement for new residential
construction?
$14,439,754

41. How much property tax revenue did
Philadelphia realize in FY17?
$578.7 million

42. How much property tax revenue did the
school district realize in FY17?
$703.9 million

43. How much total governmental activities
revenue did the school district realize in
FY17?
$3.24 billion

44. How much money did the school district
spend in FY17 for governmental activities?
$3.08 billion

45. How much revenue did the school district lose
out on due to commercial property tax
abatements in FY17?
$27.3 million

46. How much revenue did the school district lose
out on due to property tax abatements for
residential new construction in FY17?
$17.6 million

47. How much total general obligation bond debt
does the school district have, including
principal and interest?
$4,612,211,000

48. How much debt service will the city pay on
general fund-supported debt in FY18?
$392.80 million

49. HOW TO CREATE ALERTS
ON EMMA