Capital referendums and bond proceeds allow municipal leaders to transform their communities and improve their constituents’ lives. Knowing these benefits, officials often focus the majority of their efforts on garnering support for the proposed spending. While gaining the necessary votes can be quite a challenge, the real work begins once a referendum has passed.
The process of managing capital referendum and bond proceeds funds can be tedious. Community leaders must ensure their funds are secure and earning a competitive return. Additionally, they must maintain positive relationships with key vendors and ensure reporting requirements are met. Due to the effort involved in managing bond proceeds, municipalities often turn to third parties, like the American Deposit Management Co. [ADM], for help streamlining the process.
Ensuring Referendum Proceeds Are Protected
After a bond referendum passes, community leaders should secure the highest level of safety for the resulting cash. Government deposit insurance from the FDIC – or NCUA for credit unions – provides the ultimate protection for cash because these programs are backed by the full faith and credit of the United States government.
Municipalities can secure government backed insurance at most financial institutions, but coverage is limited to $250,000 per ownership category at each insured bank or credit union. Most bond referendums vastly exceed this limit, so depositing all proceeds with a single financial institution would often leave funds unprotected. However, by partnering with ADM, municipalities can secure protection for all their cash with a single account and a single monthly statement.
Securing Competitive Rates for Referendum Funds
In addition to safety, municipalities should ensure their referendum funds earn a competitive interest rate. Communities that partner with ADM have access to nationally competitive returns because the financial institutions in our network compete for deposits.
Arbitrage Rebate Rules are an important consideration when choosing investments for referendum funds. These rules are implemented by the IRS and limit the amount of interest that municipalities can earn relative to the servicing cost of the bond. ADM simplifies compliance with these rules by performing ongoing tests for our municipal partners to ensure they maximize the interest earned while staying in compliance.
Maintaining Positive Relationships with Vendors
Often, capital projects funded by bond referendums require communities to work with a variety of vendors and a variety of different payment schedules. To maintain positive relationships with key partners, communities must ensure they are paid the correct amount and according to the appropriate schedule.
Managing multiple vendor relationships can be a challenge for municipal employees, especially in small communities. Once again, ADM has a solution to this problem with fintech powered vendor payments. This innovative technology automates vendor payment schedules for municipal projects, ensuring timely, accurate and secure payments.
Managing Regulatory Filings
After a bond referendum is approved, regular reports must be filed with the IRS and Depository Trust Company for the life of the bond. These requirements are often arduous and can create loads of additional work for municipal employees. Fortunately, ADM makes regulatory filings simple.
When municipalities partner with ADM to manage referendum funds, our team handles the regulatory filings, allowing community leaders to focus on their constituents. We ensure that all reports are accurate and submitted according to the appropriate schedules.
Effectively managing bond proceeds can be a significant undertaking for municipalities – especially those that go at it alone. Fortunately, ADM makes it simple for communities of all sizes to manage their referendum funds efficiently.
After a Referendum Passes, Municipalities Should Contact ADM
Our company, the American Deposit Management Co., uses proprietary fintech to take the stress out of managing referendum proceeds. With a concept we call Marketplace Banking™, districts can achieve nationally competitive interest rates and have access to unlimited deposit protection for all their funds.
In addition to safety and returns, our company can automate Arbitrage Rebate testing, vendor payments, and regulatory filings. With our solutions, communities can reap the benefits of bond referendums without the stress traditionally involved in managing them. To learn more about our referendum proceed management program, contact us.
*American Deposit Management Co. is not an FDIC/NCUA-insured institution. FDIC/NCUA deposit coverage only protects against the failure of an FDIC/NCUA-insured depository institution.