What Is a Certificate of Participation? (with picture)

A Certificate of Participation is a financial document that represents proof of involvement in a type of bond issue. Purchasing a... RelatedTopics FreeCertificateOfParticipation CertificateOfParticipationBonds PrintableCertificate BlankCertificate CertificateOfParticipation CertificateMaker CertificateOfParticipationWording JointheCommunity Subscribetoournewsletterandlearnsomethingneweveryday. WikibuyReview:AFreeToolThatSavesYouTimeandMoney Easy,NoEssayCollegeScholarships 15CreativeWaystoSaveMoneyThatActuallyWork MalcolmTatum MalcolmTatum Abondissueiscreatedinordertofundtheconstructionofsomesortofcapitalfacilitythatiswithintheacity'slimits. TheCertificateofParticipationisafinancialdocumentthatisoftenemployedwhenamunicipalgovernmentorothergovernmententitycreatesabondissue.Ratherthanpayinginterestonthebondsorguaranteeingafacevalueattheendoftheproject,theinvestorreceivesareturnbasedontheleaserevenuesassociatedwiththeoffering.Makinguseofthisprocesscanworkverywellforthemunicipality,sinceitwillfreetheissuerfromrestrictionsontheamountofdebtthatcanbeincurredduringthecourseoftheproject. Formanycitiesandtowns,theCertificateofParticipationapproachtoabondissuewillfollowasimpleformula.Abondissueiscreatedinordertofundtheconstructionofsomesortofcapitalfacilitythatiswithinthecitylimits.Ratherthanowningthefacilityoutrightduringtheperiodofconstruction,thecityessentiallyleasesthefacilityduringtheconstructionperiodandmakesinstallmentpaymentstowardthelease.Whenthepaymentscheduleiscompleted,themunicipalityassumesownershipofthecompletedfacility. Fortheinvestor,theCertificateofParticipationrepresentsproofofinvolvementinthebondissue.Purchasingashareoftheleaserevenuescanbeanattractivealternativetothemoretraditionalbondforacoupleofreasons.Paymentsaremadetotheinvestorforthedurationoftheproject,basedonthepercentageofsharethattheinvestorhasintheleaseagreement.Thismeansthattheinvestordoesnotnecessarilyhavetowaitforabondtomaturebeforeheorshebeginstoreceiveareturnontheinvestment.Ofcourse,paymentsspecifiedbythetermsoftheCertificateofParticipationcanbedeferreduntillaterintheproject,iftheinvestorpreferstoreceivelargerpaymentsatlessfrequentintervals. Intheunlikelyeventthatthemunicipalitydefaultsonthearrangement,thetermsofaCertificateofParticipationprovideinvestorswiththeabilitytoassumecontrolofthefacility.Oncethedefaultiscompleteandthetransferoftitleisinthehandsoftheinvestors,theyarefreetodowiththeassetastheyseefit.Thisincludestheabilitytoeithercompletethefacilityandsellittoaprivateinvestor,orchoosetobandtogetherandusethecompletedstructureforpurposesoftheirown. MalcolmTatum Aftermanyyearsintheteleconferencingindustry,Michaeldecidedtoembracehispassionfor trivia,research,andwritingbybecomingafull-timefreelancewriter.Sincethen,hehascontributedarticlestoa varietyofprintandonlinepublications,including,andhisworkhasalsoappearedinpoetrycollections, devotionalanthologies,andseveralnewspapers.Malcolm’sotherinterestsincludecollectingvinylrecords,minor leaguebaseball,andcycling. MalcolmTatum Aftermanyyearsintheteleconferencingindustry,Michaeldecidedtoembracehispassionfor trivia,research,andwritingbybecomingafull-timefreelancewriter.Sincethen,hehascontributedarticlestoa varietyofprintandonlinepublications,including,andhisworkhasalsoappearedinpoetrycollections, devotionalanthologies,andseveralnewspapers.Malcolm’sotherinterestsincludecollectingvinylrecords,minor leaguebaseball,andcycling. YoumightalsoLike Recommended ReadersAlsoLove 26IncrediblyWealthyHollywoodStars CanYouGuessWhichTeamTheseAthletesPlayedFor? AnyAmericanShouldPassThisUSHistoryQuiz DoYouRecognizeTheStarsWhoWoreTheseIconicOutfits? TheMostBeautifulWomenForecastingtheWeather AmazingOpticalIllusionsThatWillPlayTricksonYourMind 40WeddingPictureFailsYouDon'tWanttoMiss 17InterestingMapsThatWillChangeYourWorldview RelatedArticles WhatisaTripleNetLease? WhatisaCapitalLease? HowcanIgetoutofaLeaseAgreementEarly? WhatisaLeasingAgent? WhatisaLong-TermLease? WhatisaLandLease? WhatisaLease? DiscussionComments anon83860 May12,2010 COPscanbetaxableortax-exempt.itjustdependsonwhatthefacilitywillbeusedfor.Ifit'stax-exempt,thenit'sjustlikeanyothertax-freemunicipalbondinthatregard. rbg31641 June14,2009 WhoknowsthelegislativehistoryonCertificatesofParticipation?Theyappeartobeawayforgovernmentstoincurdebtwithoutrequestingvoterapproval,likeareactionProp13inCalifornia. anon17306 August26,2008 ArethereanytaxadvantagesfortheinvestorsparticipatingintheCOPscheme? Postyourcomments Pleaseenterthefollowingcode: Login: Forgotpassword? Register: By:voddol Abondissueiscreatedinordertofundtheconstructionofsomesortofcapitalfacilitythatiswithintheacity'slimits.