The Leader Herald offers a few glimpses into the MOSA debate (Consultant proposes helping county break MOSA ties ):
The reduction in tipping fees was the result of a defeasement plan that eventually will eliminate outstanding bonds through a process in which MOSA transfers funds to a trust and then a trustee makes annual payments to pay off outstanding bonds, said Heaton earlier in the year.
Defeasement will save MOSA about $2.2 million, and those savings will be passed on to the counties.
“There’s been noise that Otsego County wanted to leave MOSA,” Thayer said.
If Otsego were to quit MOSA, Montgomery and Schoharie counties would be left with debt, Thayer said, saying the report basically “floated a trial balloon” to throw the idea out to the other counties.
Flippin here: Hmm, I’m not sure why Montgomery and Schoharie would want to assume debt while letting Otsego off the hook. Curious pitch and sell with this.
If you want to learn about defeasement from a financial perspective, look here. :
When referring to municipal bonds, a defeasance relates to methods by which an outstanding bond issue can be made void, both legally and financially. Although a defeasance is generally the outcome of a refunding transaction, a defeasance can also be accomplished with cash rather than the issuance of any bonds. This article focuses on the concept of a defeasance and the use of cash for this purpose.
An interesting note on defeasement:
If the defeasance is consistent with generally accepted accounting principles and complies with the outstanding bond document requirements, the bonds will no longer treated as debt for accounting purposes nor for purposes of computing any statutory or constitutional debt limitation.
Flippin here: Again, I’m trying to read the tea leaves a bit but it does seem that the county could assume more debt once the defeasance is complete. Not saying that they will, just suggesting that they can.