Handbook of Municipal Bonds

SYLVAN G. FELDSTEIN, PHD, is a Director in the Investment Department of the Guardian Life Insurance Company of America, specializing in tax-exempt, taxable, and non-U.S. municipal bonds. Prior to this, he was a research manager and analyst at major Wall Street broker-dealers and a rating agency. A graduate of Columbia University, Feldstein has won the Analyst of the Year Award from the National Federation of Municipal Analysts in addition to authoring or editing four other municipal bond industry books. FRANK J. FABOZZI, PHD, CFA, is Professor in the Practice of Finance at Yale University's School of Management and the Editor of the Journal of Portfolio Management. In 2002, he was inducted into the Fixed Income Analysts Society Hall of Fame and, in 2007, was the recipient of the C. Stewart Sheppard Award given by the CFA Institute.

• Foreword xxxiChristoper “Kit” TaylorPreface xxxiiiAbout the Editors xxxixContributing Authors xliPART ONE The Sell Side: The Originators of Deals 1CHAPTER 1 The Central Place of States and Local Governments in American Federalism 3Richard BriffaultThe States 7The Complex Structure of American Local Government 12From Dillon’s Rule to Home Rule 17Forms of Local Government 19Metropolitan Governance 21Summary 23CHAPTER 2 An Overview of Investment Banking 25Herman R. CharbonneauOverview of Public Finance Banking 25Regional Broker-Dealer Firms 29Strategic Advantages for the Regional Firm 31Disadvantages Faced by the Regional Firm 34Importance of a Well-Defined Plan 35Recent Challenges 39The Outcome of Regional Banking Efforts 41CHAPTER 3 Role of the Financial Advisor 43William H. WoodOverview of Financial Advisors and Their Roles 43Financial Advisors in Negotiated Transactions 44Financial Advisors in Competitive Transactions 45Securities Dealers as Financial Advisors 45Independent Financial Advisors 46Pricing of Financial Advisory Services 46Details Regarding the Financial Advisor’s Functions 47Typical Advisory Services Provided In Connection with an Interest Rate Swap 48How to Hire a Financial Advisor 49Summary 50CHAPTER 4 Method of Sale in the Municipal Bond Market 51Jun Peng, Kenneth A. Kriz, and Tracy NeishMethod of Sale 52Debate on the Method of Sale 57Historical Data on Use of Sale Method 62Summary 66CHAPTER 5 The Role of Bond Counsel in Public Agency Financing 69John L. KraftHistory of Bond Counsel 69Review of Bond Counsel Opinion 70Further Tax Developments 75Disclosure and Securities Laws 75Recent Developments 76CHAPTER 6 The Role of Counsel to the Underwriters 79Mary G. WilsonStructuring 80Securities Laws 80Underwriting Documents 85Review of Other Bond Documents 87Blue Sky 88Opinion 88Summary 89CHAPTER 7 Summary of Federal Tax Requirements for Tax-Exempt Bonds 91Perry E. IsraelArbitrage 93Private Activity Bonds 108Other Miscellaneous Rules, Including Refundings 120Conclusion 125CHAPTER 8 The Role of the Municipal Bond Trustee 127James E. SpiottoThe Nature of the Bond Trustee’s Duties and Responsibilities 127The Municipal Bond Trustee Preclosing 132Administration of the Transaction by the Bond Trustee 135Selected Challenges and Issues forMunicipal Trustees Postissuance 137Summary 144Chapter 9: The Last Resort for Financially Distressed Municipalities 145James E. SpiottoHistorically, Bankruptcy Has Been a Mechanism of Debt Adjustment in Other Countries 149Brief History of Municipal Bankruptcy Legislation in the United States 150Existing Municipal Bankruptcy Provisions 153Initiation of Chapter 9 Proceeding and Effect on Bondholder Rights and Remedies 156Unique Features of Chapter 9 161The Required Maintenance of Municipal Service during a Municipal Bankruptcy 163Labor Contracts Are an Important Element of the Municipal Budget Whose Status in Chapter 9 Has Been a Subject of Discussion 164Statute Governing the Rejection of Collective Bargaining Agreement in Corporate Context 165“Special Revenues” Pledged to Bondholders 166Payments to Bondholders Are not Preferences 168Use of Letters of Credit as Backing for Municipal and Conduit Obligations 169Plan of Adjustment for Municipality Time, Content, Impairment of Claims and Acceptance 170Postpetition Disclosure and Solicitation 174Acceptance of the Plan 175Confirmation of Plan 176Appendix: Chapter 9 Cases Filed as of February 8, 2007 180CHAPTER 10 Subnational Infrastructure Finance in the Emerging Markets: A Financial Guaranty Perspective 191Thomas H. Cochran, Anthony Pellegrini, David Stevens, Richard Torkelson, and David WhiteThe Development and Growth of Locally Denominated Contractual Savings Pools and Credit Markets 192The Devolution Revolution: Decentralization and/or Privatization Is Continuing in Virtually All Emerging Markets 195Developing Financially Sustainable SubnationalInfrastructure Credits in the Emerging Markets 198Conclusions 222CHAPTER 11 The Role of the Rating Agencies 223Edward A. RabsonMoody’s Investors Service 224Standard & Poor’s 227Fitch Ratings 231Summary 233CHAPTER 12 Municipal Bond Refundings 235William H. WoodRefunding Overview 235Reasons to Sell Refunding Bonds 236Issues Relating to Structuring a Refunding Bond Issue 238When Should an Issuer Refund Prior Bonds? 242Refundings and Derivatives 244Competitive versus Negotiated Sale 246Conclusions 246CHAPTER 13 Public-Private Partnerships 247Robert H. MullerHistory 248The Process of Privatization 252Summary 261PART TWO The Sell Side: Distribution and Market-Making Roles 263CHAPTER 14 The Role of the Underwriter 265Christopher J. MierThe Underwriter’s Role in Context 265When Does the Underwriter Become Involved in the Process? 266The Lead-Up to Pricing 268Summary 271CHAPTER 15 The Roles of Traders and Brokers 273JonPaul ZaptinTraders 273Types of Traders 277Watching the Taxable Markets 278Trading Discipline and Mental Attitudes 278Who Becomes a Trader? 279Brokers 280A Word on E-Commerce 281Summary 281CHAPTER 16 Municipal Arbitrage and Tender Option Bonds 283Bart MosleyRelative Value—What “Should” a Municipal Bond Be Worth? 284How Municipal Arbitrage Works 286Where Does the Municipal Yield Curve’s Steepness Come from? 292Conclusion 294Appendix: Tender Option Bonds in a Nutshell 296CHAPTER 17 Interest Rate Swaps and Their Application to Tax-Exempt Financing 299Eric H. Chu, Craig Underwood, Thomas B. Fox, Jon A. McMahon,Roger L. Davis, Stephen A. Spitz, Albert Simons III, and George G. WolfWhat Are Swaps and How Do They Work? 300Types of Swaps and Other Hedges 305Uses and Benefits 311Business Risks 315How to Acquire a Swap 317Legal Issues 323Tax Issues 326Documentation and Negotiation 333After the Close: Posttrade Management 337Appendix: Glossary of Key Terms 340CHAPTER 18 The Regional Firm: Its Customers, Traders, and Institutional Salespeople 345Mychele LindvallUnderstanding “Regional” 345Trading 347The Regional Institutional Salesperson and Their Customers 351The Skills of the Salesperson 353CHAPTER 19 Changing Roles of Buyers and Sellers of Municipal Bonds: One Participant’s View 355William J. DarusmontCommunications and Technology 357The Legal Opinion and Indenture of a Municipal Bond 357The Role of Credit Agencies 358Changes in Tax-Exempt Status 358Pricing Transparency 359The Buyers of Municipals 359Sellers of Municipal Bonds 360The Future as Prologue 362CHAPTER 20 The Depository Trust Company and Real-Time Price Transparency 365Sylvan G. Feldstein and David RatnerThe Depository Trust & Clearing Corporation 365Summary 370CHAPTER 21 i-Deal/Ipreo: The Transaction Platform 373Allen WilliamsThe Evolution of New-Issue Technology 373Order Entry 374The Issuer and Prospectus Delivery 375The Future 375Summary 379PART THREE Compliance Issues 381CHAPTER 22 The Municipal Securities Rulemaking Board 383Paul S. Maco and Jennifer Webster TaffeOrganization of the MSRB and the Scope of Rulemaking Authority 385Professional Qualifications, Supervision, Recordkeeping and Compliance 386Uniform Practice Rules 388Municipal Market Transparency and the MSRB 390Fair Dealing and Suitability 391Municipal Securities Information Library 393Market Integrity 394Additional Information Regarding MSRB 396CHAPTER 23 The Role of the Securities and Exchange Commission 397Paul S. Maco and Cristy C. EdwardsFramework of the Federal Securities Laws 399Application to Municipal Securities 407Rule 15(c)2-12 420CHAPTER 24 Sarbanes-Oxley and the Securities and Exchange Commission 425Paul S. MacoThe Act 426Conclusion 446CHAPTER 25 Using Auditing Techniques to Develop Investment Adviser Compliance Procedures 447Kevin ReillyGetting Started 448Understanding the Process 448Document the Process 453Review the Process 454Revise the Process Documentation 456Summary 456CHAPTER 26 Rule 2a-7: Legal and Research Issues for Tax-Exempt Money Market Funds 459Stephen A. Keen and Leslie K. RossDefinition of a Tax-Exempt Money Market Fund 460General Requirements of Rule 2a-7 462Eligible Securities for Tax Exempt Funds 469Diversifi cation of Tax Exempt Funds Under Rule 2a-7 477Application of Rule 2a-7 to Municipal Securities 482Postacquisition Constraints Imposed by Rule 2a-7 496Summary 498PART FOUR Fixed Income Analysis of Municipal Products 501CHAPTER 27 Evaluation of Municipal Bonds 503Gerard BrennanThe Need for Evaluations 503Tools of Evaluation 504Adjusting for Different Types of Municipal Bonds 507Other Considerations 507The Future of Municipal Bond Evaluation 511CHAPTER 28 Valuation of Municipal Bonds with Embedded Options 513Frank J. Fabozzi, Andrew Kalotay, and Michael P. DoriganUnderlying Principles 514Overview of Bond Valuation 514Valuation Model 516Specific Adjustments to the Valuation Model for Municipal Bonds 527Tax Adjustments to the Model 528Horizon Price 532Other Values Calculated from the Model 533Relative Value Analysis of Municipal Bonds 534Summary 535CHAPTER 29 Analyzing and Evaluating Tax-Exempt Indexed Floaters: Investor and Issuer Perspectives 537Yingchen LiBreakeven Equation for the Issuer 537Risk Analysis of LIBOR-Indexed Floaters 538Other Percent LIBOR-Indexed Floaters 539Percent BMA-Indexed Floaters 540CMS and BMS 541Percent CMS-Indexed Structures 541Risks of Percent CMS and Percent BMS 542Summary 543CHAPTER 30 Municipal Inverse Floating Rate Securities 545Cadmus HicksDescription 545Tax Treatment 546Computations 547Accounting Treatment 550Tender Option Bonds 551Summary 551CHAPTER 31 Analyzing Portfolios Daily 553Paul R. DanielsA Four-Level Framework for Portfolio Assets 554Credit-Level Analysis 555Basic Holding-Level Analysis 557Total Return Performance 562Simulations 564Portfolio Structure: Compliance and Targets 566Reporting 567A Secret Formula? 567Summary: 20 Ingredients for Success 568CHAPTER 32 Discovering Relative Value Using Custom Indices 571Daniel J. GarrettIntuitive Patterns 571Empirical Patterns 572Discovery 572Caveats and Disclaimers 575Conclusion 575CHAPTER 33 Municipal Bond Swaps 577Evan C. RourkeDescription of a Bond Swap 577Tax Swapping 577Other Types of Municipal Bond Swaps 579Summary 580CHAPTER 34 The Tax Treatment of Municipal Bonds 581Martin J. Mauro and Philip FischerFederal Tax Treatment of Municipal Bonds 581Calculating the Effective Tax Rate on Interest Income from Out-of-State Municipal Bonds 585Summary 588PART FIVE The Buy Side: Institutional Investors 589CHAPTER 35 Managing a National Municipal Bond Fund 591Alexander GrantThe Investor Who Buys the Fund 592National versus State-Specifi c Funds 593Total Rate of Return 594Managing a Fund by Relative Value 595Issues of Coupon and Structure 596Traditional Buyers versus the Arbitrageurs 597Conclusion 598CHAPTER 36 Managing a High-Yield Municipal Fund 599Wayne Godlin, Jim Phillips, Bill Black, Barnet Sherman, Mark Paris, and Seth HorwitzHigh-Yield Borrowers 600High-Yield Municipal Bond Fund Track Record 601Credit Analysis 603Sector Allocation 603Trading Opportunities 604Story Bonds 606Opportunity Bonds 607Credit Improvement and Enhancement 607Derivatives 608The Use of Benchmarks 610High-Yield Municipal Fund Infrastructure 610Summary 611CHAPTER 37 Managing Municipal Bonds for Property and Casualty Insurance Companies for Total Return 613Karen SzerszenBusiness of Property and Casualty Insurance Companies 613Combined Ratio 614Total Return versus Benchmark 616Regulatory Factors 616Tax Risk 618Credit Risk 619Interest Rate Risk 622Conclusion 623CHAPTER 38 The Role of Hedge Funds in the Municipal Market 625Jonathan A. FiebachRatio Curves 626Hedge Fund Activity 628Conclusion 631CHAPTER 39 Managing Municipal Bond Portfolios for High-Net-Worth Investors 633Thomas P. DalpiazA Living, Breathing Human Being 633Emotional Ups and Downs 634Transparency 634Education 634The Starting Point 634The Client’s Existing Situation 635Uncovering Client Objectives 636What Is the Client Really Trying to Achieve in the Bond Market? 636Articulating Objectives and Setting Parameters 637Performance Measurement 638Uncovering Value in the Municipal Bond Market 640Confronting Interest Rate Risk 640Confronting Credit Risk 642Confronting Call Risk 642Confronting Liquidity Risk 643Yield Curve Analysis 644Bond Swapping 644Using Balance in Portfolio Construction and Reconstruction 645Portfolio Distributions 646Municipal Bonds: A Most Necessary Investment 646CHAPTER 40 Municipal Credit Default Swaps 647Frank J. FabozziSingle-Name Municipal CDS Contract 648Uses of Municipal CDS by Portfolio Managers 652Second Generation of Credit Default Swaps 654Summary 655CHAPTER 41 Municipal Collateralized Debt Obligations 657Rebecca Manning, Douglas J. Lucas, Laurie S. Goodman, and Frank J. FabozziCDO Basics 658Muni CDOs 662Summary 663CHAPTER 42 Performance Attribution of Municipal Bonds 665Daniel J. GarrettWhich Approach for Municipal Bonds? 666What Doesn’t Work for Municipal Bond Attribution 667The Better Approach for Municipal Bond Attribution 670Mathematics of Returns-Based Attribution 672Examples of Returns-Based Attribution for Municipal Bonds 677Client Stories: Applying Municipal Bond Attribution 684Summary 686PART SIX Credit Analysis 689CHAPTER 43 The Role of the National Federation of Municipal Analysts in Promoting Better Disclosure 691Lisa Good, Gerry Lian, Tom Weyl, Gregory A. Clark, and Gregory AikmanSummary of NFMA Initiatives 692The Special Importance of Disclosure 693A Detailed Look at the NFMA’s Recommended Best Practices 697Procedure for Developing RBP Documents 698The Mechanical Steps Used to Develop an RBP Document 701Current Issues and Challenges Facing the NFMA 702CHAPTER 44 A History of Modern Municipal Defaults 707James E. SpiottoAnalysis of Defaults of Municipal Debt in the United States 707Lessons Learned from Troubled Municipal Financing 719Summary of Lessons Learned 726Rules for Survival 727Appendix: The Structure for Oversight and Emergency Financing 728CHAPTER 45 New Issues in Municipal Accounting 733David R. Bean and Dean Michael MeadStructure of Governmental Financial Statements 734Information Presented in Basic Financial Statements and RSI 735Summary 764CHAPTER 46 Managing a Buy-Side Municipal Bond Research Department 767Richard A. CiccaroneAssessment of Challenges 768Summary 777CHAPTER 47 The Role of an Activist Bond Analyst 779Arthur E. SchlossActivist Bond Analyst’s Approach to Improving Stressed or Deteriorating Credits 779Watchful Waiting 782Asset Preservation 783The Conference Call 783Covenant Waivers/Consultants 784Project Sale to External Buyer 785The Debt Service Reserve Fund 786Deleveraging 786Conclusion 788CHAPTER 48 How to Analyze General Obligation Bonds 789Sylvan G. Feldstein and Terry J. GoodeThe Issuer’s Debt Structure and Security for General Obligation Bonds 790The Issuer’s Budgetary Operations 796The Issuer’s Revenue Structure 801The Economy 802The More Important Debt Ratios 806Conclusion 807CHAPTER 49 General Analytical Framework for Assessing the Credit Worthiness of Revenue Bonds 809Sylvan G. FeldsteinLimits of the Basic Security 810Flow-of-Funds Structure 810Rate, User Charge or Dedicated Revenue and Tax Covenants 811The Priority of Pledged Revenue Claims 811The Additional Bonds Test 811Other Relevant Covenants and Issues 812CHAPTER 50 How to Analyze Airport Revenue Bonds 813William E. Oliver and Daryl ClementsAirport Ownership Structures 813Passenger Demand Characteristics 814Competition 816Use and Lease Agreements 816Gate Control 817Airport Management 818Conclusion 818CHAPTER 51 Land-Secured Bonds 821Ronald L. MintzAdvantages of Land-Secured Bonds 821General Characteristics of Land-Secured Bonds 822Credit Criteria 824Role of the Developer 832Disclosure 835The Land-Secured Bond Market 835Bond Structures 842Conclusion 843CHAPTER 52 Hospital Bond Analysis 845Lynn CavallaroNational Level Overview 846Local Level Review 850Hospital Level Review 851Transaction-Specifi c Risks 856Examples of Hospital Downgrades 857Conclusion 858CHAPTER 53 Single-Family Housing Bonds 861Kurt van KullerThe Appeal of Single-Family Bonds 861SF Bond Issuance Record in 2006 864Credit Strength of SF Bonds 867A Unique Basket of Call Options 871Prepayments in SF Bonds 872Municipal Prepayment Speeds 874Other Ways of Handling Prepayments 879PAC Bonds 879Discriminating between PAC Bonds 880Passthroughs 881Lockout Bonds 881Crosscalling 882The Ten Year Rule 884Universal Cap Regulations 886The Unused Proceeds Call 886Optional Redemptions in Single-Family Bonds 888Pricing Single-Family Bonds 889Concluding Remarks 891CHAPTER 54 Multifamily Bonds 893Kurt van KullerMultifamily Bond Market Parameters 893AMT Penalizes the Sector 895Multifamily Supply Outlook Positive 897Volume Cap Constrains Bond Issuance 897Great Diversity of Issuers 897Abundance of Project Types 899Multifamily Bonds: Default Rates 901Multifamily Default Cycles 902An Array of Credit Enhancements 904The Low Income Housing Tax Credit 905FHA Insurance 905Risk Sharing: Superior FHA Program 908GNMA Backed Multifamily Bonds 909Project-Based Section 8 911FHA Section 8 Mark-to-Market 913Section 236 Interest Subsidy 914“Affordable Housing” Projects 915Tax Opinion Risks 916Multifamily Bond Redemptions 916Prepayments in Multifamily Bonds 918Other Call Options in Multifamily Bonds 920Conclusion 921CHAPTER 55 Tax-Exempt Electric Utility Debt 923Gary M. Krellenstein and Paul R. BockwoldtStructure of the U.S. Electric Industry 925Cost of Electricity 933Charges for Service 934Credit Considerations 935Summary 939CHAPTER 56 How to Analyze Startup Continuing Care Retirement Community Bonds 941Edward C. MerriganAccommodation and Service Options 941Residency Contracts 943Ownership, Governance, and Management 946Demand Analysis of Independent Living Units 947The Analysis of Advance Fee Deposits and Monthly Service Fee Prices 950Assisted Living Unit and Nursing Care Bed Demand Analysis 950Utilization and Fill-Up Expectations 951Financial Statement Analysis 951Ratio Analysis 952Legal Security Features and Covenant Considerations 953Continuing Disclosure 954Summary 955CHAPTER 57 How to Analyze Tobacco Bonds 957Gerry LianBackground 957Analysis of Structural Risk 964Analysis of Corporate Credit Risk 965Analysis of Cash Flow Risk 968Analysis of Litigation Risk 971Conclusion 978CHAPTER 58 Toll Road Analysis 981Robert H. MullerHistory 981Key Analytical Factors 984Conclusion 993CHAPTER 59 Water and Sewer Bond Analysis 995Brian WintersStructure 996Management 997Economic Base 997Financial Ratios 998Bond Security 1000Environmental Issues 1002Other Considerations 1002Conclusion 1002PART SEVEN Special Security Structures and Their Analysis 1005CHAPTER 60 Evaluating Tax-Exempt Commercial Paper 1007Maria C. SazonOverview of Commercial Paper 1007Repayment of Commercial Paper Notes 1008Analyzing Various Sources of Repayment for Commercial Paper 1009Analyzing Commercial Paper without Enhancement 1011Summary 1012CHAPTER 61 The Use of Letters-of-Credit in Connection with Municipal Securities 1015Todd P. ZeregaOverview of LOCs 1016Considerations in Reviewing a LOC-Backed Security 1019Conclusion 1023CHAPTER 62 How to Analyze Tax, Bond, and Grant Anticipation Notes 1025Sylvan G. Feldstein and Frank J. FabozziTwo Major Purposes of Notes 1025Security Behind Tax and Revenue Anticipation Notes 1026Information Needed Before Buying Tax or Revenue Anticipation Notes 1027Summary 1029CHAPTER 63 How to Analyze Refunded Municipal Bonds 1035Sylvan G. FeldsteinPure versus Mixed Escrow Funds 1035What are the Reasons for Refundings? 1036Two Types of Refunded Bonds 1037Determining the Safety of the Refunded Bonds 1038CHAPTER 64 Pollution Control Revenue, Industrial Development Revenue, and Conduit Financing Bonds 1041Gary KrellensteinSecurity 1042Restrictions on Issuance and Refunding of PCR/IDR Debt 1044Call Features 1047Summary 1048CHAPTER 65 How to Analyze FHA-Insured Mortgage Hospital Bonds 1049Sylvan G. FeldsteinFHA Hospital Mortgage Insurance 1050Credit Risk 1051The “Prudent Man” Evaluation Approach 1053Summary 1054CHAPTER 66 How to Analyze Higher Education Bonds 1055Bradley D. MinckeThe Institution 1056Use of Bond Proceeds 1057Security 1058Degrees and Programs 1060Student Demand 1060Management and Governance 1064Faculty and Staff 1065Tuition and Financial Aid 1066Financial Statements 1067Endowment Funds 1072Plant and Facilities 1073Fundraising Abilities 1074Definitions of Certain Terms 1074Continuing Disclosure 1074Conclusion 1075CHAPTER 67 Analyzing Human Service Provider Bonds 1077Ruben SellesMilestones in the Development of Human Service Providers 1078Risk Factors Associated with Human Service Providers 1081Summary 1083CHAPTER 68 How to Analyze the Municipal Bond Insurers and the Bonds They Insure 1085Donald King CirilloWhat Is Municipal Bond Insurance? 1085Municipal Bond Insurance Benefi ts 1087Additional Benefi ts of Bond Insurance 1089Types of Municipal Bond Insurance 1090Municipal Bond Insurance Providers 1091Other Municipal Bond Insurance Providers 1092Reinsurance 1093Telling the Difference 1094Financial Factors 1096Other Financial Factors 1097Other Businesses 1098Conclusion 1099CHAPTER 69 Student Loan Financing: Risk Evaluation Tax-Exempt and Taxable Markets Converge 1101Diane R. Maurice and Ankur GoyalTax-Exempt Issuers and Privatization Trends 1103Systemic Shift-Risk Transference 1107Guaranteed versus Private Loans 1108Risk Profi le Evolves 1109Summary 1109Appendix: Recent Investigatory and Legislative Developments 1111CHAPTER 70 Analysis of Tribal Casino Bonds 1119Megan Neuburger, Michael Paladino, Jessalynn Moro, and David LitvackIssuer Credit Factors 1120Bond Structure and Security Features 1126Summary 1128CHAPTER 71 Understanding Variable Rate Demand Obligations 1129Mitchell SavaderHow VRDOs Work 1129The Need for Cash 1130The Role of Bond Insurance 1131CHAPTER 72 State Credit Enhancement Programs for School Districts and Municipalities 1133Harold B. BurgerTypes of State Credit Enhancement Programs 1134Assessing State Credit Enhancement Programs 1135Credit Enhancement Program Advantages and Disadvantages 1136Summary 1139CHAPTER 73 The ABCs of Charter Schools 1141Mitchell SavaderUnderstanding Charter Schools 1141The Charter 1142The Relationship between Demand and Financial Success 1144Summary 1146CASE STUDIES OF INNOVATIVE AND OTHER SECURITY STRUCTURES CASE STUDY 1New York City Uses Taxable Municipals After 9/11 for Budget Relief and Affordable Housing 1149Emily A. YoussoufCASE STUDY 2 9/11, Subprime Loans, and the Magnolia Park Apartments Bond Default 1153Michael J. RossCASE STUDY 3 Newport News Issues an Energy Savings COP 1161A. Theodore PalatucciCASE STUDY 4 Tax-Exempt Airport Finance: Tales from the Friendly Skies 1165James E. SpiottoCASE STUDY 5 Toronto’s Highway 407 1185William E. OliverCASE STUDY 6 Disney’s California Adventure and Tax-Exempt Bonds 1191Hilary E. FeldsteinCASE STUDY 7 Super Bowl XXXII Helps Resolve Bond Default 1195Bill HuckCASE STUDY 8 A Tax-Exempt Prepay Natural Gas Purchase Bond 1201Sandra McDonaldCASE STUDY 9 Universal Studios Road Financing: First with Special Assessment Bonds and Second with Tax Increment Financing Bonds 1207Hilary E. FeldsteinCASE STUDY 10 California’s Workers’ Compensation Insurance Crisis and the Financing of the California Insurance Guarantee Association 1211Anthony H. FisherCASE STUDY 11 Dreamworks Tries to Issue Tax-Exempt Bonds 1215Rich SaskalCASE STUDY 12 Financings of the Medical University Hospital Authority of South Carolina 1217Joseph A. SpiakCASE STUDY 13 Niagara Falls Memorial Medical Center 1223Herman R. CharbonneauCASE STUDY 14 Aruba Airport Authority Airport Revenue Bonds 1227William E. OliverCASE STUDY 15 Yankees versus Mets: A Subway Series 1233Mitchell SavaderCASE STUDY 16 Good Swap, Bad Swap 1237Peter ShapiroCASE STUDY 17 Westminster-Canterbury of the Blue Ridge Continuing Care Retirement Community 1241Marie S. PiseckiCASE STUDY 18 Preserving Housing Affordability with Taxable Municipals 1249Emily A. YoussoufCASE STUDY 19 Massachusetts Sells LIBOR Index General Obligation Bonds with an Interest Rate Swap 1253Sylvan G. Feldstein and Patrick LandersCASE STUDY 20 Developing Hudson Yards with a $2 Billion Bond Issue 1257James McSpirittCASE STUDY 21 Seminole Tribe Bets on Taxability 1263Joseph KristAPPENDIX AA Pictorial History of Municipal Bonds 1269Sylvan G. Feldstein and Peter O’BrienAPPENDIX BGlossary of Terms 1291Mitchell SavaderIndex 1297

"timeless and important...to all participants in the municipal bond market."--The Bond Buyer