Happy Holidays From Ehlers!

E-Quarterly Newsletter - December 2022 Quarterly Newsletter

We are excited to share our new quarterly newsletter! We listened to the feedback so many of you offered in our Client Engagement Survey earlier this year – the need for stories directly relating to the work you do, more case studies, and the ability to self-select the articles you’d like to read – and hope you find this new format valuable.

In this issue, you’ll find timely information on getting municipal projects done during this period of high inflation and rising interest rates, communicating the relationship (or lack thereof) between school district revenues and property taxes to your constituents, understanding the “mark-to-market” requirement for public investment portfolios and what unrealized losses really mean, and reviewing your arbitrage obligations (they’re back!) in the current rate environment. You’ll also see a year-in-review overall market commentary, including some thoughts on what we can expect in 2023.

As we close out 2022 and look forward to the new year, we extend our sincerest gratitude for the trust you’ve placed in Ehlers. We deeply appreciate our relationships with all of you and how we strive together to achieve a shared mission of building vibrant, sustainable, and equitable communities.

Wishing you the best for a happy and healthy 2023.

Cheers!

Greg Crowe
President
Ehlers Companies

Read More From This Newsletter

E-Quarterly Newsletter - December 2022 Quarterly Newsletter VIEW

Donâ€™t Let Increasing Property Values Increase Taxpayer Angst

It’s that time of year”¦and I’m not talking about the holidays! It’s the time when school district revenue calculations are complete and property tax levies are nearly finalized; it’s also the time when counties begin mailing tax information to property owners. The annual confluence of these two activities usually results in some level of taxpayer confusion and questioning.

Getting the Job Done

In a rising interest rate environment, your ability to drive capital projections toward completion may prove more challenging! The political appetite for taking on more debt to fund municipal projects may have dwindled and the narrative may have shifted more toward reducing debt burden. This scenario presents an opportunity consider alternative strategies.

Today’s Investment Environment

While the current interest rate environment is far more hospitable to producing substantially higher investment income for longer periods of time, those higher rates come with other, undesirable consequences. In this case, the good far outweighs the bad.

Arbitrage is Back!

Rising interest rates on investments are most certainly welcome for communities investing bond proceeds. However, as is the case with most good things, a new set of challenges are introduced. For issuers of tax-exempt bonds, these challenges can largely be summed up in a single word: arbitrage.

2022 Market Commentary: The Year In Review

To say a lot has changed in the bond market this year would be a major understatement”¦changes that can largely be attributed to the actions taken by the Federal Reserve to combat persistent inflation.