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Structuring tax-free serial revenue bonds: A multiple-objective decision support system framework

Amy von Schrader Puelz, University of Nebraska - Lincoln

Abstract

Municipal finance has been characterized in the past as being inefficient and outdated in developing tax-free debt issues, resulting in high costs to the issuers and taxpayers. A dynamic, competitive marketing environment combined with an increased need for funds has necessitated the application of improved decision making techniques in municipal finance. This research presents a multiple-objective based decision support system designed to aid the decision maker in determining the maturity structure and coupon rate assignments for a serial revenue debt issue. The multiple-objective portion of the decision support system is formulated as a goal programming (GP) model. Goals deal with total interest costs, marketability, and debt servicing. The decision support system (DSS) combines the GP model with a group of pricing and statistical models that generate the required rate of return for the issues' various maturities along with marketability, production and revenue flow information. Output from these DSS modules is then analyzed with regard to the purchase of insurance and the use of variable-rate or fixed-rate coupons. The DSS is designed to be flexible and work in an interactive fashion with the decision maker to aid in the development of a cost-effective minimal-risk serial revenue bond issue. This research begins with a review of the related literature followed by a presentation of the GP model and the DSS. A bond is structured with the use of the DSS to illustrate how the system is designed to operate.

Subject Area

Management|Finance

Recommended Citation

Puelz, Amy von Schrader, "Structuring tax-free serial revenue bonds: A multiple-objective decision support system framework" (1988). ETD collection for University of Nebraska-Lincoln. AAI8818648.
https://digitalcommons.unl.edu/dissertations/AAI8818648

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