What is a sinking fund?
I haven’t heard of this before. A. A Sinking Fund is a way to fund major building repairs for our schools. By law, Sinking Fund revenue can NOT be used for wages, routine maintenance, or other operating expenses. Unlike a bond issue, a Sinking Fund is pay-as-you-go. This means there is no interest cost with the Sinking Fund. The Sinking Fund concept is not new. In 1982, Bedford voters approved a dedicated pay-as-you-go millage that was used to replace the roofs on each of our schools. That issue was for 1.4 mills for four years. Q. What is the proposal this time? A. The Sinking Fund will be 0.5 (one-half) mill for five years. This is expected to generate about $525,000 per year. Q. What will the Sinking Fund cost me? A. The sinking fund will cost property owners approximately $25 for every $100,000 of market value. Use the chart below to approximate the cost for your home or business. Market Value Taxable Value Sinking Fund Cost (per year) $100,000 $50,000 $25 $200,000 $100,000 $50 $30
All of the resorts/clubs within Europe have a sinking fund (with the exception of THE Club®). The individual resorts/clubs set an annual budget in conjunction with the owners committee. These annual budgets typically include an amount of approx 20% that is to be set aside as a sinking fund. A sinking fund is a contingency account for one-off resort expenditure that has not or could not have been foreseen or planned. A sinking fund element is included in every resort’s management fee to ensure that members, resort operations and ourselves are not jeopardised by unforeseen and/or emergency work.
Sinking funds are special reserves set aside by companies that issue stocks and bonds. The main function of a sinking fund is to eventually be in a position to retire shares of preferred stock, debentures, or any outstanding bond issues. In most cases, the company will incrementally add resources to the fund over an extended period of time, allowing the balance in the fund to keep pace with the shares of issued stock or the worth of active bond issues. There are several advantages to the creation of a sinking fund. First, it is much easier to attract investors. This is because the investor knows that any shares of stock or bond issues associated with the company are backed by the resources in the fund. As a result, the potential for some sort of default action on behalf of the issuing company is greatly minimized. Another benefit to having a sinking fund to back bonds and stocks is that the company positions itself to retire the financial instrument when and as it becomes advantageous
