4.2.1.2. Competitive Bid Authorization
Some states require local governments that issue general obligation bonds to select an underwriter by competitive bidding for the sale of their bonds in the market to ensure the issuer is receiving the best price possible from the underwriter.
Since the bidding process cannot begin until after the bonds are authorized, the issuer itself must oversee the preparation of the preliminary materials and present them to the governing body for a decision. When the governing body of the issuer approves the proposal, it will authorize the issue by signing a bond resolution.
Drafted by the bond counsel, the bond resolution describes:
• The project
• Its estimated cost
• The financing plan
It also:
• Lays out the issuer’s duties to the bondholder
• Pledges the full faith and credit of the issuing authority
The bond resolutio