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the debt service, if the income from the project is insufficient, it is considered to be double-barreled. In this case however, they are more like GO bonds, except that, for bankruptcy and security purposes, they have the benefit of the additional security provided by the pledged revenues. An example of double-barreled bonds is water and sewer revenue bonds issued on behalf of a water and sewer enterprise system.
287:, or hurdle rate) to another proposed project, as it is most important to ensure the success of the municipality. For instance, local government and port authorities can propose construction for a given neighborhood, based on projects that have been successful previously, or it can create a nonprofit authority to issue revenue bonds to build a school district, for example.
274:
Revenue bonds are most often issued to finance a revenue-generating public works project such as, bridges, tunnels, sewer systems, education (e.g. college dorms and/or student loans). In the case of education or school systems, bonds issued for colleges and universities are generally backed by income
211:
or accruing market discount are not tax exempt); for these purposes, accruing original issue discount is also treated as "interest" which is excludable from gross income for federal income tax purposes. Some municipal bonds are called "specified private activity bonds" and are preference items under
324:
As a revenue bond is not backed by the full faith and credit of the issuing government, it does not require voter approval. As of July 1, 1983, all municipal bonds must be registered. Two other important pieces of legislation are the Tax Reform Act of 1986 and the 39 General
Regulations that govern
215:
For taxpayers who purchase municipal bonds issued in the same state in which they reside, interest payments are generally exempt from state and local tax also. States generally tax interest on municipal bonds issued in other states. There is considerable variability by state, however. For example,
111:
revenues) and the general credit of the issuing agency are not so encumbered. Because the pledge of security is not as great as that of general obligation bonds, revenue bonds may carry a slightly higher interest rate than G.O. bonds; however, they are usually considered the second-most secure type
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Many governments with the power to tax also issue revenue bonds, but restrict the debt service funds to only those funds from the governmental enterprise that generates these revenues. The issuing government does not pledge its own credit to pay the bonds. When a municipality assumes liability for
283:), regressive taxes and/or all other sources of revenue to the municipality. As a general rule, revenue bonds are backed by the revenue generated by the municipal facility funded by the bond issue. A feasibility study should be conducted to compare one project's IRR (
216:
in
Maryland there is also a specific exemption of capital gain on Maryland-issued municipal bonds. In contrast, Minnesota does not provide for an exemption. The differential treatment of different state's interest was considered in the case
206:
research, resulted in the "intergovernmental tax immunity doctrine," ultimately leading to "tax-free status." The interest on municipal bonds is generally excludable from gross income for federal income tax purposes (however,
212:
the alternative minimum tax. Additionally, corporate taxpayers may need to include interest on otherwise tax exempt municipal bonds in a calculation base for purposes of the alternative minimum tax and other special taxes.
325:
the SRO (self-regulatory organization) of the MSRB. The MSRB, as mentioned above, governs the issuance and trade of municipal securities both general obligation and revenue bonds.
321:, PABs (Private Activity Bonds) § Lease rental bonds § Special Assessment Bonds (or Special District Bonds or, in California, Mello-Roos Bonds) § Housing Authority Bonds
103:, only the revenues specified in the legal contract between the bond holder and bond issuer are required to be used for repayment of the principal and interest of the
314:, however, like all other securities they are subject to the anti-fraud provisions of the Securities Exchange Act of 1934, and once again the newly formed FINRA.
782:
279:. General obligation bonds may be backed by a variety of credits depending on the state and local law; those credits include taxes on local property (
32:
176:), can issue revenue bonds. An agency that provides a free service, such as a school, can not do so, as their only revenue is tax dollars.
227:. Revenue bonds may be issued by an agency, commission, or authority created by legislation in order to construct a "facility," such as a
770:
217:
190:
306:) as of July 30, 2007, the industry overall has consolidated not only in sheer number but by undoing previous legislation such as the
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303:
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Some examples of
Revenue Bonds include: § IDRs and IDBs (Industrial Development Revenue Bonds) or, after the passage of the
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generated by a specified revenue-generating entity associated with the purpose of the bonds, rather than from a tax. Unlike
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Revenue bonds may be issued to construct or expand upon various revenue-generating entities, including:
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352:
Bonds: The
Unbeaten Path to Secure Investment Growth, Hildy Richelson and Stan Richelson, 2007
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83:
Revenue Bond of the City of New York, issued 3. June 1858, signed by mayor Daniel F. Tiemann
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8:
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40:
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128:
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310:. Municipal bonds traditionally were exempt from the filing requirements of the
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Municipal Bonds may be issued in one of two forms: (a) revenue bond, or (b)
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Barron's
Financial Guides, John Downes and Jordan Eliot Goodman 1995
172:, generating operating revenues and expenses (sometimes known as an
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263:, or tolls charged for use of the facility ultimately pay off the
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deal primarily with the United States and do not represent a
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Generally, any government agency or fund that is run like a
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of 1895 initiated a wave or series of innovations for the
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distinguished by its guarantee of repayment solely from
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Securities
Industry and Financial Markets Association
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community in both tax-treatment and regulation from
355:Securities and Training Corporation, July 3, 2006
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202:. This specific case, according to a leading
29:The examples and perspective in this article
292:Financial Services Modernization Act of 1999
349:How the Bond Market Works, Robert Zipf 2002
179:
771:Commercial Mortgage Securities Association
384:
370:
67:Learn how and when to remove this message
777:International Capital Market Association
191:Pollock v. Farmers' Loan & Trust Co.
78:
304:Financial Industry Regulatory Authority
797:
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296:Municipal Securities Rulemaking Board
159:and electrical generation facilities
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707:Commercial mortgage-backed security
13:
702:Collateralized mortgage obligation
300:Securities Acts Amendments of 1975
14:
816:
20:
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153:, and other transportation hubs
697:Collateralized debt obligation
573:Reverse convertible securities
1:
340:
225:general obligation (GO) bond
7:
513:Contingent convertible bond
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290:In recent legislation, the
43:, discuss the issue on the
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821:
553:Inverse floating rate note
312:Glass–Steagall Act of 1933
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107:; other revenues (notably
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712:Mortgage-backed security
481:Types of bonds by payout
423:Types of bonds by issuer
239:; university dormitory;
220:, 553 U.S. 328 (2008).
180:Law in the United States
101:general obligation bonds
285:internal rate of return
646:Option-adjusted spread
548:Inflation-indexed bond
319:Tax Reform Act of 1986
308:Securities Act of 1933
302:), and now FINRA (the
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692:Asset-backed security
656:Weighted-average life
493:Auction rate security
91:is a special type of
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685:Securitized products
112:of municipal bonds.
49:create a new article
41:improve this article
462:Infrastructure bond
335:Build America Bonds
538:Floating rate note
253:electric districts
196:financial services
129:Wastewater (Sewer)
85:
792:
791:
745:Exchangeable bond
671:Yield to maturity
523:Exchangeable bond
445:Subordinated debt
277:progressive taxes
218:Kentucky v. Davis
204:investment bank's
141:toll revenue bond
139:and bridges (see
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51:, as appropriate.
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735:Convertible bond
578:Zero-coupon bond
518:Convertible bond
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452:Distressed debt
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35:of the subject
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764:Institutions
722:Bond options
666:Yield spread
558:Lottery bond
488:Accrual bond
414:Fixed income
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259:. The fees,
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188:decision of
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157:Power plants
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89:revenue bond
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30:
661:Yield curve
621:Dirty price
596:Clean price
472:Global bond
440:Senior debt
430:Agency bond
393:Bond market
229:toll bridge
341:References
281:ad valorem
200:government
137:Toll roads
601:Convexity
409:Debenture
275:or other
249:utilities
132:utilities
45:talk page
799:Category
676:Z-spread
631:I-spread
626:Duration
329:See also
237:hospital
233:turnpike
170:business
151:seaports
147:Airports
97:revenues
39:You may
785:(SIFMA)
163:Prisons
116:Purpose
779:(ICMA)
773:(CMSA)
606:Coupon
508:Consol
294:, the
261:taxes
257:ports
255:; or
245:sewer
241:water
125:Water
105:bonds
47:, or
404:Bond
265:debt
251:and
184:The
127:and
109:tax
801::
267:.
247:,
243:;
235:;
231:;
149:,
87:A
385:e
378:t
371:v
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55:(
37:.
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