Revenue Bond
A municipal bond repaid from a specific revenue stream (like water fees or toll road revenue) rather than the city's general taxing power.
How It Works
Revenue bonds carry higher interest rates than GO bonds because they are only backed by a specific revenue source, not the city's full taxing power. If the revenue source underperforms (e.g., toll revenue is lower than projected), bondholders have no claim on other city funds. Revenue bonds are common for utilities, airports, convention centers, and parking facilities. They typically do not require voter approval.
Related Terms
- General Obligation Bond (GO Bond) — A municipal bond backed by the full faith, credit, and taxing power of the city — meaning the city pledges to raise taxes if necessary to repay bondholders.
- Municipal Bond — A debt security issued by a city, county, state, or other government entity to finance capital expenditures. Interest income is generally exempt from federal income tax.
- Enterprise Fund — A self-supporting government fund that operates like a business — charging user fees to cover costs for services like water, sewer, electric, or transit.
About This Definition
This definition is part of the CitySpend Municipal Finance Glossary — 59 terms explaining how city governments fund and manage public services. All definitions are written in plain language for taxpayers, journalists, students, and municipal bond investors.