Types of Financing 

General Obligation Bonds

General obligation bonds are considered the strongest credits in municipal finance as they are backed by the full taxing power of the municipal entitiy.  Public Finance bankers and analysts review outstanding issues for refunding oportunities that will save money for the issuer.

Essential Service Revenue Bonds

Bonds issued in support of the delivery of essential services by a municipality may relate to water and sewer systems, electrical systems, or solid waste disposal.  These bonds are typically issued as revenue bonds.  Thus the debt service on the bonds is funded from fees and other revenues generated from the delivery of such services.

In some cases a municipality will use a defined segment of tax revenues to fund a particular project or activity.  These structures include limited tax GO bonds, Tax intercept bonds, Tax Incerment Bonds, and Millage Pledge structures.

Private Activity Project Finance

The Internal Revenue Code has provisions whereby certain activities undertaken by private for profit entities can be financed with tax exempt bonds.  These include multi-family housing (subject to a low income set aside), and solid waste disposal.  Under special circumstances such as the Gulf Opportunity Zone enacted after the devastation from hurricane Katrina, the permitted financeable activities may be greatly increased.

Bank Qualified Issues

The Internal Revenue Code provides a small issuer exemption whereby banks can invest in tax exempt bonds and exclude the interest from taxable income while retaining their deduction for the related interest expense.  Small issuer has been defined as those issuing less than $10 million of bonds in a given year.  For 2009 and 2010 the allowable issuance has been increased to $30 million.