Revenue bonds are special obligation debt backed by revenue generated by a revenue generating system. This can be water and sewer revenues, either individually or together, parking garage revenues, revenues from specific operations such as stadiums, or other revenue producing facilities. The ability of a jurisdiction to levy and collect taxes cannot be pledged for repayment. Debt service payments come from the revenue generated by the system or facility (parking garage, water system, toll road etc.) financed with the bond proceeds and is the source of credit backing. Revenue debt often does not count against constitutional or statutory debt limitations faced by city governments and the need to keep property tax rates as low as possible. 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 of municipal bonds. For Tax exempt acquisition of real and personal property. Backed by the projected revenues or operating appropriations. Able to be refinanced. Unsecured short-term promissory note issued by entities, with maturities ranging from 2 to 270 days. Tax-increment financing (TIF) of infrastructure and other municipal improvements is a process that uses the increased tax revenue from escalating property values in the area where improvements are made to service the debt incurred. The city establishes a TIF authority to oversee improvements made to the district. Within the set boundaries of the district, the property value of each district is “frozen” for purposes of general revenue. The city continues to receive this amount in general fund revenue. The authority sells tax-increment bonds to finance the planned improvements that may include street and street lighting improvements, parks and green areas and utility upgrades. The effort may also include improvements to abandoned property or the sale of such property to developers at less than market value in order to stimulate development. If all goes well, the assessed value of property rises and the incremental property tax revenue is pledged to service the debt. A municipality can create a Public Improvement District (“PID”) under Chapter 372, Texas Local Government Code. A PID is an economic development tool that is available to both cities and counties. It provides a vehicle for a developer to obtain a source of funds for infrastructure in a project from assessments made upon property located within the project so that the developer does not have to encumber his own funds for these purposes. PID revenues may only be used for infrastructure improvements that will benefit the public, such as streets, water and sewer lines. For Specific Improvements and specific benefactors. Securitized by pledged Assessments.
Tax Increment Financing District (TIF)
Public Improvement District (PID )
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