The City issues debt in the form of bonds in order to finance long-term capital improvements such as streets, buildings, utility systems, etc. Bond funds cannot be used to fund City operations such as employee salaries, police vehicles or personal computers. The financed assets should also have at least the same useful life as it would take to repay the bond (e.g., a building would qualify, but a vehicle would not). Issuing bonds allows the City to meet infrastructure needs while paying for the assets as they are used. Because municipal bonds are typically tax-exempt, they usually carry a lower interest rate than other types of funding, and are therefore an attractive source of financing.
The City uses two main types of bond funding: General Obligation and Utility System Revenue bonds.
General Obligation (G.O.) Bonds are used for public safety, streets, parks, libraries, etc. They are repaid primarily through secondary property tax, development impact fees, and sales tax revenue. G.O. Bonds are backed by the full faith and credit of the City.
Utility Revenue Bonds have no statutory limitations as to the amount that may be issued. Projects that use this type of funding are Gas, Water, Wastewater, Electric, and Solid Waste projects. Utility Revenue Bonds are repaid from revenues received from the customers of that particular utility.
As shown by the pie chart, the City continues to place a high priority on infrastructure investment to attract and service future development. This is also shown through the following bond programs: