Reprinted with permission from Building Together: Investing in Community Infrastructure (National Association of Counties, National Association of Homebuilders, Government Finance Officers Association, and Urban Land Institute).
Source Characteristics
| FINANCING SOURCE | PROVIDES FUNDS | REPAYMENT | ADVANTAGES | DISADVANTAGES |
| General Obligation Bonds — Limited or Unlimited Tax | Immediately | By all taxpayers over 10-30 years | Makes funds available immediately; ties payment to benefits received; potentially lowers interest costs | Increases taxes; competes with other local services for limited resources; separates payment from benefit |
| Revenue Bonds (or “rate-supported” bonds) | Immediately | By rate payers over 10-30 years | Makes funds available immediately; ties payment to benefits received | Increases rates or fees; interest costs potentially higher than GO bonds |
| Taxable Bonds | Immediately | By all taxpayers over 10-30 years | Not subject to requirements of Tax Reform Act | Highest interest rates of all bond types |
| Tax Increment Financing Bonds | Immediately | By all taxpayers within subarea of county | Ties payment to benefit received within subarea | Revenues dependent upon growth in assessed value within subarea |
| Lease Purchase and Certificates | Immediate use of equipment or facility while being puchased | By all taxpayers over 5-10 years | Provides a means of buying on credit without issuing debt | High interest rates; may not relate payment to benefits received |
| Revolving Loans | Immediately | By rate payers over 10-20 years | Makes funds available immediately; ties payment to benefits received; potentially lower interest costs | Increase rates; reporting and administration may be burdensome; may not be in accordance with county priorities |
| Bond Banks | Varies | By taxpayers or rate payers pver 10-30 years | Particularly helpful for small communities; lowers cost of issuance | Issuance of bonds may be delayed while sufficient number of communities apply |