Special Tax Bond
Contents
Demystifying Special Tax Bonds: A Comprehensive Guide
Unveiling the World of Special Tax Bonds
Special tax bonds are a unique type of municipal bond designed to finance community projects through revenue generated by specific taxes. Understanding the intricacies of these bonds is essential for investors and policymakers alike.
Exploring the Features of Special Tax Bonds
Special tax bonds blend characteristics of both general obligation bonds and revenue bonds. They are backed by the full faith and credit of the municipal issuer while being serviced by revenue from designated taxes, such as excise taxes or special assessment taxes.
Deciphering the Mechanics of Special Tax Bonds
Unlike ad valorem taxes, special tax bonds are repaid using taxes levied against specific activities or assets. This targeted approach ensures that revenue generated is allocated solely to repay bondholders, providing a clear source of repayment.
Diving Deeper into Special Assessment Bonds
Special assessment bonds are a subtype of special tax bonds, relying on taxes from residents who directly benefit from the funded project. These bonds are often used for infrastructure developments, with increased property taxes levied on benefiting communities.