What is a General Obligation (GO) bond? A GO bond is a debt instrument issued by the municipality that allows the city to raise funds for capital projects and other needs by borrowing from investors. Governmental entities such as the federal government, states, cities, school districts, and many other types of government institutions routinely sell bonds in order to attain funding to complete a project. This type of debt instrument also allows the city to pay it back the money (with interest) over an extended period of time (maximum of 40 years).
Also requires voter approval. Considered to be a stable investment choice for investors and are backed by the full-faith-and-credit of the state or local government.
What is a Certificate of Obligation (CO) bond? A CO bond may provide an additional option to fund public infrastructure, provide funds to rebuild after a natural disaster, purchase rights-of-way, acquire equipment/machinery, supplies and buildings, etc. This type of debt may be used by cities, counties and health/hospital districts.
Does not require voter approval; however, may be subject to an election if 5% of the qualified voters within the jurisdiction petition the City for an election. Also, considered to be a stable investment choice for investors and are backed by the full-faith-and-credit of the state or local government.
What is a Tax Anticipation Note (TAN)? This is another debt tool that may be used by local and state governments to raise money for public projects. TAN’s are usually repaid over a shorter time period (maximum period of seven (7) years) than a CO or GO debt instrument. These generally have a low interest rate, are a tax-exempt investment for the purchasers, and are also considered to be a stable choice for investors.
What is a Revenue Bond? Are authorized through the Texas Government Code and may be used for capital improvements or repairs to enterprise systems that the City operates. For Rhome, this would be the Utility Fund, where the City accounts for water and sewer service costs.