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Municipal Bonds

Municipal bonds are a cost effective financing vehicle for long-term capital projects. Because bonds are issued on a tax-exempt basis, interest rates are much lower than regular taxable financings.

A Vermont municipality may issue two types of municipal bonds:

  1. General obligation bonds:
    The bond principal and interest are secured by the full faith and credit of the issuer and supported by the issuer’s taxing authority (property taxes)
  2. Revenue bonds:
    The bond principal and interest are secured by the revenues earned from the governmental activity being financed. Vermont statutes limit revenue bonds to certain public/municipal utilities.

General obligation and revenue bonds in most cases require voter approval.