Revenue bond

The Supreme Court decision of Pollock v. Farmers' Loan & Trust Co. of 1895 initiated a wave or series of innovations for the financial services community in both tax-treatment and regulation from government.

Revenue bonds may be issued by an agency, commission, or authority created by legislation in order to construct a "facility," such as a toll bridge; turnpike; hospital; university dormitory; water; sewer, utilities and electric districts; or ports.

When a municipality assumes liability for the debt service, if the income from the project is insufficient, it is considered to be double-barreled.

Revenue bonds are most often issued to finance a revenue-generating public works project such as, bridges, tunnels, sewer systems, education (e.g. college dorms and/or student loans).

In the case of education or school systems, bonds issued for colleges and universities are generally backed by income or other progressive taxes.

Two other important pieces of legislation are the Tax Reform Act of 1986 and the 39 General Regulations that govern the SRO (self-regulatory organization) of the MSRB.

The MSRB, as mentioned above, governs the issuance and trade of municipal securities both general obligation and revenue bonds.