Revenue bonds are issued to finance capital projects and facilities that are secured by a user fee rather than the general taxing power of a municipality. Security for revenue bonds can be narrower than for tax backed obligations. Revenue bonds are considered less secure than GO’s. Voter approval is not required; however, issuers are expected to set reasonable rates, tolls and charges to cover the annual debt service payments. Generally, a debt service reserve fund is required and used if planned revenues do not materialize. Revenue bonds also include contract provisions such as; flow of funds, rate covenants, parity and additional bond tests, and operations and maintenance requirements.
All American Investment Group (“All American”) underwrites revenue bonds on a private placement basis, rather than through a public offering process. This saves time and reduces the costs of issuance for the municipal client. Private placements also allow more flexibility in contract terms since the municipality is usually dealing with one purchaser of the bonds. All American also offers semi-public and public debt offerings if needed by our client.