About
Revenue Bonds are backed by the revenue generated by the project for which the bond is issued. The infrastructure projects these municipal bonds pay for, must generate revenue that then goes to pay back the interest and principal to the investors.
A number of communities (Columbia, SC, Burlington, VT) use the stormwater fees as the “revenue” for issuance of revenue bonds.
Revenue Bonds are higher risk bonds for the investors, because they are paid solely from revenue received from the project. These bonds are not beholden to the municipality’s general fund or the tax payers.
Revenue bonds for healthy watershed projects will only be successful if the project has revenue potential. Typically, revenue bond projects are: hospitals, airports, toll roads, housing projects, convention centers, bridges, etc. Even though healthy watershed projects do not usually generate income, any revenue bond project can include healthy watershed practices. Any project can include healthy watershed, flood risk reduction practices.
Some types of bonds require voter approval, some do not. Consult your municipal attorney prior to moving forward with any type of bond opportunity.
Project Examples
In 2018, the City of Burlington issued a revenue bond for nearly $30M, payable from the net revenues of the stormwater and wastewater system. Stormwater projects included: collection system improvements, improvements to the combined sewer runoff and overflower mitigation, treatment and runoff reduction, programmatic improvements and implementation of pollution control asset management system. The bond passed with 92% voter approval.
In Columbia, SC the Stormwater Utility issues revenue bonds for stormwater projects that align with the Capital Improvement Plan. Revenue bonds are repaid by revenues from the stormwater utility charges on monthly bills. Columbia uses a dual approach to financing stormwater projects. 1) The utility assesses a stormwater development charge on new construction. Monies from the development charges address the effects of new development and the increased stormwater runoff. 2) Monthly stormwater charges provide income for long-range planning, construction and maintenance.