How are revenue bonds typically repaid?

Revenue bonds are generally repaid using specific sources of revenue generated from the project for which the bonds were issued. This can include fees or charges directly associated with the services provided, such as water charges from a utility system. Unlike general obligation bonds, which are repaid through taxpayer funds, revenue bonds rely on the income produced by the project, making them more reliant on the project's revenue-generating capabilities.

Using specific revenue sources ensures that the repayment obligations are tied directly to the success and operational income of the project, aligning the interests of investors and the entity that issued the bonds. This structure can be advantageous because it allows municipalities and agencies to finance projects without impacting their general tax revenue or relying on external assistance.