Why might a municipality choose to issue revenue bonds over general obligation bonds?

A municipality might choose to issue revenue bonds over general obligation bonds primarily because revenue bonds do not require voter approval. This feature allows municipalities to bypass the sometimes lengthy process of seeking voter consent, making it easier for them to fund specific projects that generate their own revenue, such as toll roads, bridges, or utilities.

General obligation bonds are backed by the full faith and credit of the issuing municipality and typically require voter approval since they involve a commitment to use taxpayer revenues to service the debt. Revenue bonds, on the other hand, are secured specifically by the revenue generated from the projects they finance, which allows for faster financing of essential projects without the delay of obtaining voter consent.

While the other choices touch on aspects of revenue bonds, they do not capture the primary motivation for municipalities to choose revenue bonds. For instance, although revenue bonds are not constrained by a statutory debt limit, this is a secondary concern compared to the need for rapid project funding. Similarly, while it may be true that revenue bonds can have ratings different from general obligation bonds, this does not fundamentally drive the choice of one type of bond over the other.