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Community
Development Municipal Bonds
(FRBSF Community Investments, PDF - 65KB)
Barbara Rose VanScoy, CRAFund Advisors
Summary
Municipal bond is a general term
referring to securities issued by states, cities, towns, counties
and special districts. A primary feature of these securities is that
interest on them is generally exempt from federal income taxation
and, in some cases, state income taxation. Because of this feature,
the interest rates on municipal bonds are lower than interest rates
on other types of bonds, but when taking into account one’s income
taxes, often provide a comparable, or better, rate of return. Revenue
bonds are municipal bonds secured and repaid only from a specified
stream of non-tax revenues. Examples of revenues include tolls, utility
charges or charges and use fees from a facility being constructed
with the proceeds of a bond issue, such as a sports facility or a
housing project. |
