General obligation bonds

General obligation bonds

Municipal securities secured by the issuer's pledge of its full faith, credit, and taxing power.

General Obligation Bond

In the United States, a municipal bond in which the issuing locality pledges to use all revenues at its disposal to pay bondholders, including the raising of property taxes. Should a sufficient number of residents not pay their property taxes that it impacts revenue for bondholders, the terms of the bond legally require the municipality to raise property taxes to make up the shortfall. There are two basic types of general obligation bonds. A limited GO allows for the raising of property taxes up to a certain percentage, while an unlimited GO theoretically allows the municipality to levy taxes of up to 100% of a property's value. Because an unlimited GO provides a great incentive to pay property tax on time, and because many states only allow such a bond to be issued following a vote on the matter, credit ratings agencies usually rate them higher. However, both types of GO are generally rated highly.
References in periodicals archive ?
Today, general obligation bonds are used indiscriminately.
The MOA stated that Irwindale proposed to finance the stadium by issuing general obligation bonds.
1 billion of general obligation bonds to spend on acquisition, development and protection of recreational, cultural and natural areas, to protect wildlife habitats and to repair and improve the safety of state and neighborhood parks.
Some critics point out that state general obligation bonds require only a simple majority vote to pass.
at district headquarters, 21515 Redview Drive, Superintendent Bob Lee will outline the ramifications of both types of fund-raising methods: the issuance of general obligation bonds or the establishment of a community facilities district.
In contrast, general obligation bonds such as Proposition BB are backed by even more ironclad security - the value of all the private property within the taxing agencies' jurisdictions.
The board hereby finds and determines that it would be in the public interest to establish a mechanism pursuant to which (homeowners in the Mello-Roos district) can be assured that the taxes they pay for school facilities will not increase merely as a result of a favorable vote of the electorate with respect to the general obligation bonds,'' the report states.

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