American Institute of Certified Planners (AICP) Practice Exam

What are revenue bonds primarily used to finance?

1. Public schools and libraries

2. Infrastructure projects like parking garages and sewer systems

3. Healthcare facilities

4. Cultural events and parks

The correct answer is: Infrastructure projects like parking garages and sewer systems

Revenue bonds are primarily utilized to finance infrastructure projects that generate their own revenue streams. This includes projects such as parking garages and sewer systems, which produce income through user fees or charges. The key aspect of revenue bonds is that they are secured by the revenues generated from the specific project being funded, rather than by the general taxing power of the municipality. This makes them particularly well-suited for public works and facilities that create a reliable income source, allowing investors to feel confident in the repayment of the bonds over time. While the other options—public schools, healthcare facilities, and cultural events—are certainly important aspects of public financing, they typically rely on different funding mechanisms, such as general obligation bonds or appropriations from local budgets, rather than strictly revenue-based financing. Thus, infrastructure projects stand out as the primary focus of revenue bond financing due to their capacity to generate dedicated revenue streams.