Tax-Backed Bonds

General Obligation Bonds (GO’s)

GO bonds are guaranteed by the full faith and credit of the City, meaning that the City will use its taxation power to generate the revenue to pay back the bond under any circumstances. The funding source for GO bond payments is property taxes, which are generated each year based on the tax adopted set by City Council. GO bonds require voter approval before they can be issued, so a bond election is called by the City Council when the City determines that it needs to get voter approval to issue GO bonds.  GO bonds can only be used to fund the projects authorized in the propositions approved by the voters.  

Certificates of Obligation (CO’s)

CO’s are similar to GO bonds, except that they do not require voter approval before they are issued. The CO’s are also guaranteed by the City’s taxation power and are counted in the calculation of the tax rate that is needed to support debt payments. CO’s may be payable from property taxes (also called ad valorem), pledged revenues or a combination thereof. CO’s allow the City to be responsive in addressing capital needs.  Before the City can issue CO’s, the City Council approves a resolution stating the City’s intent to issue the certificates.  A notice must be published in the newspaper at least 45 days prior to the sale date that states the maximum amount to be issued, what the proceeds will be used for, and the date and time of the planned sale, along with additional information about the City’s currently outstanding debt obligations.