Glossary of Municipal Securities Terms


Terms used to describe a variety of financing arrangements in which governmental entities borrow money without executing documents or entering agreements that constitute “debt” for state constitutional and statutory restrictions on the incurrence of debt, such as debt limits or requirements for referendum approval of debt incurrence. Common forms include leasing arrangements or the issuance of bonds through a related conduit issuer. The critical common characteristic is that the obligation of the borrowing entity to pay debt service is not absolute but instead is conditional on the applicable governing body choosing each year to appropriate funds for debt service payment. See: ANNUAL APPROPRIATION PLEDGE; CERTIFICATE OF PARTICIPATION; DEBT LIMIT; LEASE RENTAL OR LEASE REVENUE OR LEASEHOLD REVENUE BOND; MORAL OBLIGATION BOND; NON-APPROPRIATION CLAUSE; SUBJECT TO APPROPRIATION.

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