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Transportation Funding & Financing

Limited and Special Tax Bonds


Limited and special tax bonds are payable from a pledge of the proceeds against a specific tax. This tax could be a gasoline tax, a special assessment, incremental sales tax, or ad valorem (property) tax levied at a fixed price. Unlike general obligation bonds and their unlimited ability to raise taxes, with these bonds, the issuer is limited by the specific source for the revenue to pay the bonds.

Sales tax revenue bonds, for example, have been issued by several California transportation authorities and transit districts. The sales tax bonds differ from most transportation financings because the debt is paid from sales taxes and not from transportation revenues. This type of financing may require special enabling legislation to facilitate the direct disbursement of tax revenues from the tax collecting entity to the trustee of the bond issue in order to perfect the pledge of those tax revenues and to ensure higher credit ratings.


Los Angeles County Measure R
Measure R passed in Los Angeles County, CA in 2008 is a 30-year ½ percent sales tax to finance city transportation improvement projects and countywide transit and highway projects. Los Angeles County Metropolitan Transportation Authority (Metro) is authorized to sell limited tax bonds secured by the sales tax revenue.