A toll revenue bond is a financial

promissory note A promissory note, sometimes referred to as a note payable, is a legal instrument (more particularly, a financing instrument and a debt instrument), in which one party (the ''maker'' or ''issuer'') promises in writing to pay a determinate sum of ...

usually issued to generate funds for the construction and/or operation of a public accommodation such as an

expressway Expressway may refer to: * Controlled-access highway, the highest-grade type of highway with access ramps, lane markings, etc., for high-speed traffic. * Limited-access road, a lower grade of highway or arterial road. *Expressway, the fictional s ...

bridge A bridge is a structure built to span a physical obstacle (such as a body of water, valley, road, or rail) without blocking the way underneath. It is constructed for the purpose of providing passage over the obstacle, which is usually somethi ...

, or

tunnel A tunnel is an underground passageway, dug through surrounding soil, earth or rock, and enclosed except for the entrance and exit, commonly at each end. A pipeline is not a tunnel, though some recent tunnels have used immersed tube cons ...

. Funds for the repayment are obtained through

revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...

raised through collection of

toll Toll may refer to: Transportation * Toll (fee) a fee charged for the use of a road or waterway ** Road pricing, the modern practice of charging for road use ** Road toll (historic), the historic practice of charging for road use ** Shadow toll, ...

s from users as a

fare A fare is the fee paid by a passenger for use of a public transport system: rail, bus, taxi, etc. In the case of air transport, the term airfare is often used. Fare structure is the system set up to determine how much is to be paid by various pa ...

for passage. An attraction for municipalities is that the bonds allow them to avoid legislated debt restrictions that may be encountered when issuing

general obligation bond A general obligation bond is a common type of municipal bond in the United States that is secured by a state or local government's pledge to use legally-available resources, including tax revenues, to repay bondholders. Most general obligation ple ...

s. Toll revenue bonds are more speculative than "general obligation" bonds, which are backed (or guaranteed) by tax revenues of a state or local government. Such bonds may be subject to default if toll revenues are insufficient to meet scheduled payments, although such defaults are rare. One example is the 23-mile long

Chesapeake Bay Bridge-Tunnel Chesapeake often refers to: *Chesapeake people, a Native American tribe also known as the Chesepian * The Chesapeake, a.k.a. Chesapeake Bay *Delmarva Peninsula, also known as the Chesapeake Peninsula Chesapeake may also refer to: Populated plac ...

(CBBT) in

Virginia Virginia, officially the Commonwealth of Virginia, is a state in the Mid-Atlantic and Southeastern regions of the United States, between the Atlantic Coast and the Appalachian Mountains. The geography and climate of the Commonwealth ar ...

, one of the more ambitious such projects which was built in the mid-1960s. The facility was subject to increased construction costs due to weather, and disruption due to accidents caused by shipping traffic striking its bridges. The CBBT was in default of its toll revenue bonds for several years shortly after its completion, but these were repaid as traffic volume increased. Additional bridges were constructed later to reduce the likelihood of future disruption of revenue due to accidents.

References

{{DEFAULTSORT:Toll Revenue Bond Bonds (finance)

Revenue bond A revenue bond is a special type of municipal bond distinguished by its guarantee of repayment solely from revenues generated by a specified revenue-generating entity associated with the purpose of the bonds, rather than from a tax. Unlike genera ...

See also

References