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,
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 someth ...
, 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 reve ...
raised through collection of
tolls 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 bonds.
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 pla ...
(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 are ...
, 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.
See also
''See article
List of toll roads
The following is a list of toll roads. Toll roads are roads on which a toll authority collects a fee for use. This list also contains toll bridges and toll tunnels. Lists of these subsets of toll roads can be found in List of toll bridges and ...
for facilities financed by toll revenue bonds.''
References
{{DEFAULTSORT:Toll Revenue Bond
Bonds (finance)
Revenue bond