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How Revenue Bonds Work
A revenue bond is a type of municipal bond in which principal and interest are secured by future revenues. Projects financed by revenue bonds typically include highways, airports, non-profit hospitals, and other vital infrastructure-oriented projects.
ODOT has been authorized to issue revenue bonds. Investors who buy these bonds are lending money to ODOT to fix roads and bridges now — with traditional funding, construction must be phased in based on how much money is available. Bonding allows work to proceed as soon as possible. In exchange, ODOT promises to repay the borrowed money with interest. ODOT makes interest payments every six months and repays part of the principal once a year.
Income from revenue bonds is free from federal income tax. OTIA revenue bonds are also free from Oregon income tax. OTIA revenue bonds are attractive to investors looking for tax-advantaged income and lower investment risk.