What is a bond ordinance?

A bond ordinance is a formal legal mechanism used by municipalities to authorize the issuance of bonds, which are financial instruments that allow a government entity to raise funds for specific projects or needs. These bonds are typically used to finance capital projects, such as infrastructure improvements, construction of facilities, and other large expenditures that benefit the community.

When a municipality passes a bond ordinance, it is effectively creating a plan for how much money will be borrowed, the purpose of the borrowing, and how the bonds will be paid back, including provisions like interest rates and repayment schedules. This ordinance is crucial because it provides the legal foundation for the bonds to be issued and ensures that the municipality adheres to its financial and legal obligations.

The focus on financing capital projects distinguishes bond ordinances from other options, such as forms of tax collection or contracts for services, which do not involve the borrowing of money through bonds. Understanding the function of a bond ordinance is key for municipal clerks and officials as it impacts local governance and fiscal policy significantly.