Double-Barreled Municipal Bond Debt Structure
A municipal bond is issued to finance a municipal toll bridge. Debt service is paid primarily from bridge tolls, but if toll revenues are insufficient, the city's general taxing power guarantees the payment of principal and interest. This bond is:
A double-barreled bond has two distinct revenue pledges: primary project revenues (tolls) PLUS the backup full faith, credit, and taxing power of the municipality. Because it pledges taxing power, it is subject to GO debt limits.
Complete Analysis & Legal Rationale
The backup pledge of ad valorem taxing power gives double-barreled debt the credit safety of a GO bond while utilizing facility cash flows during normal operation.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Identifies primary user revenue + secondary taxing backup, subject to GO debt limits.
Pledging general taxing authority removes it from pure revenue classification.
Industrial revenue bonds benefit private corporations, not municipal bridges.
A general taxing pledge is legally binding, whereas moral obligation is voluntary.