RANs can be used for which type of financing?

Revenue Anticipation Notes (RANs) are short-term financial instruments used by municipalities to meet immediate funding needs. Their primary purpose is to provide municipalities with cash flow when there is a timing mismatch between revenue inflows and expenditure outflows.

RANs are particularly suitable for financing utility system improvements because these types of funds are often needed quickly, typically to bridge the gap until anticipated revenues, such as utility fees or charges, are collected. Municipalities may embark on improvement projects to ensure that their utility systems remain efficient and effective. The financing provided through RANs allows them to start these projects promptly without waiting for the revenue cycle to align, ensuring that utilities continue to operate smoothly and meet community needs.

In contrast, the other options describe uses for financing that don’t align with the characteristics of RANs. Operating expenses generally require consistent and reliable revenue streams for funding, long-term capital projects typically utilize bonds or other long-term financing methods suited for their duration, and debt refinancing would usually be associated with longer-term financial strategies rather than short-term liquidity needs that RANs address.