Who predominantly issues tax-exempt economic development bonds?

Prepare for the Certified Municipal Finance Officer Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Set yourself up for success!

Tax-exempt economic development bonds are primarily issued by municipal corporations. These entities, which include cities, counties, and other local government bodies, use these bonds to finance projects that promote local economic development. The tax-exempt status of the bonds makes them appealing to investors, as the interest income they earn is not subject to federal income tax, and often state and local taxes as well. This can allow municipalities to offer lower interest rates than they would for taxable bonds, making it more cost-effective to fund projects aimed at improving infrastructure, creating jobs, or stimulating growth in the community.

Municipal corporations have the authority and responsibility to undertake various development projects that benefit their local populations, and utilizing tax-exempt bonds is a common mechanism for raising the necessary capital. This approach also aligns with public policy objectives to encourage investment in local economies without straining taxpayers in the immediate term.

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