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What is a Bond Resolution?

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  • Written By: Mary McMahon
  • Edited By: Bronwyn Harris
  • Last Modified Date: 25 October 2018
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A bond resolution is a measure which is brought before the voters to ask them to authorize a government agency to issue bonds for the purpose of fund raising. Bond resolutions frequently appear on ballots, and there may be several such resolutions in a year, especially in a community which is trying to overhaul its infrastructure. If a bond resolution passes, the agency may generate and sell bonds to raise funds for a particular project; if the measure fails, other avenues of fund raising must be pursued, or the bond may be introduced again.

Bonds are a special type of security. When bonds are issued, they are typically sold in bulk to an intermediary like a bank or investment company. The bank in turn sells the bonds to individuals to generate a profit. For the issuing agency, bonds can quickly raise capital on agreeable terms, and for people who buy bonds, the bonds can generate a nice return of interest, depending on the health of the economy. There are a number of different types of bond issues which can be used in fundraising, and the specific type of bond issue is usually included in a bond resolution. Bonds can be used to generate funds for everything from new streets to wars.

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For voters, bond resolutions can be confusing at times. Often they contain misleading text or terms. For example, a bond might be labeled as the “Clean Air Bond Act,” leading voters to believe that the funds raised will be used to improve air quality. However, a close reading of the proposed bond ordinance might reveal that the funds will actually be used to support private industry which may be only tangentially related to air quality.

It is very important to read bond resolutions carefully before voting on them, and to fully understand the terms of the bond. It is a good idea to carefully examine how the funds will be used, and to see if any accountability is included in the bond resolution; for example, if a bond claims to be increasing wages for teachers, a third party organization should be able to certify a pay hike. Voters should also think about what might happen if the agency cannot sell the entire bond issue, thereby falling short of the needed funds.

In addition to being brought to a general vote, a bond resolution can also be brought to a government assembly. Such assemblies range in size from national assemblies like the United States Senate to small groups, such as a city council.

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