However, unlike rev- enue bonds that use money generated by the project (a bridge toll) to repay investors, lease revenue bonds have a lessee (government agency) that pays rent to use the facility. The rent payments are used to pay back investors who purchased the bonds used to finance the construction of the facility.
e revenue bond?
What is a Lease Revenue Bond? A Lease Revenue Bond (LRB) is a loan made to the state that is repaid by income (“revenueâ€) generated by the project. Examples include toll bridges, hospitals and colleges. Voters do not approve LRBs because taxes are not supposed to be used to pay for the projects.
- Ongoing lease payments may be higher than the cost of purchasing the asset outright.
- Limited control over the asset.
- Possible penalties for early termination of the lease.
- The leased asset may not become the property of the lessee.
- Dependence on the lessor.
- Lack of ownership.
