City of Philadelphia: Types of City Debt
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City of Philadelphia

Types of City Debt

The debt program managed by the City includes general obligation debt, lease and contract debt issued by related authorities. Types of debt managed by the City include the following:

General Obligation Debt

The City can issue general obligation debt, backed by the full faith, credit and taxing power of the City, subject to voter approval and subject to adherence to the Commonwealth Constitution. The Constitution limits the City's general obligation debt to 13.5% of the immediately preceding 10-year average of assessed value of taxable real property, with debt greater than 3% of the immediately preceding 10-year average of assessed value of taxable real property having to get voter approval.

Contract and Lease Debt

In addition to general obligation debt, the City issues tax-supported obligations through the use of its related authorities. Debt issued by related authorities is repaid through lease or contract agreements whereby annual rental payments from the City's general fund to the related authorities are sufficient to cover debt service. In this debt structure, the City covenants to budget and appropriate each fiscal year for rental payments and the City's obligation to make rental payments is unconditional. In addition, some city enterprise funds, such as the Aviation Department, have occasionally issued debt through the City's related authorities.

Revenue Bonds

The City oversees the issuance of revenue bonds for the Philadelphia Water Department, the Philadelphia International Airport, and Philadelphia Gas Works.