What must a municipality do before it can raise funds through a bond issue?

What must a municipality do before it can raise funds through a bond issue?

• A. Adopt an ordinance authorizing the bond
• B. Hold a public referendum
• C. Prepare a detailed financial plan
• D. Consult with state treasury

Answer: (A)

A municipality must adopt an ordinance authorizing the bond before it can proceed with a bond issue. The adoption of this ordinance is a crucial step in the bonding process, as it formalizes the decision to borrow funds through bonds and outlines the specific details of the bond issuance, such as the amount, purpose, and repayment method. This legal framework is essential to ensure compliance with state laws and regulations governing public debt, thereby safeguarding the municipality's financial integrity. While holding a public referendum and preparing a detailed financial plan are important considerations in managing municipal finances, they are not universally required steps for all bond issues. Referring to the state treasury is often advisable for guidance but does not serve as a mandatory prerequisite for the authorization of bonds. The ordinance serves as the definitive action needed to proceed with the bond issuance.

A municipality must adopt an ordinance authorizing the bond before it can proceed with a bond issue. The adoption of this ordinance is a crucial step in the bonding process, as it formalizes the decision to borrow funds through bonds and outlines the specific details of the bond issuance, such as the amount, purpose, and repayment method. This legal framework is essential to ensure compliance with state laws and regulations governing public debt, thereby safeguarding the municipality's financial integrity.

While holding a public referendum and preparing a detailed financial plan are important considerations in managing municipal finances, they are not universally required steps for all bond issues. Referring to the state treasury is often advisable for guidance but does not serve as a mandatory prerequisite for the authorization of bonds. The ordinance serves as the definitive action needed to proceed with the bond issuance.