The merit of the project is weigh against other projects. The project deemed the most worthy is funded. Competition in this area is keen. American cities usually have the right to borrow money against its income. When the borrowing is on a short term basis, it is usually done on unsecured notes.
Bonds are the long term means of financing for American cities.
The city sell the right to receive a stream of income over a period of years, usually more than five years and less than twenty years. Procedures for the sale of bonds are cumbersome and expensive, therefore, reserve the right to issue bonds for large, long term projects. Capital Improvements in American cities are funded primarily from municipal income taxes, special levies, loans, or government grants. Therefore, most cities have a good idea how much money will be available for capital improvements. Planning usually involves both the administration and the city council ranking projects into a priority.