Operating leases are usually used to lease land, buildings, office space, and equipment. Regular lease payments are made in exchange for the use of the asset for a specific period of time. These arrangements are contractual in nature and are similar to other types of debt service payments. Capital leases are used to pay for construction or other major capital assets, and are therefore also called lease-purchases. In smaller governments this arrangement is used to purchase items such as copiers, computers, and vehicles.
Bonds also come in two types.
This is a popular type of debt for most governments because they are almost always used to pay for public buildings or facilities and because they are less expensive. They are almost always long-term, governed and limited by law, and require bond counsel, underwriters, and others to get them on the market. Bonding can be difficult and is time consuming. Revenue bonds rarely require a vote of the people because they are backed by a government's revenue stream, other than taxes. For this reason they can be used only by entities which have revenues other than taxes, such as water or sewer operations.