This ensures equitable distribution of the debt burden. These bonds are not backed by the taxing power, and as a result, they are not included in the usual debt limits. Unlike GO bonds, revenue bonds typically do not require voter approval. According to municipal finance experts, almost anything can be engineered for lease. COPs do not need voter approval, and they do not generally count toward a jurisdiction's debt volume limitations.
Payments are subject to annual appropriations.
However, COPs are not permissible in all states, and they are generally more expensive to issue than bonds due to the involvement of a third party. More importantly, COPs are considered riskier investments because governments can, in any given year, negate a lease contract without being considered in default. As a result, investors often require higher interest rates. Moody's indicates better quality within a category by the symbols Aa1, A1 and Baa1. Most capital finance experts agree that bond referendums are risky business.