A municipal bond that is issued by cities and towns for the purpose of funding a specific development project to the benefit of a specific area. It carries the pledge of the full faith and credit power of the municipal issuer. Interest owed to investors is paid by taxes levied on the area where the bond-funded project is established. Examples of such projects include the opening up of streets, urban improvements, etc.

Special assessment refers to taxes levied on beneficiaries (those who are expected to receive the benefits).