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I I I I I I I I I I I I I I I I I I I "To initiate, acquire, construct, maintain, repair, and operate projects or cause the same to be operated pursuant to a lease, sublease, or other agreement with any person or governmental agency and may issue its bonds and notes payable solely from revenues to pay the cost of such projects (Authority, 1982)." Any such agreements may be structured as "take or pay" contracts in which the purchaser is obligated to purchase a specified amount of services, whether or not the anticipated proj ect is ever completed or is operable. In the event of default by one of the purchasers, there may be a "step-up" provision whereby the remaining purchasers will be required to pay for a percentage of the defaulting party's commitment. The payments due under such contracts must be sufficient to enable the Authority to meet all operating expenses, and debt service requirements on any bonds. The Authority could issue 3D-year revenue bonds. Yields of long-term bonds have recently dropped dramatically. Based on an assumed A rating, 3D-year revenue bonds would currently yield 8.0 to 8.5 percent. The Authority would probably get a lower interest rate than the town on a revenue bond issue. In addition to issuing revenue bonds, the Authority can provide the funds to meet the debt reserve requirements. This would essentially lower the amount of capital to be financed by about 10 percent. 6.1.8 Revenue Bonds The Town can issue general obligation bonds supported by assessments or revenue bonds supported by user fees.. The electorate must approve the proposal before they may be issued. Currently, the interest rate on municipal bonds is nearly eight percent but has been as high as ten percent in the last year. The cost of issuing bonds is generally less than three percent of the total issue. A reserve fund is generally established to make payments during construction, before the proj ect starts to generate revenue. 6-3