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Debt Service Funds <br />Debt Service funds are a type of governmental fund to account for the accumulation of resources for the payment of interest and <br />principal on debt (other than enterprise fund debt). <br />Debt Service funds may have one or a combination of the following revenue sources pledged to retire debt as follows: <br />• Property taxes - Primarily for general City benefit projects such as parks and municipal buildings. Property taxes may <br />also be used to fund special assessment bonds which are not fully assessed. <br />• Tax increments - Pledged exclusively for tax increment/economic development districts. <br />• Capitalized interest portion of bond proceeds - After the sale of bonds, the project may not produce revenue (tax <br />increments or special assessments) for a period of one to two years. Bonds are issued with this timing difference <br />considered in the form of capitalized interest. <br />• Special assessments - Charges to benefited properties for various improvements. <br />In addition to the above pledged assets, other funding sources may be received by Debt Service funds as follows: <br />• Residual project proceeds from the related capital projects fund <br />• Investment earnings <br />• State or federal grants <br />• Transfers from other funds <br />-10- <br />