What category of financing can be used to fund the construction of essential services like water and sewer facilities?

The category of financing that can be used to fund the construction of essential services such as water and sewer facilities is indeed revenue bonds. Revenue bonds are specifically issued to finance projects that generate revenue to cover the debt service costs associated with the bonds. In this case, the projects are typically related to public utilities, including water and sewer systems, which charge users for services rendered. The revenues collected from these services are then used to repay the bondholders.

This approach is particularly advantageous for funding infrastructure that provides essential services, as the user fees can provide a steady source of income. In contrast, general obligation bonds are secured by the full faith and credit of the issuing municipality and may not specifically fund revenue-generating projects. Public enterprise revenue bonds also target revenue-generating projects but are less common than standard revenue bonds for essential services. Blanket loans generally refer to financing secured by multiple assets and are not specifically focused on municipal infrastructure projects. Hence, revenue bonds emerge as the appropriate financial instrument for such initiatives.