=10. Bond Issues.=—A municipal bond is a promise by the municipality to pay the face value of the bond to the holder at a certain specified time, with interest at a stipulated rate during the interim. The security on the bond is the taxable property in the municipality. The legal restrictions thrown around municipal bond issues, the value of the taxable property in the municipality, all of which may be used as security for municipal bonds, and the fact that a municipality can be sued in case of default, make municipal bonds desirable and provide a good market for their sale. The funds available from a municipal bond issue are limited by the amount that the legal limit is in excess of the outstanding issues. The legal limit varies in different states from about 5 to 15 per cent of the assessed value of the property in the municipality. In some cases the amount available from municipal bonds has been increased by forming a municipality within a municipality such as a sanitary district, a park district, a drainage district, etc., which comprises a large portion or all of an existing municipal corporation. This case is well illustrated in some parts of the City of Chicago where the municipal taxing powers are shared by the City government, the Sanitary District, and Park Commissioners. The right to create a new municipal corporation must be granted by the state legislature. Knowledge of fixed bonds, serial bonds, life of bonds, sinking funds, etc. is an important part of an engineer’s education.[14] Bond issues must usually be presented to the voters for approval at an election. If approved, and other legal procedure has been followed, the bonds may be bought by some of the many bonding houses, or by private individuals, and the money is immediately available for construction. The bonds are redeemed by general taxation spread over the period of the issue.