What is the term for financing projects by using funds generated from user fees?

The term for financing projects through funds generated from user fees is known as revenue bonds. Revenue bonds are debt instruments that are secured by the earnings generated from specific projects, such as toll roads, airports, or utilities, which collect fees from users of these services. This financing method allows governments or municipalities to fund capital projects without imposing a burden on taxpayers, as the repayment of the bonds relies on the income produced by the project itself rather than general tax revenues.

This approach aligns well with various public projects, especially those that can generate a reliable stream of income. By using revenue bonds, public entities can undertake necessary improvements or new projects while ensuring that the costs are covered by the very users who benefit from them. The focus on user-generated funds reflects a prudent financial strategy that can enhance the sustainability of public services.