TAHOMA, Calif. – A recent decision by the Washington Supreme Court has thrown a wrench into the use of a credit enhancement tool used on hundreds of millions of dollars in bonds.

The court earlier this month upheld a lower court ruling that contingent loan agreements – generally an agreement in which one government agrees to pay debt service for another in the event of a default - must count towards a municipality’s state constitutional debt limit of 1.5% of assessed property value.

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