Billing and collection of special assessments and payment of debt principal and interest on special assessment debt for which the city is not obligated in any manner should be recorded in a(an):

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Custodial funds are used to report fiduciary activities that are not held in a trust or do not meet the criteria for inclusion in other fiduciary fund types. When a city collects special assessments and pays debt principal and interest on special assessment debt for which it is not obligated, it is acting in a custodial capacity, making the custodial fund the correct choice for recording these transactions.

Billing and Collection of Special Assessments and Payment of Debt