City Council: Cities may issue municipal bonds to fund public projects

This one is strange. What do you think guys?

City Council: Cities may issue municipal bonds to fund public projects. Because the interest paid to the bond holder is tax-exempt, municipal bonds are an attractive investment. So, to pay for the five state-of-the-art school buildings needed to accommodate our growing student population, Northopolis should issue a ten-year, $200 million bond, thereby paying for the buildings with revenues from an expanding tax base.

Which of the following, if true, casts the most serious doubt on the likelihood that the bond issue recommended above will have the result that is claimed?
chain of events :
increased tax base by channelising investments in bonds ----> increased tax collections -----> money for building schools
(A) Most Northopolis citizens would be reluctant to support a tax increase to pay for new school buildings.
Distorted facts... possibility of tax increase has not been mentioned .... The plan is to increase the tax base ( i.e. number of people who will be paying the taxes ..

(B) Because municipal bond interest is tax-exempt, bond issues can severely affect a city's tax revenues for the life of the bond, despite the short-term benefits.
B -- directly hits the chain : hence correct answer


(C) Many popular investments are created by pooling state and municipal bonds to create tax-exempt index funds.
( irrelevant info ...because we donont know whether these invesments are channelised for social causes like making a school)
(D) Estimates of the cost of five new school buildings vary from well below $200 million to well above $200 million.
we are not concerned about the total cost of the making school as it is immaterial to people who will be investing in the bonds

(E) A significant percentage of municipal bonds issued by cities such as Northopolis are purchased by investors from other cities who aim to diversify their bond portfolios.
( it doesnot matter whether local people or peole from other cities are investing money in bonds ...it will strenghten as you will have more money in the fund )