It's a bird, it's a plane, no ... it's a butterfly bond.

Yes, the Northern California community of Pacific Grove, otherwise known as "Butterfly Town, U.S.A.," has sold what likely is the first general obligation bond issue to finance a safe wintering habitat for the monarch butterfly.

Pacific Grove, which imposes a $1,000 fine on anyone caught "molesting" butterflies, is serious about these lepidoptera.

In 1990, when many California cities could not even stir up public support for schools and roads, Pacific Grove persuaded two-thirds of its residents to approve a bond measure for the monarch.

The $1.2 million of bond proceeds will buy two acres of land used by the monarch as an "ancient overwintering" site, city officials said.

"These are the first bonds sold for a butterfly habitat," said Carl D. Kadie of Kadie-Jensen, Johnson & Bodnar, the city's financial adviser. Merrill Lynch & Co. purchased the issue on June 10 with a competitive bid that produced a net interest cost of 6.13%.

"These were bought as collector's items," said Mr. Kadie, who added that "we got eight bids" on the tiny bond issue.

William Pitt, Pacific Grove's finance director, said it took nearly two years after the bond election to sell the debt because of price negotiations for the habitat site.

The first butterflies migrate annually to Pacific Grove in about November and leave in February. One of the great mysteries is how the monarch remembers the way to Pacific Grove every year, said Mr. Pitt.

The new site will be accessible to the public, so tourists can easily view the clusters of brightly colored butterflies hanging from city trees.

"People here are very attached to the monarch," Mr. Pitt said.

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