{"id":26541,"date":"2019-10-28T12:00:07","date_gmt":"2019-10-28T16:00:07","guid":{"rendered":"https:\/\/test.greenmoney.com\/2025\/?p=26541"},"modified":"2020-07-31T15:38:14","modified_gmt":"2020-07-31T19:38:14","slug":"how-community-focused-municipal-bond-investments-can-drive-social-impact","status":"publish","type":"post","link":"https:\/\/test.greenmoney.com\/2025\/how-community-focused-municipal-bond-investments-can-drive-social-impact\/","title":{"rendered":"How Community-Focused Municipal Bond Investments Can Drive Social Impact"},"content":{"rendered":"
>> Back to November 2019<\/a><\/div>\n

\"GurtinMunicipalBondMgt-logo\"Pairing the words \u201ccommunity-focused\u201d and \u201cmunicipal bonds\u201d together feels redundant, because at their core, the purpose of most municipal bonds is to invest in a local community. Whether through building roads and bridges, fire stations and school buildings, or community centers, municipal bonds frequently fund the bones of a community. Well-maintained and updated infrastructure can provide a solid backdrop for a community to flourish, but I didn\u2019t fully appreciate the role that municipal infrastructure can fill, in bringing a community together until becoming a parent and exploring the full range of free and low-cost community spaces.<\/p>\n

Many cities now have modern-day playgrounds complete with \u201cninja warrior\u201d climbing structures, public pools with water slides, libraries with computers, free Wi-Fi, and child play areas. These updates help equalize play by providing a space for all children in a community to access amenities that otherwise would be available only to children whose families can afford to visit private facilities. Ultimately, municipal bonds provide a way for governments to afford these types of infrastructure projects.<\/p>\n

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In addition to providing community spaces, municipal bonds contribute to the development of structures that ensure all members of a municipality have their basic needs met, which can positively impact the individuals affected and their surrounding communities. One such example is the role of municipal bonds in funding affordable housing<\/a><\/strong>.<\/p>\n

Why Underserved Communities Need Affordable Housing Assistance<\/h2>\n

Whether due to a shortage of available housing in high-demand areas or to the lack of developer interest in maintaining inexpensive housing, the United States is experiencing an affordable housing crisis. A 2017 study by the Joint Center for Housing Studies reported that the number of homes costing $2,000 or more in rent per month had increased by 97% over a 10-year period.[1]<\/span> In many locations, private markets cannot provide sufficient affordable housing without the help of a public subsidy because rent generated from low-income households oftentimes does not fully cover costs. To combat this, state and local governments work with the federal government to offer funds and tax credits to help provide access to affordable housing. One way that state and local housing finance agencies (HFAs) provide financing to housing projects is through issuing municipal bonds<\/em>. (See Figure 1: How Affordable Housing Gets Built.)<\/p>\n

HFAs typically loan funds generated from municipal housing bonds to:<\/strong><\/p>\n

1) Real estate developers to finance multi-family housing projects with units rented to moderate- and low-income families;<\/p>\n

2) Finance single-family home mortgages targeted at first-time homebuyers who meet income and purchase price requirements.[2]<\/span><\/p>\n

Municipal bonds allow developers to finance projects at lower interest rates and facilitate eligibility for the federal government\u2019s low-income housing tax credit program, which helps developers offset the cost of developing and rehabilitating affordable rental housing.[3]<\/span><\/p>\n

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\"How
Source: Rebekah King and Ethan Handelman, The cost of affordable housing: Does it pencil out? July 2016<\/em><\/figcaption><\/figure>\n

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The Positive Impact of Affordable Housing on Moderate- and Low-Income Residents<\/h2>\n

For moderate- and low-income families, the availability of affordable housing can positively affect their health, education, and economic opportunities.<\/p>\n

\u2022 Reducing Negative Health Outcomes<\/strong><\/p>\n

Adults who can spend less on housing are more likely to fill prescriptions and adhere to health care treatments than those who are cost burdened.[4]<\/span> Additionally, children in low-income families who receive housing subsidies are more likely to meet \u201cwell child\u201d criteria, which measures development, weight, and health.[5]<\/span> Well-constructed and maintained housing also limits exposure to environmental toxins and allergens.[6]<\/span><\/p>\n