THE MU­NIC­I­PAL IM­PACT COALI­TION,

The Bond Buyer - - Front Page - By Chip Bar­nett

a group of mar­ket pro­fes­sion­als, is ex­pand­ing its drive to make mu­nic­i­pal bonds more ac­ces­si­ble and un­der­stand­able across the na­tion and around the globe

The Mu­nic­i­pal Im­pact Coali­tion, a group of mu­nic­i­pal mar­ket pro­fes­sion­als, is ex­pand­ing its drive to make mu­nic­i­pal bonds more ac­ces­si­ble and un­der­stand­able across the na­tion and around the globe.

It aims cre­ate a stan­dard­ized uni­form lan­guage about so­cially re­spon­sive in­fra­struc­ture projects as im­pact in­vest­ing pro­vides a way to sup­port so­cial and en­vi­ron­men­tal goals through se­cu­ri­ties that also pro­duce solid fi­nan­cial re­turns. The Coali­tion has been work­ing with un­der­writ­ers, in­vestors and state and lo­cal gov­ern­ments to cre­ate a way to an­a­lyze and quan­tify just how im­pact­ful U.S. pub­lic in­fra­struc­ture projects are now.

The Coali­tion wants mar­ket par­tic­i­pants to have a uni­ver­sally rec­og­nized “So­cial Rate of Re­turn” on these projects, which are aimed at im­prov­ing the daily lives of peo­ple in var­i­ous lo­cal com­mu­ni­ties as well as low­er­ing costs for those who are rais­ing funds for the pub­lic good.

“To bring broader in­ter­est to the pub­lic in­fra­struc­ture mar­kets in the U.S. and around the world, we need a trans­par­ent, rig­or­ously de­fen­si­ble, ob­jec­tive process guided by thought lead­ers in the in­dus­try, academia and non-profit spa­ces,” says Matt Pos­ner, founder and CEO of the Coali­tion.

He said that while “green bonds” have been the tra­di­tional start­ing point to dis­cuss en­vi­ron­men­tal is­sues in re­la­tion to mu­nis, there is more to it than that.

“The in­dus­try is miss­ing a much larger pool of cap­i­tal with in­vestors who care about ‘im­pact’ in a broader lens: ed­u­ca­tion, health­care, trans­porta­tion, en­ergy, wa­ter and sewer, de­vel­op­ment, all are project sec­tors that af­fect our com­mu­ni­ties na­tion­wide and cur­rently are not viewed un­der the ‘im­pact’ lens,” he said.

The Coali­tion not only wants a new gen­er­a­tion of in­vestors to reeval­u­ate the way in which they view the mu­nic­i­pal bond sec­tor, but also wants to help those in­ter­na­tional in­vestors who want to in­vest in Amer­i­can in­fra­struc­ture but are cur­rently ask­ing for a uni­ver­sal lan­guage. UBS Fi­nan­cial Ser­vices said that its pub­lic fi­nance de­part­ment is look­ing for­ward to part­ner­ing with the Coali­tion in or­der to ex­tend the firm’s com­mit­ment sus­tain­able in­vest­ment.

“We fun­da­men­tally be­lieve any se­ri­ous fo­cus on sus­tain­able and im­pact in­vest­ment must con­sider the mu­nic­i­pal bond mar­ket as a nat­u­ral provider of mean­ing­ful op­por­tu­ni­ties in the space,” said Mark Price, a UBS ex­ec­u­tive di­rec­tor.

“We also be­lieve that for our mu­nic­i­pal bond is­suer clients to take full ad­van­tage of in­vestor de­mand for sus­tain­able and im­pact in­vest­ments, there needs to be a nat­u­ral evo­lu­tion of a widely ac­cepted set of met­rics to mea­sure the im­pact of projects funded by the mu­nic­i­pal bond mar­ket,” Price said. “The work the Mu­nic­i­pal Im­pact Coali­tion is un­der­tak­ing fits squarely with our mis­sion and we are de­lighted by the op­por­tu­nity to work with them.”

Hec­tor Negroni, CEO of FCO Ad­vi­sors, said the Coali­tion’s goals will help the mu­nic­i­pal bond mar­ket as a whole.

“With an in­dus­try-led im­pact mea­sure­ment frame­work de­vel­oped by the Coali­tion, the pub­lic fi­nance mar­ket can bet­ter iden­tify it­self as a source of pos­i­tive so­cial and en­vi­ron­men­tal in­vest­ments for the one of the fast-grow­ing in­vestor classes, mis­sion-driven in­vestors,” Negroni said. “There are tril­lions of global in­vest­ment dol­lars with re­spon­si­ble in­vest­ing man­dates look­ing for a home. A uni­form, trans­par­ent mea­sure­ment sys­tem for mu­nic­i­pals will at­tract that cap­i­tal to­wards the needs of state and lo­cal gov­ern­ments for es­sen­tial ser­vice and sus­tain­able in­fra­struc­ture.”

Negroni said that a frame­work was needed to help ad­vance global un­der­stand­ing of the U.S. mar­ket.

“Most peo­ple ap­pre­ci­ate that the mu­nic­i­pal mar­ket is the ‘orig­i­nal’ im­pact mar­ket, but with­out mea­sure­ment tools, it is hard bridge the di­vide be­tween our mar­ket and the large pool of global in­sti­tu­tional and mis­sion-driven in­vestors,” he said.

He added that stan­dard­ized data and lan­guage would help his both the com­pany and its clients.

“Uni­form, data-driven and trans­par­ent met­rics to mea­sure the non-fi­nan­cial im­pacts of in­vest­ment ac­tiv­ity are be­com­ing a stan­dard for the global in­sti­tu­tional in­vestor com­mu­nity which rep­re­sent a ma­jor­ity of FCO’s clients,” he said.

The Coali­tion has gath­ered in­dus­try thought lead­ers who rec­og­nize so­cially re­spon­si­ble-in­ter­ested in­vestors ex­ist both in the United States and over­seas.

Mem­bers of the coali­tion in­clude: Will MacPher­son, head of the mu­nic­i­pal fi­nance group at Ipreo; Matt Hodg­son, the tech­ni­cal ar­chi­tect for new mu­nic­i­pal ini­tia­tives at Ipreo; Jane Campbell, di­rec­tor of the Wash­ing­ton, D.C., of­fice of the Na­tional De­vel­op­ment Coun­cil and Pres­i­dent of Women Im­pact­ing Pub­lic Pol­icy;

Julie Egan, di­rec­tor of mu­nic­i­pal re­search at Com­mu­nity Cap­i­tal Man­age­ment; Ro­drigo Gar­cia, Illi­nois Deputy State Trea­surer; Michael Bel­sky, ex­ec­u­tive di­rec­tor of the Cen­ter for Mu­nic­i­pal Fi­nance at the Har­ris School for Pub­lic Pol­icy at the Univer­sity of Chicago; Justin Land, chief mu­nic­i­pal strate­gist at Was­mer, Schroeder & Co.;

Cary Krosin­sky, lec­turer within sus­tain­able fi­nance at the Yale School of Man­age­ment and a fac­ulty ad­vi­sor on en­ergy stud­ies at Yale Col­lege; Stephen Win­ter­stein, man­ag­ing di­rec­tor of mu­nic­i­pal re­search at Wilm­ing­ton Trust; Mike Bloomberg, project man­ager for the Ja­cobs In­sti­tute at Cor­nell Tech and the co-founder of the in­fra­struc­ture data tech­nol­ogy startup Ground­work;

Justin M. Un­der­wood, di­rec­tor of fed­eral pol­icy and fixed in­come re­search for the Bond Deal­ers of Amer­ica; James McIn­tyre, di­rec­tor of Cap­i­tal Mar­kets for the New York State Divi­sion of Hous­ing and Com­mu­nity Re­newal; and Dan­ford Peter­son, chief in­vest­ment of­fi­cer at Fun­da­men­tal In­fra­struc­ture Im­pact Op­por­tu­ni­ties.

Pos­ner was most re­cently head of mar­ket strat­egy at Neigh­borly. Be­fore that, he was one of the founders of Court Street Group, which pro­vides weekly anal­y­sis of pub­lic fi­nance mat­ters. And prior to this, he was a man­ag­ing di­rec­tor at Mu­nic­i­pal Mar­ket Ad­vi­sors. He spent most of his child­hood abroad in Sene­gal, The Gam­bia, Bo­livia and Peru. He is a grad­u­ate of Ge­orge­town Univer­sity with de­grees in Gov­ern­ment and His­tory.

“As re­cently stated by our Chief In­vest­ment Of­fice, ‘a sig­nif­i­cant sub­set of [the mu­nic­i­pal bond mar­ket] rep­re­sents bonds whose pro­ceeds specif­i­cally fund projects with so­cial or en­vi­ron­men­tal ob­jec­tives…’ [Sus­tain­able in­vest­ing | Ed­u­ca­tion primer: Sus­tain­able mu­nic­i­pal bonds, Aug. 1, 2018],” said UBS’ Price.

Pos­ner said he hopes more bond mar­ket par­tic­i­pants will join with the Coali­tion in or­der to ed­u­cate and in­form more peo­ple about mu­nic­i­pals bonds. “Join us in sup­port­ing schools, hos­pi­tals, trans­porta­tion, en­ergy sys­tems, hous­ing and our wa­ter and sewer au­thor­i­ties,” he said.

Matt Pos­ner, CEO and founder of the Mu­nic­i­pal Im­pact Coali­tion.

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