This is the fourth article in a series highlighting the most important aspect of municipal bonds: how the projects bonds finance helps the community. It appropriately started with Municipal Bonds: Investing In Our Communities. This piece looks at how municipal bonds fund green and sustainable initiatives with quantifiable results with community wide benefits beyond the environment.
Sensitive to the current impetus for sustainable environmental outcomes, municipalities seeking to demonstrate they are “green” are looking beyond environmental metrics. Sustainable environmental outcomes encompass the effective application and utilization of all public resources—natural, human, economic and technological—to improve service delivery and create sustainable outcomes in municipal operations and programs.
In rural Pend Oreille County (Moody’s: Baa2; Standard & Poor’s: NR) in northeast Washington, the key resource is the natural beauty of the Selkirk Mountain Range. The Public Utility District’s Box Canyon Hydroelectric Project is owned by the people of the county, serving 13,100 residents with clean power. When the dam required upgrades to the turbines and generators, the District issued municipal Green Bonds and New Clean Renewable Energy Bonds to finance the project. The beneficial impact of this capital plant upgrade will last for many years, providing low-cost energy to the county’s residents.
Pend Oreille Public Utility District (PUD) took an all-encompassing view in project planning—from addressing the environmental impacts to using the latest technology to maintain peak efficiency. In addition to maintaining nine community drinking water systems providing potable water to 590 homes, the district maintains a wildlife management area: fish-passages, a trout habitat restoration area and natural resource management for minimal erosion and low impact on wildlife.
In addition, the project enjoys a high-water efficiency rating due to high engineering standards, minimizing water waste. Finally, as a publicly-owned utility, this hydroelectric plant is a revenue-generating asset for the community and by selling power at cost to the electric system, it also has a positive impact on local family budgets.
The Mass Transportation of Sustainable Infrastructure
Another facet of sustainability is efficient and effective service delivery. Overseeing all public transportation in Boston and the surrounding suburbs (176 towns), the Massachusetts Bay Transit Authority (Moody’s: Aa3; Standard & Poor’s: AA) helps connect an average of 1.3 million riders a week to and from wherever they are going. The MBTA’s network is comprised of commuter and subway trains rolling on hundreds of miles of track, buses driving over hundreds of miles of road, and ferries covering dozens of nautical miles.
The MBTA, the oldest and fifth-largest transit system in the country, also takes a broader perspective of its mission as an essential public purpose service provider; the authority saw the strong economic, social and environmental influence it had in the community. Its strategic plan integrated a commitment to strengthening and improving the economic health of the region, promoting social equitability through services to a diverse customer base and embracing environmental stewardship. In fact, social and environmental factors form the foundation of the MBTA’s commitment to sustainability.
It all came together in 2017 when the MBTA issued the first tax exempt Sustainability Bond in the nation—offering $118 million in long-term bonds to fund 115 projects for new and upgraded facilities. In addition, the MBTA developed a Sustainability Bond Framework with sustainability researchers at Harvard and MIT, and aligned with the Sustainability Bond Principles established by the International Capital Market Association. This framework’s quantifiable metrics apply in the facility planning process as well as outcome measurement once the projects are operational.