Social Investors Join Cities to Finance Neighborhood Green Initiatives
Home Energy Efficiency Makeover by Greenforall
Municipal financing authorities are teaming up with mission-driven investors to create bond programs, which pay for green building initiatives.
Typically, the cities issue the bonds in order to help pay for upgrades to homes and buildings, which will make them more energy efficient.
Socially responsible investors are buying these bonds because they pay fixed returns while simultaneously funding the investors’ real estate sustainability goals.
Case in point:
The New Mexico Mortgage Finance Authority and Community Capital Management have created one of the latest of these financing programs, also designated for funding neighborhood scale green initiatives. The article highlights the use of the Home Energy Rating System in order to determine the kinds of energy efficiency improvements which will result in upgraded homes qualifying for Energy Star ratings.
What’s interesting here is that the article reflects how local governments are able to be significant green finance players by combining stimulus funding available to them with innovative fixed income financing programs — backed by the powerful SRI market, which has not been as affected by the economic downturn as many traditional private market capital providers.
The benefits? As one investor put it:
“When urban areas have good schools, job opportunities, an adequate supply of housing, safe and reliable transportation, and low crime rates, they become attractive places for families to live and businesses to set up shop. Robust communities reduce the pressure on the environment associated with sprawl.”
Be on the lookout for more growth in this form of capital to pay for the of our neighborhoods. Over the next few years, it will be interesting to follow these financing initiatives to see which programs and cities do the best job of achieving the energy efficiency increase and carbon emissions reductions that they now seek.
