Emily Robare - GurtinMunicipalBondMgmt - GreenMoney

How Community-Focused Municipal Bond Investments Can Drive Social Impact

By Emily Robare, Gurtin Municipal Bond Management

GurtinMunicipalBondMgt-logoPairing the words “community-focused” and “municipal bonds” 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’t 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.

Many cities now have modern-day playgrounds complete with “ninja warrior” 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.

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.

Why Underserved Communities Need Affordable Housing Assistance

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] 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. (See Figure 1: How Affordable Housing Gets Built.)

HFAs typically loan funds generated from municipal housing bonds to:

1) Real estate developers to finance multi-family housing projects with units rented to moderate- and low-income families;

2) Finance single-family home mortgages targeted at first-time homebuyers who meet income and purchase price requirements.[2]

Municipal bonds allow developers to finance projects at lower interest rates and facilitate eligibility for the federal government’s low-income housing tax credit program, which helps developers offset the cost of developing and rehabilitating affordable rental housing.[3]


How New Multi-Family Affordable Housing Gets Built-Gurtin
Source: Rebekah King and Ethan Handelman, The cost of affordable housing: Does it pencil out? July 2016


The Positive Impact of Affordable Housing on Moderate- and Low-Income Residents

For moderate- and low-income families, the availability of affordable housing can positively affect their health, education, and economic opportunities.

• Reducing Negative Health Outcomes

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] Additionally, children in low-income families who receive housing subsidies are more likely to meet “well child” criteria, which measures development, weight, and health.[5] Well-constructed and maintained housing also limits exposure to environmental toxins and allergens.[6]

• Increasing Educational Achievement

Access to affordable housing can reduce frequent moves, which can have a negative impact on children’s educational achievement.[7] Stable housing helps avoid school absences, changing schools, and loss of friendships and community ties, all of which can lead to declines in educational achievement.[8]

• Enhancing Economic Opportunity

Housing stability can also help residents avoid job loss and increase their economic security.[9] Researchers estimate that involuntary housing loss through eviction increased the risk of job loss by 11% to 22%. Spending less on housing costs allows moderate- to low-income residents to increase economic security through providing a greater ability to save for retirement, pay for higher education, or use discretionary income to build up an emergency fund.

Positive Impact on Communities

Affordable housing can also have a positive influence on a surrounding community through neighborhood improvement and economic impacts.

For instance, affordable housing projects can improve the communities where they’re built by reducing blight and fostering greater stability.[10] Stable housing also allows communities to retain and attract qualified workers.[11] Additionally, affordable housing may increase a community’s property values, especially if it replaces a decaying property.[12]

Gurtin Investment in Housing Bonds

Gurtin seeks to support social impact by investing in municipal bonds that fund essential government projects — such as those helping to improve access to affordable housing — in low- to moderate-income or high-poverty areas. In addition to affordable housing projects, Gurtin also seeks to support social impact in communities by investing in municipal bonds that help finance projects related to parks and recreation facilities, libraries, public transit, bridges, and other essential infrastructure that benefits underserved communities throughout the United States.

Through municipal bond investing, we aim to help improve the communities’ social and economic fabric by making it more inclusive, safe, resilient, and sustainable.


Article by Emily E. Robare, head of ESG (environmental, social, and governance) research on the municipal credit research team at Gurtin Municipal Bond Management, a PIMCO company. As head of ESG research, Ms. Robare leads the firm’s sustainability and ESG research efforts, including integration of ESG risk factors into credit analysis for all bond holdings and conducting in-depth research on ESG topics, such as climate change and public pensions. Ms. Robare co-led the development of Gurtin’s Municipal Social Advancement strategy, allowing investors to target sustainable municipal bond investing in impactful projects in local communities across the United States. In addition, Ms. Robare sits on the Investment Committee and continues to conduct day-to-day credit analysis on municipal bonds across a variety of states and municipal sectors.

Outside of her role at the firm, Ms. Robare is on the Board of the Minnesota Chapter of Women in Public Finance.

Important Disclosures

Gurtin Fixed Income Management, LLC dba Gurtin Municipal Bond Management, a PIMCO company (the “Adviser” or “Gurtin”), is a registered investment adviser with the U.S. Securities and Exchange Commission (the “SEC”). This confidential presentation has been prepared solely for prospective investors considering the investment advisory services provided by Gurtin Municipal Bond Management (the “Adviser” or “Gurtin”). The contents of the presentation should not be construed as investment, tax, financial, accounting or legal advice. Investors should seek such professional advice for their particular circumstances.

Gurtin claims compliance with the Global Investment Performance Standards (GIPS®). Gurtin has been independently verified for the periods February 1, 2008 through March 31, 2017 by Ashland Partners & Company LLP and from April 1, 2017 through September 30, 2019 by ACA Performance Services. GIPS is a registered trademark of CFA Institute. CFA Institute has not been involved in the preparation or review of this report/advertisement. A copy of the verification report is available upon request.

This presentation does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdictions. Offers may only be made to prospective investors through a prospectus. Neither the SEC nor any other federal or state agency or non-U.S. commission has confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is unlawful.

Each prospective investor will be required to execute an Investment Management Agreement and related Account opening documents (collectively, “Agreements”). If any of the descriptions or terms in this presentation are inconsistent with the terms of the Agreements, such Agreements shall control.

No assurance can be given that the investment objectives will be achieved or that investors will receive a return of any capital. In considering any prior performance information, historical or hypothetical, contained herein, prospective investors should bear in mind that prior performance does not guarantee nor is it indicative of future results. There can be no assurance that the investments made by the Adviser will achieve any particular results.

Article Notes:
[1] Out of Reach 2018: The High Cost of Housing, National Low Income Housing Coalition, 2018.
[2] Housing Revenue Bond, Municipal Securities Rulemaking Board, n.d.
[3] Mark Keightley, An Introduction to the Low-Income Housing Tax Credit, Congressional Research Service, March 2018.
[4] Nabihah Maqbool, Janet Viveiros, and Mindy Ault, The Impacts of Affordable Housing on Health: A Research Summary, Insights from Housing Policy Research, Center for Housing Policy, April 2015.
[5] Ibid.
[6] Ibid.
[7]Maya Brennan, Patrick Reed, and Lisa A. Sturtevant, The Impacts of Affordable Housing on Education: A Research Summary, Insights from Housing Policy Research, Center for Housing Policy, November 2014.
[8] Ibid.
[9] The Gap: A Shortage of Affordable Homes (2018), National Low Income Housing Coalition, March 2018.
[10] Measuring the Economic Impact of Affordable Housing in Rhode Island, HousingWorks RI, 2010.
[11] Ibid.
[12] Ibid.

Energy & Climate, Featured Articles, Impact Investing

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