Want to use some of your school construction money with the aim of supporting a cleaner planet? Hoping to leverage the promise of energy efficiency and environmental responsibility to finance big-ticket projects?
One option: so-called 鈥済reen bonds.鈥�
Green bonds tie capital raised in bond issues to projects with eco-friendly or climate benefits such as energy efficiency, clean water, renewable energy, clean transportation, or habitat restoration. They are purchased largely by pension funds, individuals, institutions, asset managers, and insurance companies.
Such bonds are a growing segment of the national municipal-bond market: The ratings agency Moody鈥檚 expects $120 billion in green bonds to be issued this year, up from a record $93.4 billion in 2016. They give school districts and other public entities interested in low-carbon projects an attractive way to invest.
One prominent recent example: the 74,500-student Fort Bend Independent school district in Sugar Land, Texas, about 20 miles southwest of Houston. It was the first district in the state to issue green bonds, for the construction of three new environmentally sustainable elementary schools. The district issued $99 million in tax-exempt bonds in April, and approximately $52 million of those were designated as green bonds, part of a $484 million bond package approved by the district鈥檚 voters in 2014.
Issuing green bonds 鈥渄emonstrates our conservative approach to managing our building program,鈥� said Fort Bend Superintendent Charles Dupre.
In its second and most recent transaction, Fort Bend sold $45 million in green bonds for a three-year interest rate of 1.35 percent, along with $50 million in regular bonds for a four-year interest rate of 1.5 percent.
鈥淚t鈥檚 not an exact science because you don鈥檛 really know whether the lower interest rate was because the bonds are green or because they鈥檙e for three years instead of four, but it鈥檚 inexpensive, and the district is happy about that,鈥� said Steven Bassett, the district鈥檚 chief financial officer. 鈥淚t doesn鈥檛 hurt, that鈥檚 for sure.鈥�
