Tax incentives as a municipal development strategy have failed to attract tax revenue and meet their promise: more often than not, they end up being costly to the public. Yet ESG and impact investors rarely engage with the negative fiscal impacts of the excessive use of development tax incentives. Indeed, while many investors enjoy the benefits of the subsidies, an investor concerned with community well-being might want to ask: at what cost to those communities? A novel angle to think about oversight of tax incentives is via muni bonds and the role of bondholders as activists.
In this session, we explore the intersection of muni bonds and tax incentives through the remarkable work of Activest, with whom we covered previously racial justice impact strategies through the muni bond market. Our speakers Ryan Bowers and Napoleon Wallace highlight Activest's most recent work on bondholder engagement around tax incentives and help us navigate: why are tax avoidance and development finance so interlinked? what are the transparency requirements under GASB? what are the externalities of these practices and what role can investors play?
You may also want to check out this ImpactAlpha podcast: Impact investors start to make stodgy municipal bonds sexy.