Jade Craig on Rate Covenants in Municipal Bonds

Ipse Dixit

In this episode, Jade Craig, Assistant Professor of Law at the University of Mississippi School of Law, discusses his article, "Rate Covenants in Municipal Bonds: Selling Away Civil Rights and Fair Housing Goals." Professor Craig discusses revenue bonds that state and local governments issue to fund projects ranging from improvements to public utilities and toll roads to convention centers and retirement communities. Local governments repay revenue bond investors with money generated by fees associated with the funded project which are charged to members of the public who use the service. In charging these fees, governments are often bound by rate covenant provisions that require the government to charge fees sufficient to cover the debt—with little in the way of restrictions on how high those rates may go. Absent restrictions, and in the interest of repaying investors (and generating a profit for these investors), state and local governments often charge high fees for users, resulting in regressive rates that disproportionately harm low-income people and people of color. Professor Craig urges greater attention to the harms rate covenants pose to these communities and provides suggestions for how governments may better accommodate their constituents' civil rights while continuing to fund infrastructure and other projects through revenue bonds.

Professor Craig's article was published in Volume 102 of the Denver Law Review and is available here. Professor Craig is on Twitter at @ProfJadeCraig.

This episode was guest-hosted by Michael Smith, who will be joining the University of Oklahoma as an associate professor of law beginning in August 2025. Professor Smith is on Bluesky at @msmith750.bsky.social.

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