Pros And Cons Of Municipal Bond Investments

Sports are something most Americans can relate to; many of us played some type of sport as a kid and some of us are die-hard fans. Sports have developed with us as a society and have become an interwoven piece of our culture and their effects can be seen in many cities countrywide. The facilities where these teams play can become a centerpiece of the local community and the teams themselves can bring people from all walks of life together in search of one mutual goal, for their team to win. The controversy arises when it comes to how many professional stadiums are routinely being funded and whether taxpayers should foot the multi-billion-dollar bill. This has not always been a controversy, however, as prior to 1953 stadiums were largely funded

Dan Weil, a financial columnist and former Bloomberg reporter explains municipal bonds thoroughly in his 2014 Bankrate article “Municipal Bonds: Pros and Cons of Muni Bond Investments”. In this article, Weil explains that a municipal bond is a form of debt instrument typically issued by corporations and governments to fund certain capital expenditures, or spending on physical assets such as highways, toll roads, or for a corporation, a new factory or acquisition (Weil, 2014). These municipal bonds are issued to investors to raise capital for certain projects, in return, the investors receive a coupon or a percentage of the purchase price of the bond yearly. What makes these bonds particularly enticing to investors is the fact that they are exempt from all federal taxation and are often excluded from state and local taxes as

Today, Michigan’s largest city is known primarily for its high crime rate, poverty, and fiscal issues. “Detroit is Once Again the Most Violent City in America” by Tresa Baldas of the Detroit Free Press found that in 2016 Detroit was the most dangerous large city in The United States with total violent crimes of 13,705 (Baldas, 2017). In addition to extensive crime, Detroit has been a fiscal disaster for decades. “A History of Detroit’s Fiscal Problems” by Karen Pierog of Reuters details Detroit’s financial downfall, which can be traced all the way back to the 1970’s. Pierog highlights Detroit 's fiscal mishaps step by step, including their 2013 bankruptcy. In July of 2013, Detroit filed for the largest municipal bankruptcy in United States History with an estimated debt of $18-20 billion and just three months later, in October, it defaulted on more than $600 million in general obligation bonds (Pierog, 2014). Yet, despite all these problems, Detroit has continued to allocate hundreds of millions of dollars for its professional sports franchises. The Detroit Redwings of the NHL for example, who are owned by Little Caesars founders Mike and Marian Ilitch had 58% of their new $450 million arena built with taxpayer money. According to CelebrityNetWorth, the Ilitch’s are combined worth an estimated $4.2 billion (CelebrityNetWorth). The total public