Maryland Update

From the Desk of Alison Prost

Spring 2018

Beautifying Bonds?

Nature is subversive in the city. Tree roots plot the upheaval of sidewalks. Dandelions and crabgrass take root in the smallest breaches.

CBF believes nature's forces can help a city. It is introducing an innovative type of financing that local governments throughout the watershed can use to scale up green infrastructure, such as planting street trees, rain gardens, and other landscaping.

Cities and suburbs in the Bay region are required by law to reduce polluted runoff, the only major source of water pollution that's growing. Hard surfaces such as streets, sidewalks, and rooftops create polluted runoff. Rain runs off those surfaces and picks up contaminants. Many cities and towns have started installing more green infrastructure to sop up and filter polluted runoff.

But to make a real difference, and to meet state requirements, urban areas are going to have to significantly increase the number of those projects. Enter environmental impact bonds, or EIBs. These special bonds incentivize local governments to launch an all-out assault on runoff because the bonds reduce financial risk.

Baltimore is the first locality in Maryland to seize the opportunity. On March 26, the city and CBF announced a partnership to use an EIB to fund 90 special landscaping projects in three dozen neighborhoods. The work will reduce polluted runoff and help beautify neighborhoods that can use all the green they can get.

The collaboration was announced at a press conference in the Harlem Park neighborhood of West Baltimore.

Pavement at the site will be torn up and replaced with special landscaping. Mayor Catherine E. Pugh said in a statement she was proud the city was "at the forefront of a creative, results-oriented approach" that will improve such neighborhoods.

CBF hired an expert, Quantified Ventures, to help advise Baltimore as it structures the innovative financing. The company recently helped Washington, D.C., issue an EIB to reduce runoff. An anonymous donor, The Kresge Foundation, and the Abell Foundation are supporting CBF's contracting with Quantified Ventures.

What makes EIBs different than traditional bonds for capital projects? Quantified Ventures CEO Eric Letsinger says a growing group of investors want to put their money into projects that provide measurable benefits.

EIBs do just that. Baltimore's bonds will be repaid based on the tangible success of the 90 landscaping projects in meeting agreed-upon social or environmental objectives.

That's a win-win for the city as well as the investors. If the projects don't get results as advertised, the city pays less. If they work, the city pays interest, but it also gets increased assurance that it will meet state and federal requirements to reduce polluted runoff.

So, Baltimore can innovate. It can confidently expand green infrastructure to improve neighborhoods, clean up the Inner Harbor, and create jobs. 

CBF is looking for other cities and counties in the Chesapeake region who want to abet nature's counteroffensive against pavement.

—Alison Prost
Maryland Executive Director
Chesapeake Bay Foundation

P.S. The Maryland General Assembly recently wrapped up its session. This year, the legislature approved Governor Hogan's budget fully funding many environmental programs. But lawmakers did not support our effort to better protect forests from development, or any other major policies to accelerate the cleanup of the Bay. 

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