Paying for Stormwater Solutions
Chesapeake Bay watershed municipalities face challenges in meeting federal and state Clean Water Act requirements and managing compliance with consent decrees—particularly when it comes to financing solutions.
Working with impact investment advisory firm Quantified Ventures, CBF is providing pro bono support to municipalities and water utilities seeking funding for stormwater management and related resilience projects. Quantified Ventures introduced the first-ever Environmental Impact Bond with DC Water in 2016 and is now working with cities across the U.S. to help them tap into impact investment for environmental projects.
Environmental Impact Bonds allow municipalities to:
- access capital for projects that are difficult to finance,
- get projects financed more quickly if they are not already a priority by engaging new investors,
- pilot new projects that may be viewed as risky—and share the risk with investors if the projects are not successful,
- engage other budget centers run by departments who will also benefit from a project's social and economic outcomes, and
- benefit from understanding the efficacy of projects funded by the bonds, thereby informing future investment decisions.
What is an Environmental Impact Bond?
Today, we have a new generation of investors that cares as much about social and environmental returns as they do financial ones. These “impact investors” are seeking financial, social, and environmental returns on their investments.
CBF wants to help municipalities leverage this new source of capital to create green infrastructure (rain gardens, permeable pavement, bioswales, and more) that can help reduce stormwater management burdens.
The Environmental Impact Bond model matches impact investors with municipalities planning environmental resilience projects such as green infrastructure. Investors provide up-front capital and share the project risk.
Here's how it works:
- Quantified Ventures works with municipalities to bring the necessary parties together and determine the parameters of the Environmental Impact Bond, including interest rate, timeframe, outcome metrics, and more.
- A municipality issues the Bonds and sells them to private investors to finance environmental capital projects.
- The municipal issuer then uses this funding for green infrastructure solutions. The entity is required to pay interest on the bonds and to repay the principal amount of the bonds on scheduled payment dates.
- At the end of an evaluation period (for example, five years), the municipal issuer pays the investors an outcome payment if the project performs better than expected and the investors will pay the municipality a risk-sharing payment if the project underperforms.
Take advantage of pro-bono support
CBF is looking for innovative municipalities and water utilities in Pennsylvania, Maryland, and Virginia to partner with on a pro-bono basis in adopting the Environmental Impact Bond model to finance green infrastructure projects.
We will help selected jurisdictions and their advisors structure an Environmental Impact Bond issuance or similar “Pay for Success” model tailored to your community's financial and environmental needs in order to realize green infrastructure solutions.
Stay up-to-date on EIBs
Sign up to receive email updates on this pro-bono project from CBF and Quantified Ventures.
The Green Infrastructure Environmental Impact Bond project being conducted by CBF, with our contractor Quantified Ventures, was started with a generous grant from an anonymous donor that was matched in part by a grant from The Kresge Foundation. The Kresge Foundation is a $3.5 billion private, national foundation that works to expand opportunities in America’s cities through grantmaking and social investing in arts and culture, education, environment, health, human services, and community development in Detroit. In 2016, the Board of Trustees approved 474 grants totaling $141.5 million, and made 14 social investment commitments totaling $50.8 million. For more information, visit www.kresge.org.
NO FEES WILL BE CHARGED BY CBF OR QV FOR THEIR PROGRAMMATIC SERVICES. ALL OTHER EXPENSES MAY APPLY, INCLUDING RATING AGENCY, BOND COUNSEL, INDEPENDENT REGISTERED MUNICIPAL ADVISOR, AND EVALUATOR FEES AND SUCH FEES SHALL BE PAID FOR BY THE APPLICABLE MUNICIPAL ENTITY. NEITHER CBF NOR QV IS RECOMMENDING ANY ACTION TO ANY MUNICIPAL ENTITY. THE INFORMATION PROVIDED HEREIN IS NOT INTENDED TO BE AND SHOULD NOT BE CONSTRUED AS “ADVICE” UNDER SECTION 15B OF THE SECURITIES EXCHANGE ACT OF 1934 OR THE MUNICIPAL ADVISORY RULES OF THE SEC AND MSRB. CBF AND QV ARE NOT AND WILL NOT BE, ACTING AS AN ADVISOR (WHETHER FINANCIAL OR MUNICIPAL), AGENT OR FIDUCIARY TO ANY MUNICIPAL ENTITY AND CBF AND QV WILL NOT HAVE ANY ADVISORY, AGENCY OR FIDUCIARY DUTY TO ANY PERSON PURSUANT TO SECTION 15B OF THE SECURITIES EXCHANGE ACT OF 1934 OR SECTION 975 OF THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT. CBF AND QV ARE ACTING FOR THEIR OWN INTERESTS. MUNICIPAL ENTITIES SHOULD DISCUSS ANY INFORMATION AND MATERIAL CONTAINED IN THIS COMMUNICATION WITH ANY AND ALL INTERNAL OR EXTERNAL ADVISORS AND EXPERTS THAT THE MUNICIPAL ENTITY DEEMS APPROPRIATE BEFORE ACTING ON THIS INFORMATION.