If you look at your water bill, you will may see a stormwater charge or drainage fee that helps pay for stormwater management services—like preventing flooding and cleaning up runoff before it flows into the creeks, rivers and lakes near your home. Utilities can use this funding to install green stormwater infrastructure – such as green spaces, bioswales, and pervious surfaces – to help absorb and clean rainwater as it runs off of roofs and roads. In a new toolkit out this week, we and our partners at Environmental Consulting & Technology, Inc. outline several ways utilities can pay for green stormwater infrastructure (GSI) in the Great Lakes Region. While this toolkit is focused on the Great Lakes, its recommended financing approaches are applicable throughout the U.S.
In recent years, the Great Lakes region has battled the water quality and flooding impacts that come from climate change paired with expanding development. Green spaces and forest have been replaced by concrete, roads and buildings, which means that stormwater has a harder time reaching areas where it can be stored or seep into soils which are effective at removing pollution. Large rain events can overwhelm aging gray infrastructure, and in places with combined sewer systems, stormwater forces untreated sewage into nearby rivers and lakes. Green infrastructure is well-documented as an effective, aesthetically pleasing and adaptive approach to updating old gray infrastructure.
There is a wide variety of funding tools available to cities and utilities, from traditional funding and financing sources to new and innovative approaches: Muni bonds, state revolving funds, community-based public private partnerships, environmental impact bonds, stormwater credit trading and more. The toolkit highlights two innovative case studies for funding GSI in the Great Lakes region: Milwaukee’s Community-based Public Private Partnership (CBP3) and Buffalo, New York’s Environmental Impact Bond (EIB). Both cases demonstrate how utilities can attract private sector investment and engage in risk-sharing to deliver GSI efficiently and cost-effectively.
- In January 2020, the Milwaukee Metropolitan Sewerage District signed a long-term partnership with Corvias, a private partner with a national portfolio of public infrastructure partnerships. The partnership sets out many goals, including ensuring compliance with stormwater and wastewater permits, as well as reducing the costs for GSI through employing a pay-for-performance structure that places the onus on Corvias to invest in—and deliver on—the planning, design, procurement, construction, community engagement, subcontractor development, certification, and a two-year warranty/maintenance, all at a cost/gallon below the traditional approach. The structure of this arrangement with a private firm creates efficiencies that save money for the sewer district and attracts upfront financing from the infrastructure firm.
- The Buffalo Sewer Authority (BSA) will soon issue a $30 Million Environmental Impact Bond (EIB) to incentivize the installation of green infrastructure on private property throughout the city of Buffalo, New York. A special kind of municipal bond, an EIB focuses on the delivery of successful environmental outcomes and can include features that link effective investor returns to the achievement, or non-achievement, of those outcomes. Proceeds from the EIB will fund the Rain Check 2.0 Grant Program, which offers higher reimbursement rates for GSI like rain gardens and tree plantings than for non-vegetated practices on private property. Buffalo anticipates many benefits of the EIB structure: savings of about $148,500 per acre for implementing projects on private property as opposed to carrying out public projects in the right-of-way; savings on construction and avoided operations and maintenance costs due to aggregating multiple projects; water and air quality benefits, and potential urban heat island mitigation benefits; and an ability to tie payments on financing to the actual achievement of outcomes and cost savings, offering an efficient way to align incentives for the success of the grant program.