Washington State Standing Up Community-Based Public-Private Partnerships for Green Stormwater Projects
EPIC has been surveying the states for programs and policies that can generate efficient and equitable investments in Green Stormwater Infrastructure (GSI). Much has been written about CBP3s but less about how states are facilitating the adoption of this promising approach. It is one thing to stand up a new approach and another to expand its reach to different locations with different political, social, and geographic contexts. This blog discusses an initiative in the State of Washington which aims to help communities consider whether the CBP3 approach for stormwater projects would be a good fit for their community and, if so, how to get started.
In 2023, Washington State Department of Ecology initiated the Stormwater Community-Based Public-Private Partnership (CBP3) Funding Program. The creation of the program was motivated by the potential for CBP3s to meet the needs of several types of stormwater permittees across Washington State as described in the Washington State Stormwater Community-Based Public-Private Partnership Feasibility assessment commissioned by the WA Department of Commerce in 2018. As part of this program, the Department of Ecology has contracted with the consulting firm Environmental Incentives who has developed a “Learning Network” approach facilitated through workshops. These workshops will lead to a CBP3 working group for Washington State, with the goal of building local capacity for assessing and implementing these contracting mechanisms. To date, around 85 local government organizations in Washington State, including cities and counties, participated in these Learning Network workshop meetings. With the assistance of the contractor Environmental Incentives, eight local governments are currently receiving technical assistance to pursue a stormwater CBP3 project through the assessment and development described in the Washington State CBP3 Guidebook for Municipal Stormwater Managers. The Department of Ecology anticipates providing technical assistance to around 15 local governments. Although nonprofits are not the lead organizations structuring these contracts, in other P3s they have been partners in key elements of the overall work. During these initial meetings in Washington state, several nonprofits participated in the meetings, suggesting that the seeds of partnership are being incubated.
P3s have been gaining interest as a way to help pay for larger capital projects, ranging from stormwater projects to meet National Pollution Discharge Elimination System (NPDES) permit requirements, to large combined sewer separation projects, to lead service line replacement projects like the one EPIC is involved with in Wausau, WI. They were initially used for projects such as toll highway construction where a predictable source of revenue could be expected after project completion. The potential benefits of these arrangements are that they can shift varying amounts of responsibility to the private sector, freeing up agency staff time and reducing risk to the funder, while at the same time ensuring that specified metrics for secondary goals and benefits from the infrastructure investments – such as workforce development, local hiring, community-informed project planning, or other desired co-benefits – are also delivered. Additionally, given the long-term nature of these contracts and staggered payment terms, they can allow municipalities to close the gap between existing revenue and longer term funding needs through a variety of financing mechanisms. Although this contracting approach carries some risks and isn’t right for every situation, EPA has been supporting these efforts on a national level and believes that it can be an effective tool to meet the growing need for infrastructure modernization.
CBP3s developed for delivering stormwater retrofits began in 2018 with a $350 million project in Prince George’s County, Maryland to meet major NPDES permit requirements driven by the Chesapeake Bay Total Maximum Daily Loads. Their use has expanded to a handful of communities (Milwaukee, WI; Chester, PA; Los Angeles, CA; Seattle, WA) and dozens more are in planning phases. These projects have delivered impressive returns to their respective community in terms of hiring local residents and/or small, women, minority, and veteran-owned business enterprises (SWMBE) through the inclusion of specific business and workforce development metrics. Each community has the ability to define the secondary benefits within their own agreement.
The suitability of these contracting mechanisms varies for each community, but important enabling conditions include:
Meaningful scale of green infrastructure implementation
Legal authority and risk appetite
Dedicated funding source
The desire for community benefits that might be difficult to otherwise realize.
The benefits of taking this approach include the previously mentioned local workforce development benefits but also:
Cost-efficiencies
Greater political support coming from a wider range of constituents and politicians
Greater institutional support from a wider range of agencies
Broader co-benefits including recreational benefits, place-making, and community engagement
Mentoring and development of local small businesses by like-minded lead businesses
Some of the current needs and knowledge gaps of the learning network participants identified, which Washington’s CBP3 program might help to address, are:
Establishing per unit price benchmarks to determine public benefit
Developing metrics to assess water quality and community benefits
Clarifying contract requirements regarding verification, monitoring, and maintenance
Developing a template for third party verification contracts
Addressing unknown challenges in contracting within respective jurisdictions
Washington State’s new Stormwater Community-Based Public-Private Partnership (CBP3) Funding Program will support communities in the planning of potential CBP3 contracts, development of performance metrics, and translating the desired community benefits into contract deliverables. It is anticipated that several municipalities will be supported through this initial allocation. The Department of Ecology has budgeted up to $3 million for this program, appropriated by the state from funds raised via the Model Toxics Control Act [1].
There is a timely example of this type of contracting arrangement in Washington State. Seattle Public Utilities recently initiated the “Rain City” Public-Private Partnership (P3) project which will invest $15 million in a five-year contract to deliver multiple benefits desired by the community and Seattle Public Utilities. Two of the water quality goals to be achieved through this P3 are 25 acres of impervious surface managed with green infrastructure and one acre of riparian wetland created. The community and economic goals include; 10 community driven Green Stormwater Infrastructure projects, 12 community organizations or businesses mentored, 28% of contract value to SWMBEs and 40% of total workforce hours from priority zip codes. There are also incentives for the P3 team to raise funds for placemaking or other community identified project components that the utility cannot fund. If the project is successful, the project will be expanded to $100 million over 20 years.
Providing this level of support for smaller municipalities to think through the details of alternative contracting mechanisms is smart policy. P3s have worked well in many larger municipalities and county governments, however the process is different from the way contracting has been done for decades and issues vary with each community. This program provides the support needed so that municipalities begin this process on a solid footing. The fact that the State of Washington is dedicating $3 million in capital funding for the development of these CBP3s incentivizes municipalities to seriously consider the opportunity. Future funding for implementation will likely come from a variety of sources, including local revenue sources, grants from Washington’s Stormwater Financial Assistance Program (SFAP), and the Clean Water State Revolving Fund (CWSRF), federal funding that predominantly provides loans for wastewater, storm water, and other water quality related projects. With these actions, Washington State Department of Ecology is providing a foundation for this contracting approach to expand.
It will be interesting to see what impact the program has on the development of CBP3s in Washington and if such initiatives ramp up the scale of GSI and the delivery of ancillary co-benefits. Other states can take lessons from this initiative or consider providing similar support to address the unique conditions that exist in their state.
Sarah Ponte, PhD, Stormwater Public-Private Partnership Planner for the Washington State Department of Ecology provided key information for this write up. You can read more about this program here.
[1] As of July 1, 2019, the tax rate for The Model Toxics Control Act is: $1.09 per barrel (42 gallons) for liquid petroleum products (such as gasoline); 0.7% of the wholesale value ($7 per $1,000) for other taxable hazardous substances