What are my financing options?

Municipal bonds have long been the financing vehicle of choice for cities and public water agencies to pay for big capital projects such as pipes, tunnels, and treatment plants. Financing is not just available for conventional infrastructure. Nature-based solutions, such as green infrastructure and other coastal resiliency strategies, can be financed alongside conventional strategies. These nature-based solutions are infrastructure that provide meaningful stormwater management, flood mitigation, and erosion control.

Click the “What are my financing options?” link above to learn about different types of debt-financing mechanisms including municipal/revenue bonds, green bonds, and environmental impact bonds, to gain insights into legal, tax, and accounting issues that can arise when using debt to pay for localized water infrastructure, and to explore case studies on how other communities have scaled their investment in decentralized strategies by moving these projects from their operating to their capital budgets.

Accessing State Revolving Funds

The Clean Water Act established state revolving loan funds (SRFs) to assist communities with upfront cash to build water infrastructure. EPA allocates SRF funding to each state that administers the Clean Water Act. The states then contribute an additional 20% to match federal SRF capitalization grants, and also administer the program according to state-specific eligibility criteria. While states establish their own eligibility criteria, the American Recovery Act of 2009, and subsequent appropriations bills, require all Clean Water SRF programs to use at least 10% of their federal capitalization grant for green infrastructure, water and energy efficiency projects, or other environmentally innovative activities. This requirement is commonly referred to as the Green Project Reserve.

Many states, including Michigan and Wisconsin, allow revolving loan funds to be used to pay for natural infrastructure projects. Click the “Accessing State Revolving Funds” link above to learn more about leveraging SRF loans to finance coastal resiliency investments.

Incentivizing Natural Infrastructure

There are a variety of ways to motivate residential, commercial, industrial, and institutional customers to voluntarily install coastal resiliency natural infrastructure solutions on their properties. In many cities, incentive programs that encourage private property installations can be more cost-effective than programs that consider only projects located on public property. While these installations are on private property distributed throughout the community, they manage water in ways that benefit the entire water system and supplement centralized infrastructure. It’s key to consider private property installations because of these system wide benefits and because most property in urban and suburban settings is privately owned.

Incentive programs range from customer rebates that reimburse property owners for part of the cost of natural infrastructure project to direct install programs where municipalities pay for and build the projects upfront, and credit trading programs that create markets that motivate natural infrastructure investments. For example, Grand Rapids, Michigan, with support from American Rivers and other partners, launched a credit trading program harnessing the power of market forces to reduce stormwater management cost, while advancing the use of green infrastructure across the city.

Click the “Incentivizing Natural Infrastructure” link above to learn more about different types of incentive programs that you can use to motivate private property owners to install coastal resiliency infrastructure.