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Step 7 - Develop Financing Pathways

Accessing grant funds for priority projects often includes finding matching dollars, and grants may not provide sustained funding for long-term capital plan implementation. Explore the guidance and resources below to learn about developing financing pathways for nature-based storm resilience solutions.

Develop Financing Pathways

There are 50+ grant opportunities available to Lake Michigan communities that can help fund coastal resiliency and natural infrastructure projects. While grant funding has its benefits, grants are competitive, opportunistic, and limited in available dollars. Grants also often require municipalities to contribute local matching funds. And the costs of investing in coastal resiliency natural infrastructure projects will likely exceed the amount municipalities can cover with grants or pay from annual revenues without experiencing rate shock.

These constraints are why developing financing pathways is Step 7 in the process of matching funding and financing options with priority projects.

This financing approach allows municipalities to generate the funds needed to meet match requirements and pay for the investments upfront, while spreading payment of the costs out over time, keeping rate impacts down. Debt financing investments in green infrastructure and coastal resiliency projects is also appropriate from a policy perspective. It matches the benefits with costs. Because these projects have long-term benefits, the costs of those projects are appropriately paid for over the long-term. Debt financing provides intergenerational equity ensuring that both current and future ratepayers bear the burden of the cost because current and future ratepayers both enjoy the benefits. Thus, debt, when incurred responsibly and appropriately, can be a path towards accelerated investments in resilience while avoiding unaffordable rate impacts.


Keep scrolling to explore resources for debt financing options, including bonds and State Revolving Fund loans. You’ll also find resources for implementing natural infrastructure through incentive programs like rebates, grants, and credit trading. More resources for further reading are linked below, too.


Need help navigating financing questions? WaterNow provides no-cost technical assistance to communities interested in exploring financing pathways for nature-based solutions. Reach out about this program by filling out the form below.

Get Financing Technical Assistance

Looking for other technical assistance to be ready to apply for a range of funding and financing options? Go to Step 6 to connect with technical assistance providers ready to support communities’ needs.

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Financing nature-based storm resilience solutions

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. Paying for these investments overtime helps keep costs down while providing matching funds for grant opportunities and creating multiple benefits for the community.

Check out these “Financing nature-based storm resilience solutions” resources 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 nature-based storm resilience solutions, 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.

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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. Check out these “Accessing State Revolving Funds” resources to learn more about leveraging SRF loans to finance coastal resiliency investments.

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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.

Check out these Incentivizing Natural Infrastructure resources to learn more about different types of incentive programs that you can use to motivate private property owners to install coastal resiliency infrastructure.

Additional Financing & Implementation Resources

Compendium of Debt-Financing Options

Compendium of debt-financing options for mid-sized Wisconsin cities to finance capital investments in distributed green stormwater infrastructure.

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Funding Resilience in Wisconsin Small & Mid-Sized Cities

Report providing an overview of GSI funding, financing, and incentive programs that are relevant to small and mid- sized municipalities in Wisconsin.

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Go Green: Muni Bond Financing for Distributed Water Solutions

A primer for water leaders on how to debt-finance distributed infrastructure projects and consumer rebates.

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Using CWSRFs for Greening & Climate Resilience

Guide clarifying key tenets of the Clean Water State Revolving Fund and providing guidance on how to access the funds for green, climate-resilient projects.

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MMSD: Bond Counsel Opinion

MMSD bond counsel opinion on debt-financing localized green infrastructure

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WaterNow: State Gift Prohibitions Database

WaterNow's 50-state database of state constitutional gift prohibition laws

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The Power of Debt

Conservation Finance Network and Highstead webinar on debt financing opportunities for land conservation.

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Gateway Gardens: Local Clean Water Investment Model

Innovative model developed by American Rivers to attract private investment to help municipalities overcome stormwater management challenges.

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Establishing a Stormwater Volume Credit Trading Program

Guidance on how to establish stormwater credit trading programs to incentivize green infrastructure installations.

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Stormwater Credit Trading

Video explaining the mechanics and benefits of stormwater credit trading.

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Grand Rapids Stormwater Credit Trading

Video series capturing city and partners' perspectives on Grand Rapids' stormwater credit trading program.

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Direct Installations How-to Guide

How-to guide for implementing direct install programs that various types of onsite, distributed water infrastructure at no- or low-cost to customers.

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Environmental Impact Bonds: How do they work?

Video with Quantified Venture's Eric Letsinger explain how EIBs work

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Green Bond Principles

Report outlining voluntary process guidelines for cities and utilities interested issuing green bonds

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MMSD Green Bond Framework

MMSD issued the first-ever climate certified bond for a combined wastewater and stormwater program in the United States.

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DISCLAIMER: These materials are not offered as or intended to be legal advice. Readers should seek the advice of an attorney when confronted with legal issues. Attorneys should perform an independent evaluation of the issues raised in these materials. By providing these materials WaterNow does not endorse, either expressly or by implication, their accuracy or legality and expressly disclaims any and all liabilities and warranties related to use of these materials.

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