Toolkit | Tap into Resilience

Welcome to the Tap into Resilience Toolkit

Welcome to the TiR Toolkit! The Toolkit is an interactive resource for utility decision makers, management, and staff.

Onsite, localized water infrastructure has tremendous potential to address our communities water needs – from drinking water to wastewater to stormwater management. But scaling up investment in and implementation of these solutions and strategies can be challenging.

You’re in the right place. The Tap into Resilience Toolkit is a resource with answers to your financing, tax, accounting, and legal questions that arise when scaling investment in decentralized solutions. The Toolkit includes interactive financing and implementing modules, videos, a resource library, a portal to receive pro-bono support, and much much more.

The Toolkit is here to help you explore, plan for, finance and adopt localized infrastructure solutions like water use efficiency programs, green infrastructure, and onsite reuse.

Localized Infrastructure Decision-Making Framework

To explore lessons from learned from TiR Case Studies click through WaterNow’s 10-part decision-making framework for deploying localized water infrastructure strategies at larger scale as best fit a community’s particular needs.

What are my financing options?

To learn about accessing capital dollars and other revenue streams to pay for decentralized water infrastructure and solutions to common legal, financial and accounting questions that arise when increasing investments in these environmentally friendly programs click through the “What are my financing options” sections.

Localized water infrastructure implementation strategies

To learn about common challenges – and corresponding solutions – for public utilities deploying decentralized strategies on public property not directly owned or controlled by the water utility (“public non-utility property”) and private property click through the “Localized water infrastructure implementation strategies” section.

Toolkit Quick Reference Library

Click here for quick references to Toolkit resources, example documents, and case studies.

Ask an Expert

Connect with Tap into Resilience expert panelists.

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Localized Infrastructure Decision-Making Framework

As part of the Innovation in Action: 21st Century Water Infrastructure Solutions report, WaterNow has distilled lessons from Tap into Resilience case studies across the country into a 10-part, high-level decision-making framework for deploying localized water infrastructure strategies at larger scale. This guidance can be adapted and used by local communities as the basis for implementing localized water strategies that best fit the community’s particular needs.

This module of the Toolkit makes the decision-making framework interactive and easily accessible. Just click on the sections below to find an overview of that step in the decision-making process along with direct links to relevant case studies, related TiR Toolkit modules, and other resources in the Toolkit Quick Reference Library.

Explore for yourself to start implementing!

1. Identify the drivers for considering sustainable solutions.

A large number of immediate and longer-term community needs and goals can be drivers for public entities to consider investments in distributed solutions as supplements, or alternatives, to conventional infrastructure. A first step is clearly identifying the various drivers at work in a community and the types of onsite technologies, installations and practices most suited to addressing those issues.

There are many several—often overlapping—drivers motivating water utilities to explore localized solutions from very local (community demand) to global (climate change) considerations including but not limited to the challenges listed in the box to the right.

More than half of the case studies described in the Innovation in Action paper reported deploying localized infrastructure to address the challenges posed by a combination of at least three of these drivers. In other words, localized strategies are serving multiple water management purposes. The most commonly cited drivers for localized infrastructure in the case studies we examined were climate change, declining water supply availability and reliability, drought, regulatory compliance, and urban stormwater management. The decision of the profiled communities to deploy localized infrastructure either to supplement their conventional infrastructure (or avoid expensive new investment in conventional approaches) to meet these fundamental challenges demonstrates sustainable, decentralized strategies can effectively serve the same functions as traditional infrastructure.

Click the case studies below for a few examples of community drivers. All TiR case studies are available here.

City of Eugene Public Works

Eugene Public Works uses city-wide green infrastructure to meet multiple objectives and improve water quality with 1,300 GSI facilities installed on public and private property to date.

Milwaukee Metropolitan Sewerage District

Public and private property green stormwater infrastructure already reduce combined sewer overflows by 60% per year.

Seattle Public Utilities

Debt financing efficiency and green infrastructure rebates for private property installations.

2. Identify appropriate models and data to assess potential performance.

While there may be more variables involved in estimating how well distributed strategies will perform in relation to more conventional centralized approaches, case studies demonstrate that communities are finding there is sufficient data available to model potential performance with a relatively high degree of confidence. This modeling will allow communities to assess the ability of these solutions to effectively meet water management needs. The data from the case studies show that localized options can perform well.

In its tenth year, Tucson Water’s conservation program conserved more than 2.1 billion gallons (6,446 acre-feet), and the City is currently using water at the same level of use as in 1985, while population increased by more than 226,000 souls. This investment in conservation as a water supply has allowed Tucson Water to defer expanding the capacity of its water system and developing more expensive new centralized supplies.

Philadelphia Water Department’s investments in GI have reduced CSOs by 7 million gallons.

Milwaukee’s GI program is expected to capture and store 740 million gallons of stormwater, eventually outperforming its Deep Tunnel by more than 200 million gallons.

Looking to these and other examples can help water managers evaluate the risks involved with relying on localized water infrastructure, particularly because the many of case studies chose decentralized options specifically to meet federal and/or state regulatory mandates. A few relevant resources are linked below. Additional resources can be found in the All Resources library.

An Assessment of Urban Water Demand Forecasts in California

A Pacific Institute report examining the accuracy of long-range water demand forecasts for California’s 10 largest urban water suppliers finding that per capita water demand declined for all water suppliers…

A Handbook for Understanding Natural Capital

From our partners at Earth Economics, check out this guidance manual for understanding relationship between economics and natural systems.

County-Scale Rainwater Harvesting

Report providing county-level analysis of the potential of roof-based rainwater harvesting for urban water use in the U.S.

Explore Strategies: Opportunities for Localized Solutions

This report dives into the big picture benefits of localized water strategies and how to finance them.

Lifecycle Analysis of Stormwater Infrastructure Costs

A project intended to provide communities with a tool that takes into account the costs associated with planning, designing, acquiring, constructing, operating, maintaining, renewing, and replacing stormwater infrastructure.

Tucson Rate Impacts of Increased Water Efficiency

AWWA Journal Feature article on Tucson Water's avoided cost analysis finding that the utility's water conservation programs saved $416 million in system costs.

3. Evaluate costs and benefits holistically—include financing options and multiple benefits.

The costs associated with public investment in distributed technology and systems will vary widely depending on numerous variables. For purposes of the localized infrastructure decision-making framework, we highlight two in particular: how these strategies are financed, i.e., using annual rate revenue or debt; whether and how cost-benefit analysis accounts for the economic value of key co-benefits that can flow from well-designed onsite programs. Obtaining a fair and accurate understanding of bang-for-buck from a ratepayer perspective will be enhanced by an analysis that captures costs and benefits comprehensively, enabling decision makers to determine the true affordability and rate implications associated with their potential choices.

Various studies, including the Pacific Institute’s multi-benefits framework, are beginning to document that localized and other sustainable water management strategies are capable of providing multiple co-benefits that should be measured and incorporated into decision making. These include open space, improved public health, community engagement, and creating connection with nature, among many other benefits associated specifically with implementing decentralized water strategies. Pacific Institute’s proposed framework includes 3 steps:

Define “the problem” in a way that reflects a holistic approach and analyze the full range of costs and benefits, including benefits that cannot be easily monetized.
Characterize benefits and costs both qualitatively and quantitatively and identify an appropriate baseline measurement as the point of comparison.
Incorporate multiple benefits and costs into decision making using one or more of the growing number of frameworks.

Applying this framework to development of a localized water infrastructure program will help water managers make the case for increased investments in these solutions.

Check out the resources below with more details on Pacific Institute’s multi-benefit framework.

Moving Toward a Multi-Benefit Approach for Water Management

Our partners at the Pacific Institute and collaborator Professor Bob Wilkinson are developing a framework for incorporating multiple benefits of water projects into decision-making.

Webcast: Tapping into Multiple Benefits

Watch WaterNow’s February 25, 2020, Tap into Resilience webcast.

Webcast Slides: Tapping into Multiple Benefits

Download the slides from WaterNow’s February 25, 2020, Tap into Resilience webcast.

4. Incorporate distributed onsite systems into capital planning alongside conventional infrastructure.

Capital Improvement Plans are often a critical blueprint for public utility investment over the long-term. For many, if not most utilities, inclusion in these or similar planning documents is essential for any project to be considered eligible for capital financing. One of the surest ways for localized infrastructure to be treated on par with more conventional infrastructure approaches is to incorporate these solutions into capital planning. This shift in framing can open up the full range of available funding options — see Part 5 below.

In particular, under GASB Statement 62, local utilities can account for distributed infrastructure as a regulated asset rather than an annual expense allowing these expenditures to be capitalized. These programs are not “give aways,” they are public investments that provide long term benefits to the utility that accrue over the life of the debt. For example, rebates for water efficient appliances and fixtures add value to a utility’s system by reducing water consumption over time, not only in the year that the rebate was issued.

Assets that provide benefits overtime should be capitalized to ensure the costs are “matched” with benefits. The matching principle is important because the proper matching of expenses and revenues gives a more accurate appraisal of the results of operations, helps to avoid distortion of the financial position of the business, improves the quality of the financial statements, and ensures generational equity so that future ratepayers share in the costs of improvements that provide benefits over time. Further, the GASB interpretation guide uses water efficiency programs as an example of what a utility might choose to capitalize: “…certain period costs (for example, … conservation program costs of providing assets, such as low-flow shower heads, to customers) that are proposed for recovery in future rates.”

The “What are my financing options?” section of the Toolkit provide more details on capitalizing investments in localized infrastructure.

5. Think broadly and creatively about financing options.

Many financing options available for conventional infrastructure can also be accessed to finance large-scale distributed systems, including but not limited to those listed in the box below.

Leveraging one or more of these funding sources to scale investment in localized water solutions is the surest and most expeditious way to deploy adoption of these strategies broadly across a community and more fully realize their benefits.

The “What are my financing options?” sections of the Toolkit provide more details on funding and financing options for localized infrastructure investments. A few key resources are linked below.

A Water Leaders Guide to Financing Localized Solutions

A water leader's guide to finance distributed infrastructure.

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.

Developing Rates for Small Systems

AWWA how-to manual for ratemaking for small utilities serving a population of up to 10,000 customers.

6. Incorporate stakeholder outreach and engagement in planning & implementation.

Decentralized strategies, by definition, require partnering with owners of various types of property throughout the community—streets, public buildings and parks, schools, institutions, businesses, industries and residences. Implementing onsite water strategies thus presents unique opportunities for community engagement, but also means that achieving widespread adoption of these strategies must include an intentional and well-resourced program to incorporate stakeholder outreach, education and communication at both the planning and implementation phases.

Key stakeholders include:

Utility customers
Sister agencies within the utility’s service area or city
Local nonprofits and community groups
Area businesses such as landscapers, nurseries, plumbers

Such engagement can help managers identify and prioritize areas of the community most in need of localized solutions such as green infrastructure both from a water management and co-benefits perspective. Taking this step also helps utilities build needed partnerships with community groups that are valuable to implementation and ongoing community engagement.

For example, San Antonio Water System has had great success in working with area groups to reach customers in all parts of its service area. Los Angeles and Austin were able to develop long-term integrated water plans that represent the communities’ needs and values by conducting rigorous public outreach and meeting the public where they were.

San Antonio Water System

By treating conservation as a source of supply San Antonio Water System reduced water consumption in its service area by 50%.

City of Los Angeles Sanitation District

Comprehensive One Water Plan that includes site-level and regional green stormwater infrastructure.

Austin Water

100-year One Water plan to increase local water supplies and mitigate climate change impacts.

7. Identify project- and place-specific implementation challenges.

Like conventional infrastructure, distributed water infrastructure entails implementation complexities such as navigating legal, financial and accounting issues. In addition, different types of localized strategies can entail different types of risks; for example, onsite treatment and reuse systems raise public health issues; leak detection devices sometimes require professional installers raising training and liability challenges; bioswales, green roofs and urban trees require ongoing maintenance (see below). Implementation issues can be more easily addressed by identifying them as early as possible in planning and establishing a process to resolve them.

There are plenty of solutions for steering through these challenges, including creating intra-agency coordination through cost-sharing and other agreements, setting regulatory mandates or establishing incentive programs to motive private participation, formalizing ongoing operation and maintenance requirements through contracts, easements, or other mechanisms. Exactly which challenges a community might face and how to overcome them will depend on community, project and occasionally state, specifics.

A few relevant resources are linked directly below. Explore the “Localized water infrastructure implementation strategies” section of the Toolkit for more information on ways to overcome implementation challenges.

Intra-agency Coordination: Philadelphia’s Cost-Sharing

Learn how the Philadelphia Water Department shares costs with other city departments

MWRD: Intergovernmental Agreement

MWRD funds green infrastructure built by partner communities and public agencies. An Intergovernmental Agreement between MWRD and its partners help secure long-term benefits.

Conservation Program Operation & Management

AWWA manual detailing critical elements of establishing, implementing, and evaluating an effective water conservation program.

AWWA Standard and Operation Guide Set

AWWA guides for implementing critical requirements for water utility management set out in AWWA Standard G400.

Water Conservation Planning Manual

AWWA manual on developing, implementing, and securing the benefits of water conservation programs.

Developing Rates for Small Systems

AWWA how-to manual for ratemaking for small utilities serving a population of up to 10,000 customers.

Principles of Water Rates, Fees and Charges

AWWA manual to help water policymakers, utility managers, and rate analysts consider all relevant factors when setting water rates.

Drought Preparedness & Response

AWWA manual with step-by-step guide for preparing for and responding to drought related water shortages.

Lead Communications Toolkit

AWWA toolkit designed to help utilities communicate with their customers about lead in drinking water.

9. Have a plan for ongoing maintenance.

There is a great deal of discussion, particularly around green stormwater infrastructure implementation, about how to ensure that investments in distributed systems are properly maintained to ensure functionality over time. Whether the best approach is to pass this responsibility on to property owners or for the utility to retain it will necessarily be situation-specific. Case studies do, however, provide some guidance for mitigating this challenge, such as entering into operation and maintenance contracts with landowners.

To ensure distributed infrastructure is properly operated and maintained, water managers need to:

identify staff dedicated to inspection, oversight, and/or monitoring at the outset of the program wherever possible and/or

create a training program to build a cohort of third-party inspectors that report to the utility.

Taking this approach allows water managers to keep better track of the performance of distributed strategies once they are installed, be responsive to operation issues, and have additional assurances that the anticipated water management benefits are fulfilled. In addition, this approach creates local jobs.

The additional costs associated with ensuring appropriate operation and maintenance staff may make a localized infrastructure program more expensive, but not necessarily unattainable when compared with alternative approaches; all infrastructure requires maintenance.

Resources for designing and implementing a localized infrastructure operation and maintenance program are linked below.

MWRD: O&M Plan for Bioswales and Rain Gardens

MWRD enters into O&M plans with organizations that install green infrastructure and receive a grant from MWRD for doing so.

MWRD: O&M Plan for Permeable Pavement

MWRD enters into O&M plans with organizations that install green infrastructure and receive a grant from MWRD for doing so.

Conservation Program Operation & Management

AWWA manual detailing critical elements of establishing, implementing, and evaluating an effective water conservation program.

NEORSD: Green Infrastructure Grants

NEORSD grant program to strategically implement and ensure the long-term maintenance of green infrastructure.

Intra-agency Coordination: Philadelphia’s Cost-Sharing

Learn how the Philadelphia Water Department shares costs with other city departments

DOEE: Local Stormwater Ordinance

Read about Washington, D.C.'s Department of Energy and Environment stormwater management ordinance that requires onsite stormwater capture for certain development projects

10. Establish performance metrics and evaluation methods.

One of the best ways to build public, utility and decision-maker confidence in the efficacy of distributed systems is meaningful data demonstrating value and establishing that these investments are performing as intended.

Performance metrics vary according to the type of strategy employed and the type of data needed to evaluate whether the chosen strategy meets the community’s particular water management challenge. As shown in the case studies, communities are employing a variety of performance metrics and evaluation methods. The table below provides some example metrics communities use to measure localized infrastructure strategies.

What are my financing options?

The financing sections cover

Utility Costs & Revenue Sources

Debt Financing Localized Infrastructure

Accessing state, federal, and philanthropic funding

Materials are revealed as you move through the Toolkit by clicking on the sections below. Under each tab you’ll find an overview of that topic, in-depth resources for download and further reading, explanatory videos, a searchable database, example ordinances and agreements, and much more. Sort the All Resources library by “TIR Toolkit” if you’re looking for quick access to a specific resource.

Explore for yourself to start implementing!

Utility Costs & Revenue Sources

Utility’s costs include their capital investments and day-to-day operating and maintenance expenses. These costs are paid for out of the utilities revenue sources, i.e., rates, fees, taxes, grants, and bonds. The revenue source available to pay for utility costs depends on the type of cost at issue. In particular, capital costs can be paid for either on a “pay as you go” basis as part of the operating budget or they can be paid for over time with debt as part of the capital budget.

How utilities establish their revenue sources to pay for their costs can vary widely depending on local and state requirements and needs. The subsections below provide an overview of how rates, fees, and taxes can be structured by drinking water, wastewater, and stormwater utilities and how these revenue sources can pay for localized water infrastructure solutions, as well as on special fees sometimes levied to help pay for key programs that can help the utility fund important strategies to help achieve water quality or quantity goals.

Explore the Debt Financing Localized Infrastructure section of the Toolkit to learn more about how utilities can use revenue bonds — a key utility revenue source — to pay for localized infrastructure costs.

Drinking water

Fundamentally, a drinking water utility rate is the amount the water provider charges its customers to cover the costs of delivering and treating drinking water. American Water Works Association’s “Principles of Water Rates, Fees and Charges” provides guidance for water policymakers, utility managers, and rate analysts to help them consider all relevant factors when setting water supply rates.

As utilities rely on rate revenues to operate, decreased water consumption can mean reduced funds for delivery and treatment of water; certainly, this is not a novel issue. Responding to this reality has been the subject of much discussion since at least the mid-1990s.

Implementing one or a combination of the conservation-oriented rate structures listed below can help.

Repeal of volume discounts

Increasing block or tiered rates

Seasonal rates

Drought pricing

Flat fee combined with a variable, tiered rate

Water budgets

Fixed, variable rate

While water is an essential resource, conservation pricing can yield on average a 15% reduction in water consumption and up to a 22% reduction in per capita use. Indeed, pricing policies making water more expensive, at least at higher tiers, inherently incentivizes business and residential consumers to use water more efficiently, either through technology or behavior changes.

San Antonio Water System (SAWS) uses a tiered rate structure to incentivize lower water consumption, together with other efficiency programs. Over the past 25 years, SAWS customers have reduced their consumption by nearly half from 225 gallons per capita per day (GPCD) to 117 GPCD.

In 2004, Boulder Water Utility boosted the its conservation programs by approving a block water budget rate structure designed to encourage water conservation. The water budget rate structure was further refined in 2018, and using data from this water budget rate structure, Boulder will work to measure the gallons of water saved through its conservation programs. This additional data will inform the program’s success and future needs.

By offering rebates and establishing a rate structure to incentivize its customers to use water more efficiently, Moulton Niguel Water District saves on average 4,000 acre-feet of water a year and has saved 24,000 acre-feet to date.

Further, communicating with ratepayers early and often about rate increases and conservation efforts is essential. You can find out more about WaterNow’s “Communicating with Ratepayers” workshop by clicking the link below. And a recent Environmental Law Institute article, linked below, highlights the need for the public to support investment in water infrastructure and the importance of communication with ratepayers.

WaterNow has also created a primer on how rates, fees, and incentives can motivate individuals and businesses to employ localized strategies.

Communicating with Ratepayers: Getting Past Paying More for Less

Workshop on communicating with ratepayers that provides actionable strategies and helps water leaders to begin to build a vision around communications for their utility

Leveraging rates, fees, and incentives

Overview of how the existence of a utility rate or fee can provide a lever to motivate private parties’ participation in localized infrastructure solutions

The Public Needs to Support Proactive Officials

Article for the Environmental Law Institute about the importance of public support for innovative water management

Principles of Water Rates, Fees and Charges

AWWA manual to help water policymakers, utility managers, and rate analysts consider all relevant factors when setting water rates.

Developing Rates for Small Systems

AWWA how-to manual for ratemaking for small utilities serving a population of up to 10,000 customers.

Wastewater

How wastewater utilities approach rates varies widely. Types of structures include:

Rates

Property taxes

Fees based on parcel-size or amount of water put into the wastewater system

Approaches can also differ within a utility depending on whether a customer has metered or non-metered use or according to the type of property i.e., residential or commercial, being charged.

The University of North Carolina School of Government Environmental Finance Center created a “Rates Dashboard” designed to help utility managers and local officials compare and analyze water and wastewater rates against multiple characteristics, including utility finances, system characteristics, customer base socioeconomic conditions, geography, and history.

Stormwater

Stormwater utility fees can be structured in a number of ways, including:

Tiers of stormwater rates based on diameter of a property’s potable water pipe based on assumptions about usage

Based on a property’s “usage,” i.e., gallons of stormwater that a property generates per inch of rainfall either “parcel-based” or “impervious area-based”

Based on assessed property value, i.e., property taxes

A usage-based charge means impervious area becomes an important determinant of fees. Because the amount of runoff a property creates is directly proportional to the impervious area a property has, it would be fair for a property with a large amount of stormwater infrastructure to pay a higher stormwater fee.

In the parcel tax context, the County of Los Angeles passed Measure W in November 2018. Measure W is a parcel tax that will be assessed to every property on the County’s existing tax roll. The tax will be based on the amount of stormwater each property generates, measured in terms of impervious area. The revenue generated by Measure W will be used to help the County make much-needed localized water infrastructure investments that help the County manage its water supply as well as County water quality. Parcel-based structures can be coupled with financial incentives designed to encourage reduced impervious areas in exchange for reduced fees. Click here to read WaterNow’s primer on motivating private parties to employ localized water infrastructure solutions by leveraging rates, fees, and incentives.

Western Kentucky University’s most recent stormwater utility survey provides a comprehensive overview of the range of stormwater utility rate structures nationwide. WaterNow has also created a primer on how rates, fees, and incentives can motivate individuals and businesses to employ localized strategies. For example, explained in the resource linked below, the City of Portland uses its stormwater utility fee to encourage residents and businesses to manage stormwater onsite.

Los Angeles County: Measure W

In 2018, LA County residents approved a parcel tax commonly called "Measure W" to help pay for localized stormwater management

Leveraging rates, fees, and incentives

Overview of how the existence of a utility rate or fee can provide a lever to motivate private parties’ participation in localized infrastructure solutions

Stormwater Utility Survey

Survey by Western Kentucky University researchers to identify and compile information on stormwater utility fees in the US and Canada

Special Fees

In addition to utility rates, some utilities levy special fees to help pay for key programs that can help the utility fund important strategies to help achieve water quality or quantity goals. Examples include “conservation fees” which collect funds to pay for water conservation programs, or “watershed protection” fees which help fund land acquisition efforts to protect water quality.

As explained in the sub-sections below, the City of Tucson, Arizona, and Central Arkansas Water use special fees to fund localized water infrastructure in their service areas.

Tucson Water

The City of Tucson implements a “conservation fee” that collects $0.10 per every 100 cubic feet (748 gallons) of water used by commercial and residential property owners. The revenue collected from the conservation fee, in turn, is used to fund Tucson Water’s rebates and grant programs, which reimburse residential and commercial property owners for replacing inefficient water fixtures and installing water re-use systems. Projects that Tucson Water reimburses include replacing high-usage toilets and clothes washers with water-efficient models, and installing rainwater harvesting and graywater systems.

The below resources provide additional details on Tucson Water’s conservation fee and rebate programs.

Tucson Water

Tucson Water's comprehensive conservation programs have saved 2.1 billion gallons of water over the past decade.

Tucson Water: Water Conservation Program Annual Report

Report summarizing the revenues generated and the programs funded by Tucson Water's conservation fee

Central Arkansas Water

The Central Arkansas Water implements a “watershed protection fee” that generates approximately $1 million in annual revenues. The fee has been in effect since 2009, and is added to the monthly bills of all customers based on the diameter of a property’s water meter.

The watershed protection fee revenues are then used to repay the agency’s bonds. The bond proceeds are partly used to buy land in Central Arkansas’ watershed that is then protected by a conservation easement. This decentralized strategy helps the agency protect the community’s drinking water from increased pollution that may result from development and other land disturbances.

Click below to read more about Central Arkansas’ watershed protection fee and debt-financed localized water infrastructure program.

Central Arkansas Water: Watershed Protection Fee

Central Arkansas Water uses a watershed protection fee to fund its conservation program aimed at protecting its source water

Debt Financing Localized Infrastructure

Utility capital budgets represent the utility’s long-term investments that are financed, mostly, with debt. Debt financing is often attractive to water utilities because it enables them to fund major projects with a minimal impact to ratepayers because the investments can be paid back over time. Traditionally, most utilities have only accessed debt-financing for centralized water infrastructure such as wastewater treatment plants, dams, reservoirs, drinking water conveyance systems, and sanitary sewer collection systems. However, localized water infrastructure can also be financed as part of capital budgets.

Click through the sub-sections below 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.

If you would like to connect with an expert for further, pro bono assistance on these issues, click the “Ask an Expert” button below to submit an inquiry to WaterNow’s team of specialists.

Ask an expert

Types of Bonds

There are different types of debt-financing mechanisms available to fund localized water infrastructure solutions, including municipal/revenue bonds, green bonds, and environmental impact bonds. Click through the sub-sections below to learn more.

Municipal/Revenue Bonds

Municipal, or revenue, bonds are bonds issued by local governments to raise funds for public capital projects. These types of bonds provide up-front capital that is paid back over the life of the bond out of general revenues. Municipal utilities and special districts often have bonding authority as well, which allows them to borrow against expected revenue from ratepayers.

Municipalities benefit from a federal law that exempts investors’ interest earnings on the bonds from federal income tax. These “tax exempt” bonds translate to lower interest rates for some forms of municipal debt. Over the past century, tax-exempt municipal bonds have been the primary way that municipalities pay for water infrastructure investments.

Communities are already using municipal bonds to pay for localized infrastructure, including:

Seattle Public Utilities has used $2.2 million in municipal bond proceeds to fund its water conservation rebates programs as well as its low-income direct installation program allowing the utility to implement its market rate program on a regional scale and its low-income program citywide

Los Angeles Department of Water and Power pays for its turf rebate replacement program using capital dollars

Central Arkansas Water finances its conservation easement program aimed at protecting its source watershed with municipal bonds

The resources linked below provide additional information on how utilities can finance localized water infrastructure using municipal bond proceeds.

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.

GASB 62: How Does It Work?

Video with Ed Harrington about "Regulated Operations" and GASB 62 and the potential to unlock an alternative way to finance localized infrastructure solutions

Bond Financing Distributed Water Systems

As extreme weather events exacerbate challenges already faced by communities across the US, this report, by our partners at Ceres, explores how to make better use of current market mechanisms…

DC Water

Environmental impact bond issued in partnership with Quantified Ventures to finance $25 million in green stormwater infrastructure projects.

Green Bonds

Green Bonds are instruments in which the proceeds will be used exclusively for projects and activities that serve environmental sustainability purposes. Many traditional bond underwriters are increasingly developing green bond financing packages. As explained in a Ceres report issued in 2014, there are at least four types:

Green use of proceeds bond

Green use of proceeds revenue bond

Green project bond

Green structured bond

The appropriate type of green bond for a particular project depends on available revenues and collateral to secure the bonds.

Functionally, “green bonds” are municipal bonds, and are secured by a general obligation, project or asset, or revenue. “Green Bonds” differ from traditional bonds because they have undergone a certification process that attest to the environmental benefits of the bond-financed projects. For example, The Water Consortium, a global group of climate finance and sustainability organizations such as Ceres, the World Resources Institute, and Climate Bonds Initiative, launched new Water Infrastructure Criteria of the Climate Bonds Standards. The criteria “defines and evaluates low carbon and climate resilient water infrastructure projects by encompassing two broad components: 1) climate mitigation and 2) climate adaptation and resilience.” Water infrastructure projects that meet the criteria can be included in green bond investment and receive Climate Bond Certification. The TIR Toolkit resource library includes a playbook for issuing green bonds.

Green bonds have been used for a range of environmentally-beneficial projects, and are increasingly being used to finance localized water infrastructure projects, including:

In 2016, the San Francisco Public Utilities Commission issued a $240 million green bond to support sustainable stormwater management and wastewater projects

In 2014, District of Columbia Water and Sewer Authority, also known as DC Water, issued a $350 million green bond to support the utility’s Clean Rivers Project

In 2020, Milwaukee Metropolitan Sewerage District issued a $80 million green climate-certified bond for a combination of wastewater and stormwater programs, including $20 million for community based green infrastructure

Green Bond Principles

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

DC Water: Green Bond

Case study on DC Water green bond to support the Clean River Project

How to Issue a Green Muni Bond

Playbook for cities interested in issuing green bonds to finance sustainable water investments

MMSD Green Bond Framework

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

Environmental Impact Bonds

Environmental impact bonds (EIB) are an innovative financing tool that leverages private investment to support high-impact environmental programs. EIBs use a “Pay for Success” approach where private investors provide upfront capital for environmental projects and the beneficiary—either a public entity or a private institution that benefits from the project—repays the investors based on the achievement of the agreed-upon project outcomes.

The “pay for success” aspect means that if a project funded by an EIB does not perform in accordance with pre-determined outcomes, then the water agency may not have to repay the entirety of its the debt (and investors in that bond may lose some amount of their principal, depending on the terms they agreed to when they bought the bonds.) If, on the other hand, the project performs perfectly or even exceeds expectations, investors are repaid if full or could receive a premium out of the budgetary savings created by outperforming projects.

Because repayment of an EIB is benchmarked against specific performance outcomes EIBs create incentives to deploy innovative solutions. And EIBs can be an attractive option for a water agency looking to scale up investment in localized infrastructure projects while also mitigating some of the performance risks.

Click the image to watch Quantified Ventures’ Eric Letsinger explain how EIBs work and provide examples of existing EIBs in Washington, D.C. and Atlanta Georgia.

Environmental Impact Bonds: How do they work?

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

Atlanta: First Publicly Offered Environmental Impact Bond

Case study on first-ever publicly offered Environmental Impact Bond financing $14 million in GSI projects in economically and environmentally distressed neighborhoods.

DC Water

Environmental impact bond issued in partnership with Quantified Ventures to finance $25 million in green stormwater infrastructure projects.

Answering legal questions that arise when using debt

Water leaders may face several legal questions when debt-financing localized water infrastructure. These questions may come from city attorneys, bond counsel, or other legal and financing staff and consultants, and could include:

What is localized water infrastructure from a legal perspective?
Does our city and/or utility have the legal authority to employ and/or debt-finance localized solutions to combat our water management challenges?
Are there existing debt constraints for financing decentralized strategies?
Does my state’s “gift prohibition” preclude the use of public dollars to pay for improvements on private property or benefits to individuals or businesses?

Click through the sub-sections below to find information on how water leaders might answer each of these legal questions that often arise when debt-financing localized infrastructure.

Distributed or “localized” infrastructure from a legal perspective

“Distributed infrastructure” is not a legal term of art. Rather, it is a concept encompassing improvements, technologies and practices spread across many locations with the goal of enhancing a utility system by supplementing the traditional centralized infrastructure. In contrast to centralized infrastructure, which typically refers to largescale treatment and transmission facilities that are owned and operated by a utility, distributed infrastructure describes dispersed facilities located at or near the point of use. Unlike traditional centralized infrastructure, distributed infrastructure assets are generally situated on or consist of improvements to property not owned by the utility, which may call into question the utility’s ownership or control of the assets.

With a focus on conservation rather than production, distributed infrastructure seeks to achieve a reduction in water use or volume of storm water and wastewater requiring treatment. It typically functions to conserve resources through technologies that capture rainwater, reuse graywater, or reduce consumption. These technologies and strategies include:

Permeable pavement

Turf buyback programs

Graywater reuse systems

Rain cisterns

Smart irrigation

Click the image to explore localized infrastructure strategies

Bioswales

Green roofs

Water catchment facilities

Water efficient toilets

From a legal standpoint, distributed infrastructure assets can consist of interests in real property, fixtures (personal property permanently affixed to real property), or personal property (including certain rain cisterns and items that can easily be removed from real property). Moreover, ownership interests in real property assets from a legal standpoint may be held by a single party in fee or the various rights ownership brings may be divided among several parties through easements and leasehold interests. Although related, “ownership” and “control” are separate concepts. Depending on the distributed infrastructure asset, the utility may retain different legal rights of control in the asset. For example, water efficient appliances and graywater systems attached to a customer’s home may become fixtures that leave the utility with little to no legal rights over the asset. On the other hand, a utility may retain control over permeable pavement and turf buyback installations if real property rights such as easements or liens are granted by the customer. Control may also be sought through contractual arrangements.

You can download Milwaukee Metropolitan Sewerage District’s conservation easement agreement here.

Explore Strategies: Opportunities for Localized Solutions

This report dives into the big picture benefits of localized water strategies and how to finance them.

Incentive-based Instruments for Freshwater Management

Synthesis report and interactive tool that provides a detailed review of incentive based instruments for managing water; includes set of additional resources re studied incentives

Case Studies on New Water Paradigm

Study analyzing new water infrastructure in Tuscon/Pima County, AZ and Northern Kentucky.

Sources of legal authority

To finance distributed infrastructure with debt, utilities must have the requisite legal authority. Depending on the statutory regime and the distributed infrastructure to be financed, the requisite authority for some utilities will be clear. For others, the utility may need to structure financings to preserve ownership interests or control over distributed infrastructure assets to comply with the governing laws or even seek to amend existing legislation.

Generally, utility powers may be express or implied by such express powers. A local governmental agency, special districts, or regional water districts’ powers may be derived from:

State constitution

State statute

Local ordinance

Other enabling legislation

Utilities wishing to issue debt for the purpose of financing distributed infrastructure will need to consider whether their express and implied powers restrict the purposes and types of financeable projects, as the authority to spend money on distributed infrastructure may be broader than the authority to issue debt to finance distributed infrastructure.

For example, many statutes provide broad authority to finance facilities of benefit to the utility even if not owned or controlled by the utility. Some statutes, however, provide only for the financing of improvements to real property or physical assets related to specific portions of the water or sewer system, while others require that the utility maintain ownership or control over the asset. There may also be specifications that limit the term or the source of repayment of debt.

Additionally, most state constitutions limit the ability of government entities to grant, donate or gift assets or anything of value to private individuals, associations, or corporations. In some states, such “gift clauses” are broad prohibitions on any transaction of the type. For distributed infrastructure, which is frequently located on private property, this can present challenges. However, most states have interpreted their “gift clauses” to allow for exceptions for the government providing funds to private entities if such funds will be used for a public purpose or provide a public benefit.

To find out what your state’s constitution says about “gifts” click here.

WaterNow: State Gift Prohibitions Database

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

San Francisco City Charter

In 2018, the City of San Francisco amended its City Charter to allow the San Francisco Public Utilities Commission to finance localized water infrastructure on public non-utility and private property

Existing debt constraints

In addition to state constitutional and statutory authority, a utility’s ability to issue debt for the purpose of financing distributed infrastructure may be governed by the utility’s contractual commitments to lenders, credit providers, and bondholders. Holders of a utility’s debt generally require protection against the utility’s voluntary incurrence of new debt if that would have the effect of weakening the security for such existing debt. “Additional debt tests” in bond resolutions or indentures, loan agreements, and credit agreements require that certain requirements be satisfied before the utility may incur additional debt (often only debt payable from the utility’s revenues at the same or at a higher priority level).

Additional debt tests typically limit the purposes for which new debt may be issued. A concern with respect to distributed infrastructure is that improvements to property not owned by a utility may not constitute “improvements to the utility system.” If an additional debt test only requires that improvements financed by such debt “benefit the system,” financing distributed infrastructure should not be impeded. If, however, an additional debt test requires that such debt finance “improvements to the system,” it could constrain the utility’s ability to finance distributed infrastructure.

Holders of debt payable from a utility’s enterprise revenues also generally require that the utility establish rates and charges each year sufficient to produce net revenues (revenues less operation and maintenance expenses) that are a specified percentage of the debt service payable in such year (e.g., net revenues equal to at least 120% of debt service). For such purposes, terms such as “revenues” and “operation and maintenance expenses” are calculated with reference to Generally Accepted Accounting Principles (GAAP). Additional debt tests generally require that the utility demonstrate its ability to continue to comply with this “rate covenant” taking into account the debt service or the proposed additional debt. If distributed infrastructure costs are not capitalized under GAAP but instead constitute operations and maintenance expense, “debt service coverage” will be reduced and satisfying additional debt tests may be more challenging. Learn more about capitalizing the cost of improvements to private property in the “Accounting issues that arise when using debt” section of the toolkit.

You can find additional resources about debt-financing localized infrastructure in the links below.

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.

A Water Leaders Guide to Financing Localized Solutions

A water leader's guide to finance distributed infrastructure.

A Handbook for Understanding Natural Capital

From our partners at Earth Economics, check out this guidance manual for understanding relationship between economics and natural systems.

State gift prohibitions

Because localized infrastructure is implemented across many locations, installing these strategies on property not owned by the city or utility is key. Using public dollars to improve privately owned land can implicate state gift laws, however.

If you’re curious about your state’s relevant constitutional sections, potential exceptions to prohibitions against the use of public funds for private purposes, and any potentially relevant state-specific case law, attorney general opinions or other local agency opinions on the subject you can search WaterNow’s 50-state database below. Simply choose the state from the dropdown menu and the relevant information will be provided. You can also select multiple states by clicking the “Search Another State” button. And select the “Email this to Me” option to receive a record of your search.

Answering tax questions that arise when using debt

Debt-financing localized water infrastructure can raise certain tax issues utility and city leaders should consider when using debt to scale their investments in these sustainable solutions. Two of the most common tax related issues — issuing tax exempt bonds and taxability of incentives customers receive to employ decentralized strategies — are discussed in the sub-sections below.

These sections provide insights on how bond issuances to finance distributed infrastructure can be tax free, the tax treatment of rebates and other financial incentives, and how other communities have successfully navigated these tax questions.

Issuing tax exempt bonds

If debt issued by a utility to finance distributed infrastructure can be issued as “tax-exempt bonds,” the utility can achieve significant savings because the interest paid on “tax-exempt bonds” is excluded from gross income for federal income tax purposes because purchasers are willing to accept a lower rate of interest than they would require for comparable taxable debt. Although the federal tax code provides a general rule that interest on bonds issued by state and local governments, including municipal utilities, is tax-exempt, there are a variety of requirements that must be satisfied. These are explained below.

Issuing Governmental Bonds. Generally, municipal utilities seeking to issue tax-exempt bonds for the purpose of financing assets owned and operated by said utility will do so through the issuance of “governmental bonds.” A bond will be a governmental bond and not a “private activity bond” if:

No more than five percent of the proceeds are loaned to a nongovernmental person and

No more than ten percent of the proceeds are used in a private trade or business (“Private Business Use Test”) unless (i) the payments in respect of such private trade or business are no more than ten percent of the debt service on the bonds or (ii) the financed property (or in certain cases other property) secures an amount equal to the 10% of the debt (“Private Payment or Security Test”).

Because these requirements apply to the entire proceeds of a bond issue, a utility may be able to address private activity concerns by including the financing of distributed infrastructure in a larger bond issue financing conventional infrastructure, although the ten percent thresholds are reduced to five percent if the distributed infrastructure is unrelated to the primary purpose of the bond issue.

Private Business Use Test. Private business use of a financed asset is any use other than that by a governmental entity or the general public. Ownership by a nongovernmental entity, leases, management contracts or preferential legal entitlements with respect to the financed assets can create private business use. The Private Business Use Test can present challenges for utilities when issuing tax-exempt bonds for distributed infrastructure that encompasses or extends into private property used in a trade or business. If, however, the financed assets are available for use by nongovernmental entities on the same basis as the general public, then the bond issue will likely fit within the restrictions of the Private Business Use Test and could be issued as tax-exempt bonds.

Private Payment or Security Test. This requirement focuses on payments from the private businesses that use the financed assets and the security for the bonds, as well as potentially other payments directly or indirectly related to such private business use. A bond issued to finance distributed infrastructure would likely fit within the restrictions of the Private Payment or Security Test if:

There is a grant of bond proceeds to a private business owner without an expectation of repayment

Cumulative payments made with respect to the private business use do not exceed 10% of the debt service on the bonds

Weighted Average Maturity. Another requirement for tax-exempt bonds is that the weighted average maturity of the issue not exceed 120 percent of the reasonably expected average life of the financed assets. This limits a utility’s ability to finance distributed infrastructure assets with relatively short economic useful lives with long term tax-exempt bonds. However, this constraint can be addressed by combining short term distributed infrastructure assets with long term conventional assets with a long average life in the same financing.

Notwithstanding a utility’s expectation that the bonds will satisfy the requirements for tax-exemption at issuance, the utility will also need to take appropriate measures to track the use of proceeds throughout the life of the bonds to ensure continuing compliance.

Taxability

As explained in the “Issuing tax exempt bonds” section of the TIR Toolkit, municipal bond dollars are generally tax free. An entirely separate tax question can arise when utilities use financial incentives to motivate private parties to employ localized water infrastructure solutions:

Are rebates or grants utility customers receive for increasing water efficiency or managing stormwater onsite taxable income?

Answering this question from federal, state, and local tax perspectives can be a key issue when developing and scaling investment in a financial incentive program. Communities across the country have already grappled with these issues and provide useful examples for others facing similar challenges:

In Washington D.C., the utility’s stormwater credit trading program raised local tax issues for area nonprofits participating in the program, as the money they earned from the sale of their stormwater credits potentially threatened their tax exempt status. To address this challenge, the utility worked with other local leaders to revise their municipal code. For more details on this local tax issue click here. And click here to learn more about DOEE’s stormwater program.

In California, the State Legislature has permanently exempted rebates and other financial incentives for water efficient toilets, clothes washers, and certain types of recycled water plumbing from state income tax for both individuals and businesses. Click here to learn more about state tax considerations that might apply to incentive programs in the 41 states that collect income taxes.

At the federal level, it is possible that consumer rebates and other financial incentives are taxable income. Click here to learn more about federal tax issues, including arguments for non-taxability and options for public water agencies to structure programs to enhance the likelihood that the rebate payments not be taxable to the property owner.

Stormwater Retention Credit Trading Systems: Local Tax Issues

Overview of taxability of financial incentives for localized water infrastructure at a local level

Taxability of Financial Incentives: State Tax Issues

Overview of taxability of consumer rebates for water efficiency and stormwater management at the state level

Taxability of Rebates: Federal Tax Issues

Overview of taxability of consumer rebates and other financial incentives at the federal level

DOEE: Local Stormwater Ordinance

Read about Washington, D.C.'s Department of Energy and Environment stormwater management ordinance that requires onsite stormwater capture for certain development projects

Motivating Private Property Owners: Rates, Fees, Incentives

COMING SOON - Primer on the role rates, fees, and financial incentives play in motivating ratepayers to employ localized water solutions

Answering accounting questions that arise when using debt financing

Debt-financing localized water infrastructure can raise certain accounting issues utility and city leaders should consider when using debt to scale their investments in these sustainable solutions. Two accounting related issues — capitalizing the cost of improvements to private property and how to use the regulated assets approach to debt-finance localized infrastructure — are discussed in the sub-sections below.

Capitalizing the cost of improvements to private property

Broadly speaking, “capital expenditures” under Generally Accepted Accounting Principles (GAAP) are expenditures for fixed or capital assets. For a distributed infrastructure expenditure to be an expenditure for a fixed or capital asset under GAAP, the expenditure must, among other things, result in the acquisition, improvement or creation of an “asset” of the utility. Distributed infrastructure on public property not owned or controlled by the utility, i.e., public non-utility property, and private property localized infrastructure may constitute an asset of the utility if the distributed infrastructure expenditure creates a “regulatory asset” under Governmental Accounting Standards Board (GASB) Statement No. 62 or if the utility exercises “control” over the asset sufficient to satisfy the requirement of GASB Statement No. 4.

The requirements of GASB 62 are detailed in the “How to debt-finance localized infrastructure as a regulated asset” section of the TIR Toolkit, and through the links below.

If GASB 62 is not applicable (e.g., because cost recovery is not available), “asset” status may be achieved under GASB 4 if the distributed infrastructure program is structured to provide the utility sufficient “control” over the property in question. As a general matter, control results from the utility’s ability to “determine the nature and manner of use” of the capacity of a resource. This may consist of a right on the part of the utility to:

Directly use the capacity to provide service

Exchange the capacity for another asset or for cash or

Employ the capacity in other ways that provide benefit

Control may be retained through an easement or established by contract. You can find an example easement in the link below.

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.

Bond Financing Distributed Water Systems

As extreme weather events exacerbate challenges already faced by communities across the US, this report, by our partners at Ceres, explores how to make better use of current market mechanisms…

MMSD: Conservation Easement

MMSD enters into conservation easements with private property owners that install green infrastructure and receive a reimbursement from MMSD for doing so

GASB 62: How Does It Work?

Video with Ed Harrington about "Regulated Operations" and GASB 62 and the potential to unlock an alternative way to finance localized infrastructure solutions

The Financing Fix to Scale Water Innovation

This document is a quick 2-page overview of the new GASB policy guidance and how it opens up new channels to transform our water infrastructure.

A Water Leaders Guide to Financing Localized Solutions

A water leader's guide to finance distributed infrastructure.

How to debt-finance localized infrastructure as a regulated asset

For years, water agencies interested in employing localized infrastructure were not sure whether they could access municipal debt financing for those projects. Without access to municipal debt, localized infrastructure programs and projects had to be funded by operating budgets, which meant that, for the most part, programs remained limited or else run the risk of massive increases in utility rates. As a result of a 2-year WaterNow campaign, in May 2018 the Governmental Accounting Standards Board (GASB) issued new guidance making it clear that municipal bond proceeds can be used to fund localized water infrastructure. Click here for a primer for water leaders on how to debt-finance distributed infrastructure projects and consumer rebates. Additional resources are linked below.

Click on the image below to watch a video with TIR Expert Ed Harrington on how this new GASB guidance works.

The new GASB guidance is a game changer. If even a tiny percent of the billions in annual capital spending for local water infrastructure nationwide is redeployed to distributed solutions, it would represent vast new investment capacity and a major expansion in the adoption of these technologies and programs.

GASB Statement 62 allows public agencies to book the cost of “business-type activities” as assets instead of annual expenses. These are called “regulatory assets” and can be capitalized by public water resource entities. The regulated assets approach is a complete alternative to traditional public agency accounting for capital assets. To meet the regulated assets approach and access debt-financing for localized infrastructure, local water providers need to have a governing board that:

Is empowered to set rates
Can set those rates at levels to cover the cost of the specific programs to be financed, and
Can commit to setting rates in the future to pay for the cost of these programs

Virtually all public water providers are positioned to meet these criteria, and communities across the country have already used debt to make significant investments in localized infrastructure, including:

Los Angeles Department of Water and Power pays for its turf rebate replacement program using capital dollars

Central Arkansas Water finances its conservation easement program aimed at protecting its source watershed with municipal bonds

If you would like to connect with an expert to talk about how you can use bond proceeds to scale your community’s investment in sustainable, localized water solutions, click below and submit an “Ask an Expert” request today. WaterNow will put you in touch with one of our pro bono expert panelists.

Ask an expert

The links below provide additional details on how to debt-finance distributed infrastructure. Check out the “Localized water infrastructure implementation strategies” section of the Toolkit to learn how to motivate private property owners to employ localized water solutions and much more.

A Water Leaders Guide to Financing Localized Solutions

A water leader's guide to finance distributed infrastructure.

Bond Financing Distributed Water Systems

As extreme weather events exacerbate challenges already faced by communities across the US, this report, by our partners at Ceres, explores how to make better use of current market mechanisms…

Public Finance Authority Water/Wastewater Finance Pool

Learn how cities, counties, towns and districts can finance and refinance water and wastewater projects through the Public Finance Authority (PFA) at AA rates.

Accessing State, Federal, and Philanthropic Funding

In addition to operating budget funds and debt proceeds, utilities can access state, federal, and philanthropic dollars to help finance localized water infrastructure in their communities. These sources of funding are attractive because, although they may require more administrative work and advance planning to obtain, they can offer some very low-cost debt and, in some cases, grants or debt forgiveness.

Click through the sections below to learn about State Revolving Funds, the Water Infrastructure Finance and Innovation Act, the Bureau of Reclamation’s WaterSMART program, Housing and Urban Development’s Section 108 Loan Guarantee Program, and the role philanthropy can play in increasing investments in localized water infrastructure.

Quick Reference: Toolkit Resources, Example Documents, and Case Studies

The Toolkit covers over 60 different topic areas related to localized water infrastructure. But are you looking for quick access to a specific Tap into Resilience Toolkit resource? Sort the All Resources Library by “TIR Toolkit” to find all the resources included in the Toolkit subsections in one place. Use the Toolkit Reference Guide to get an overview of the Toolkit and link directly to particular subsections.

Tap into Resilience Expert Panelists

The TiR expert panel is a team of tax, accounting, financing, auditing, municipal bond, and water infrastructure experts including attorneys, accountants, auditors, investors, economists, and consultants to help make sustainable, localized water management a reality for communities across the nation. Click the names below to learn about our panelists’ areas of expertise. To connect with one of the TiR Experts fill out the short form linked below.

Ask an Expert

Craig Holland, The Nature Conservancy

Craig is the senior director of urban water for the Global Cities program of The Nature Conservancy. In this role, Craig develops global strategies to address water quality challenges related to urban development and leads a team to oversee those strategies’ implementation.

Specializing in green infrastructure investment and deployment, Craig helped develop private financing mechanisms for Philadelphia’s Green City Clean Waters initiative and co-authored the National Resources Defense Council’s January 2013 report “Creating Clean Water Cash Flows: Developing Private Markets for Green Stormwater Infrastructure in Philadelphia.”

Craig leads strategy for the Conservancy’s innovative collaboration, announced by the White House in March 2016, District Stormwater LLC, which finances and builds green infrastructure for stormwater management in Washington, D.C. Craig also serves as the President of the Board of TNC/Opti Development Partners, a joint venture between the Conservancy and the technology firm Opti, that builds distributed water quality and flood resilience projects.

Craig holds a BA with distinction from the University of Massachusetts, Amherst and an MS from Columbia University.

Ed Harrington, Municipal finance consultant

Ed Harrington is the former President of the Government Finance Officers Association and the former General Manager at San Francisco Public Utilities Commission.

Ed chaired the Water Utility Climate Alliance, focused on providing leadership and collaboration on climate change issues affecting water utilities and the customers they serve. He has served on three different accounting group Boards, including the Government Finance Officers Association, which he became the President of in 2004. He is a CPA, and serves on various nonprofit boards including Greenpeace International, and is now an adjunct professor at the University of San Francisco and a consultant on government finance issues.

Eric Letsinger, Quantified Ventures

Eric Letsinger is the founder and CEO of Quantified Ventures, an impact investing firm that helps governments, social entrepreneurs, nonprofit organizations and healthcare systems tap into the financial resources needed to sufficiently scale operations and deliver meaningful impact.

He graduated from Northwestern University with a BA in Urban Studies, and continued his education at Yale University, where he earned his MBA. Since then, he has gained over 25 years of leadership experience in government, nonprofit and private sector organizations operating in healthcare, the environment, education and housing. He has worked in cross-sector business environments, leading transformative public initiatives to drive social impact, and he speaks regularly at dozens of conferences, events and universities, including his alma mater. His company is currently designing and implementing a series of environmental, health and education transactions across the country.

Janet Clements, Corona Environmental Consulting

Janet Clements began her career as a water and natural resources planner in a rural California county, where she worked with government agencies, Native American tribes and nonprofit organizations on watershed planning efforts.

Afterwards, she went to graduate school and now has over 17 years of experience in water and natural resources planning and economics. She is currently working as a senior economist with Corona Environmental Consulting, where she conducts financial and sustainability analyses to evaluate the financial, social and environmental implications of water-related policies and programs. She is a noted economic expert in a number of fields within the water sector, and has conducted several studies related to financing and incentivizing green infrastructure on private property, as well as quantifying the benefits and costs of stormwater and green infrastructure alternatives.

Jeff Odefey, American Rivers

Jeffrey Odefey is a Colorado native with a BA in English and Art History from the University of Colorado, and MA from the University of Montana, and is a magna cum laude graduate of Pace University School of Law. He worked as a staff attorney for Waterkeeper Alliance and for Hudson Riverkeeper.

He is now the Director of Clean Water Supply Programs for American Rivers, where he helps lead a multi-disciplinary effort to promote integrated management of water resources through progressive regulation, sustainable financing, and policy reforms. His focus is on urban water systems, including green infrastructure, water conservation, and integrated water management as pathways to preserve and protect healthy waters and communities.

Jim Gibbs, Sperry Capital

James Gibbs earned his BS in Electrical Engineering from UC Berkeley, and his MBA from Stanford University, and now has over 35 years of experience in municipal advisory and public finance investment banking services.

He has managed and completed several financing transactions for many large agencies, including water and sewer utilities, public power agencies, renewable energy corporations and more. He is now Principal at Sperry Capital, an infrastructure financial advisory firm.

April Mendez, Greenprint Partners

April Méndez got her Bachelor of Arts and Psychology from Carleton College, where she graduated magna cum laude, and was in Stanford’s Executive Programs for Nonprofit Leaders and for Social Entrepreneurship. She has over 15 years of community and youth engagement experience, during which she recruited, trained and supported community residents to take action on local issues that mattered to them, designed and ran youth leadership programs, and founded two different youth empowerment organizations.

She is now is an MBA student at Northwestern University and is Co-founder and CEO for Greenprint Partners, where she develops municipal, utility, and community partnerships to deliver green stormwater infrastructure at large scale in order to transform communities, and collaborates on general firm management and strategy.

Nicole Chavas, Greenprint Partners

Nicole Chavas earned her BA and MA from the University of Wisconsin-Madison and went on to get her MBA and Master of Finance and Entrepreneurship from Northwestern University in 2015. She began her career as an accountant at Grosvenor Capital Management, and went on to be an Operational Due Diligence Analyst at Man Investments. She then became the Senior Associate and Manager at Covariance Capital, a TIAA-CREF company, where she led operational due diligence, evaluated financial, operational and legal infrastructure, and spearheaded an internal impact investing research initiative to address increasing market interest in opportunities.

She is now the President + COO and Co-founder of Greenprint Partners, a green infrastructure delivery partner that helps cities achieve high-impact, community-driven stormwater solutions at scale.

Jim Sparper, Greenprint Partners

James Sparber earned his BS in Civil Engineering from Valparaiso University with a minor in Business Administration, and then got his MS in Environmental Management from Illinois Institute of Technology. He gained 10 years of managerial experience between Rempe-Sharpe & Associates and Baxter & Woodman, Inc, during which he worked on infrastructure design and efficiency.

He is now the Vice President, Engineering for Greenprint Partners, where he is responsible for the development and implementation of stormwater management projects and services through water utility programs across key municipal communities.

Rose Jordan, Greenprint Partners

Rose Jordan earned her BA in Community, Environment and Planning and Environmental Resource Management from the University of Washington, and later her MBA in Marketing Management from Northwestern. She now has over 17 years of executive experience in her field, after serving as Vice President at Guenther Creative, an award-winning communications firm, serving as the Account Executive at Frause, another communications firm. Later, she became the Senior Program Manager at Midwest Energy Efficiency Alliance, a nonprofit dedicated to sustainable economic development and environmental stewardship.

She is now the Vice President of Marketing and Program Operations at Greenprint Partners, for which she is responsible for development and implementation of marketing and communication strategy to drive growth for green infrastructure delivery partner, and the drive of business development strategy for growth.

Roger Baneman, NRDC Advisor and Retired Partner of Shearman & Sterling LLP

Roger Baneman is an advisor to the Natural Resources Defense Council, and works primarily with the Green Finance Center. His NRDC projects have included the potential use for clean energy investing of public capital market vehicles such as REITs, mutual funds and publicly traded partnerships, the organization of a network for green banks, and green infrastructure programs for stormwater management.

He was a tax partner at Shearman & Sterling LLP for many years and is now retired from the firm. He has a JD from Harvard Law School and a BA from Yale College. Early in his career, he served in Treasury’s Office of Tax Legislative Counsel. He was also an adjunct professor at Cardozo Law School.

Rowan Schmidt, Earth Economics

Rowan Schmidt was educated in Biology and Philosophy at the University of Auckland in New Zealand, and has spent his career applying his education in the business realm of environmentalism. He has worked to fund mechanisms and policy levers to benefit the economy, the environment and society with utilities, federal agencies, NGOs and more.

He has been with Earth Economics for 9 years, during with he leads the organizations’ work around finance and investment strategies, and has helped catalyze policy changes from local to federal levels.

Scott Harder, Environmental Financial Group, Inc.

Scott Harder has forty years of experience developing and financing water, clean energy, and low-carbon solutions. He is educated in Civil Engineering, Finance, Mathematics and Economics, and is a published author.

Scott is the founder of Environmental Financial Group, Inc., a consulting firm that serves international clients, and provides advice to corporations, project developers, investors, cities, utilities, technology companies and financial institutions. He also serves on the leadership and advisory boards for a number of advocacy groups around the world.

Tom Innis, D.A. Davidson

Tom Innis is Managing Director of the Public Finance’s National Utility Practice in D.A. Davidson’s Fixed Income Capital Markets Division. D.A. Davidson delivers financial solutions through primary market underwriting, secondary market sales and trading of municipal securities and taxable fixed income investments, and municipal advisory services. Innis provides support for water/wastewater and electric utility clients to address their aging infrastructure needs. His experience in senior managed financings range from under $10 million to over $750 million. Over his career, Innis has senior managed more than $10 billion in financings in the Western Region.

Innis received a bachelor’s degree from the United States Military Academy at West Point and received a Masters of Business Administration degree from the Wharton Business School at the University of Pennsylvania.

Acknowledgements

The TIR Toolkit was developed and produced by WaterNow Alliance with contribution and support from local utilities and cities across the country, municipal financing and legal experts, and other WaterNow partners. WaterNow would like to thank and acknowledge the local utilities and cities across the country, municipal financing and legal experts, and other contributors to the TIR Toolkit.

Thank you to our city and utility partners

Bay Area Water Supply & Conservation Agency

Camden County Municipal Utility Authority

Central Arkansas Water

City of Hayward

City of Hoboken

City of Lancaster

City of New Orleans

City of Tacoma

City of Tucson

DC Dept of Environment & Energy

Los Angeles Department of Water and Power

Milwaukee Metropolitan Sewerage District

Metropolitan Water Reclamation District of Greater Chicago

New Orleans Redevelopment Agency

North East Ohio Regional Sewer District

Philadelphia Water Department

San Antonio

San Francisco Public Utilities Commission

Seattle Public Utilities

Sonoma County Water Agency

Washington Suburban Sanitary Commission

Thank you to our industry and organizational partners

Alisa Valderrama, Neptune Street

American Water Works Association

Earth Economics

Green Infrastructure Leadership Exchange

Jesse Albani, Orrick

Judson Greif, Greenfield Government Strategies LLC

Kresge Foundation (informational interview)

New Jersey Future

New Jersey Infrastructure Bank

Roger Baneman, Natural Resource Defense Council

Spring Point Partners (informational interview)

Stephen Spitz, Orrick

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 their use.

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Tap into Resilience

A WaterNow Alliance Initiative

The Tap into Resilience Toolkit

Welcome to the Tap into Resilience Toolkit

Localized Infrastructure Decision-Making Framework

What are my financing options?

Localized water infrastructure implementation strategies

Toolkit Quick Reference Library

Ask an Expert

Ask an Expert

Localized Infrastructure Decision-Making Framework

1. Identify the drivers for considering sustainable solutions.

2. Identify appropriate models and data to assess potential performance.

3. Evaluate costs and benefits holistically—include financing options and multiple benefits.

4. Incorporate distributed onsite systems into capital planning alongside conventional infrastructure.

5. Think broadly and creatively about financing options.

6. Incorporate stakeholder outreach and engagement in planning & implementation.

7. Identify project- and place-specific implementation challenges.

8. Identify internal capacity, gaps, and available support resources.

Ask an expert

WaterSMART

9. Have a plan for ongoing maintenance.

10. Establish performance metrics and evaluation methods.

What are my financing options?

Utility Costs & Revenue Sources

Drinking water

Wastewater

Stormwater

Special Fees

Tucson Water

Central Arkansas Water

Debt Financing Localized Infrastructure

Ask an expert

Types of Bonds

Municipal/Revenue Bonds

Green Bonds

Environmental Impact Bonds

Answering legal questions that arise when using debt

Distributed or “localized” infrastructure from a legal perspective

Sources of legal authority

Existing debt constraints

State gift prohibitions

State Gift Prohibition Lookup

Answering tax questions that arise when using debt

Issuing tax exempt bonds

Taxability

Answering accounting questions that arise when using debt financing

Capitalizing the cost of improvements to private property

How to debt-finance localized infrastructure as a regulated asset

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Accessing State, Federal, and Philanthropic Funding

State Revolving Fund

SRF Eligibility

SRF for private property localized infrastructure

Green project reserve

Water Infrastructure Finance and Innovation Act

Eligibility

Application process

Additional WIFIA resources