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CBF: Apply Now For Green Infrastructure Funding Under Pay For Success Program

The Chesapeake Bay Foundation, in partnership with Quantified Ventures and with support from The Kresge Foundation and other funders, is inviting municipalities in Pennsylvania, Maryland, and Virginia to participate in a pilot project to implement green infrastructure solutions that reduce urban/suburban runoff that damages local rivers, streams, and the Chesapeake Bay.

The deadline for applications is October 31.

“We understand that reducing polluted runoff is often difficult and expensive and we want to make it easier and more effective for communities in the Bay watershed to meet their clean water goals,” said CBF Vice President Kim Coble. “Because some local governments and lenders may be less familiar with implementing natural solutions, these kinds of projects may be seen as riskier and more difficult to finance.”

For the pilot project, CBF is helping municipalities take advantage of a new financial tool pioneered by Quantified Ventures and DC Water called the Environmental Impact Bond (EIB).

In 2016, DC Water used an Environmental Impact Bond structure to privately finance and share the risk for implementing natural solutions to manage stormwater runoff into the Potomac River.

The EIB allowed the utility to raise funds from impact investors Goldman Sachs and the Calvert Foundation to finance projects such as permeable pavement and bioswales—which mimic natural processes, may be more cost-effective than traditional “gray” infrastructure, and can provide additional community benefits such as reducing local flooding, improving climate resiliency, and creating local jobs.

“We think the DC Water example shows promise so we are excited to help CBF test this model around the Bay region at no extra cost to our municipal partners,” said Todd Appel of Quantified Ventures. “Polluted runoff is the only major source of pollution that is still increasing, and in some urban and suburban areas is the leading cause of damage to local rivers and streams.”

An Environmental Impact Bond provides up-front capital for environmental projects. In its most basic form, a municipality or municipal entity (such as a municipal utility) issues Environmental Impact Bonds and sells them to private investors to obtain financing to pay the cost of environmental projects.

The municipal issuer is required to pay interest on the bonds and to repay the principal amount of the bonds on scheduled payment dates.

The EIBs follow a Pay for Success model. After an evaluation period, if the project reduces significantly more pollution than expected the investor receives a higher rate of return.

If the project reduces significantly less pollution than anticipated the investors will receive a lower rate of return.

“In our pilot program, we will coordinate with up to four local jurisdictions’ financial advisors toward the creation of an Environmental Impact Bond or loan tailored to their community's financial and environmental needs to implement green infrastructure solutions,” said Coble.

“CBF has been a strong partner with our local government clients in supporting water quality funding, and we applaud CBF’s effort to pilot this idea in diverse localities across the watershed,” said Chris Pomeroy, president of the AquaLaw law firm and counsel to the Virginia and Maryland Municipal Stormwater Associations.

To apply or for more information, visit the CBF’s Environmental Impact Bonds webpage. Click Here to view an earlier webinar on the program or download a brochure.

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