On May 27th, Quantified Ventures issued a press release regarding the evaluation of the first ever Environmental Impact Bond (EIB). EIBs are innovative pay-for-performance debt-financing mechanisms that have been used to finance green infrastructure projects in DC, Atlanta GA, and Hampton VA. EIBs are unique in that they tend to have predetermined outcome measures that dictate the overall cost of capital. While green bonds also finance environmental projects, they typically do not measure and report outcomes.
About the DC Water EIB
The DC Water EIB funded green infrastructure installments aimed to reduce runoff into DC Water’s combined sewer system, and eventually into Rock Creek. The EIB funded 25 acres of green infrastructure as part of DC Water’s Clean Rivers Project, which aims to reduce runoff into combined sewer systems and combined sewer overflows. The $25 million EIB was sold to Goldman Sachs and Calvert Impact Capital in a private issuance and included three performance tiers. The outcome measure for the project was runoff reduction into the combined sewer system, measured against a flow baseline established before the project was completed.
The idea is that an EIB allows for risk-sharing. If the project underperforms, DC Water receives a performance payment from investors that reduces the cost burden on ratepayers. Because DC Water is required to reduce combined sewer overflows, underperformance might mean future investment to control the problem. The table below summarizes the range of outcomes and performance payments for the DC Water EIB, as outlined by a Goldman Sachs fact sheet.
The North Carolina Water and Wastewater Rates Dashboard was updated with 2021 data and the 2021 North Carolina Water and Wastewater Rates Report was published. Check them out today and join us for our June 15 webinar.
We are thankful for another year of partnership with the North Carolina League of Municipalities and for the on-going funding support from the North Carolina Division of Water Infrastructure.
The 2021 North Carolina Water and Wastewater Rates Dashboard was deployed in February 2021. The Dashboard is up to date for rates as of January 1, 2021. The Rates Dashboard provides an up-to-date look at rates and financial sustainability indicators for utilities around the state.
The current housing market boom leads to large tracts of available land being swept up into the hands of private developers. For many local governments, development is good. It provides access to new tax revenues and tends to perpetuate growth; an area actively developing tends to attract more industries and people. These new revenues can be used for any number of purposes, including adding services, such as land conservation or parks and recreation, to the municipality. The challenge is in protecting land before it falls into the hands of developers, and balancing the open space needs of the municipality and its constituents with the municipal revenue streams.
Any land conserved or turned into a public park is lost property tax revenue. In larger cities with combined sewer systems, land conservation may have a direct return on investment, whereby the open spaces reduce the total impervious surface and associated runoff, and thus prevent or reduce combined sewer overflows. But in municipalities without regulatory drivers, the benefits may be less direct and harder to quantify. Green space does provide many direct and indirect economic benefits to a municipality, including attracting development and increasing property values. Other, less measurable benefits include mental, physical, and emotional wellbeing, which are important to overall quality of life but do not have a market value. In a Benefit Cost Analysis, these values are important, but challenging to meld with dollar values for costs or dollar value benefits in avoided costs for upsizing a stormwater system.
This is the third post in a three-part blog series on data management. This post will focus on user-centered design of Environmental Finance Center tools.
Post by Julia Cavalier, Senior Research Specialist at UNC EFC and Robin Haley, Graduate Research Assistant at UNC EFC
As mentioned in the first and second part of this blog series, If you build the data platform, will they come? and Behind the Scenes of the Revenueshed Tool, the Environmental Finance Center (the EFC) project designers have to know the users, identify purpose of the project goal, and collect the data that exists to support this goal. With this comes documentation of the project, because without context it will be difficult to replicate actions and hard to understand from a user’s perspective. The EFC is revising some existing tools. The first step in revision is to understand and document how tools are used. The second step in revision is to set goals for what new tools should do. The goals will become the foundation of tool redesign.
Which EFC tools are being redesigned?
The EFC is redesigning the following tools:
- Water and Wastewater Rates Affordability Assessment Tool (the “Affordability Tool”). This tool shows the impact of rates on different customers. It looks not just at median household income but also other impacts on affordability like poverty rate.
- Financial Health Checkup Tool. This tool gathers input from five years of utility financial data and shows how key financial indicators compare to benchmarks.
- Rates Analysis Model. This tool lets a utility explore different rate changes – what would happen if I increased rates, added blocks, or changed the base or volumetric charges within some blocks?
The past year has forced local government utilities to make difficult decisions about how to maintain operations while providing essential services during an infectious disease pandemic, as discussed in several of our past blog posts (here, here, and here).
Financial viability is a cornerstone of a utility’s ability to weather a proverbial storm that disrupts revenue flows. A viable system is one that functions as a long-term, self-sufficient business enterprise while providing reliable water services. The EFC has been on the look-out for stories of utilities and municipalities that are making steps towards financial viability, even in the midst of challenges like COVID-19.
The town of Ahoskie, located in rural Hertford County, has been implementing financial best practices over the past few years to decrease expenses and pay off debt, which set them up to survive a financially straining event like a lockdown. Below is a part of their story, here is a video that highlights the work they’ve done, and here is a more in-depth report. More resources regarding evaluating costs can be found at this webpage.