Clean Water, Healthy Communities. the Chesapeake Bay Watershed through Environmental Impact Bonds. Funding Green Infrastructure in SEPTEMBER 21, 2017

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1 Alisha Goldstein Clean Water, Healthy Communities Funding Green Infrastructure in the Chesapeake Bay Watershed through Environmental Impact Bonds SEPTEMBER 21, 2017

2 Disclaimer NO FEES WILL BE CHARGED BY CHESAPEAKE BAY FOUNDATION (CBF) OR QUANTFIED VENTURES (QV) FOR THEIR PROGRAMMATIC SERVICES. ALL OTHER EXPENSES MAY APPLY, INCLUDING RATING AGENCY, BOND COUNSEL, INDEPENDENT REGISTERED MUNICIPAL ADVISOR, AND EVALUATOR FEES AND SUCH FEES SHALL BE PAID FOR BY THE APPLICABLE MUNICIPAL ENTITY. NEITHER CBF NOR QV IS RECOMMENDING ANY ACTION TO ANY MUNICIPAL ENTITY. THE INFORMATION PROVIDED HEREIN IS NOT INTENDED TO BE AND SHOULD NOT BE CONSTRUED AS ADVICE UNDER SECTION 15B OF THE SECURITIES EXCHANGE ACT OF 1934 OR THE MUNICIPAL ADVISORY RULES OF THE SEC AND MSRB. CBF AND QV ARE NOT AND WILL NOT BE, ACTING AS AN ADVISOR (WHETHER FINANCIAL OR MUNICIPAL), AGENT OR FIDUCIARY TO ANY MUNICIPAL ENTITY AND CBF AND QV WILL NOT HAVE ANY ADVISORY, AGENCY OR FIDUCIARY DUTY TO ANY PERSON PURSUANT TO SECTION 15B OF THE SECURITIES EXCHANGE ACT OF 1934 OR SECTION 975 OF THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT. CBF AND QV ARE ACTING FOR THEIR OWN INTERESTS. MUNICIPAL ENTITIES SHOULD DISCUSS ANY INFORMATION AND MATERIAL CONTAINED IN THIS COMMUNICATION WITH ANY AND ALL INTERNAL OR EXTERNAL ADVISORS AND EXPERTS THAT THE MUNICIPAL ENTITY DEEMS APPROPRIATE BEFORE ACTING ON THIS INFORMATION.

3 Welcome & Introductions Lee R. Epstein Lands Program Director and Special Counsel Chesapeake Bay Foundation Carolyn dupont Associate Director Quantified Ventures

4 Agenda 1 What is an EIB? What is CBF s EIB Pilot Program? 2 Why should your jurisdiction apply? 3 How do I apply?

5 Agenda 1 What is an EIB? What is CBF s EIB Pilot Program? 2 Why should your jurisdiction apply? 3 How do I apply?

6 At a Glance: EIBs for Green Infrastructure OUR OBJECTIVE: Create a model for funding green infrastructure that, where appropriate, can be duplicated in small-to-mid-size cities to help the cities meet federal and state Clean Water Act requirements. Looking for 4 jurisdictions in PA, MD, VA Pay for Success approach to provide up-front capital for environmental projects CBF and Quantified Ventures will provide assistance without charge Apply at cbf.org/eib by Oct 31

7 Green Infrastructure 2017 Hilary B. Price - Distributed by King Features Syndicate, Inc.

8 Green Infrastructure Bioinfiltration, D.C. Jeffrey Brainerd Permeable parking, D.C. DC DOEE Parking lot infiltration, Stafford County, VA

9 Barriers to Deploying GI PERCEIVED PROJECT RISK PERCEIVED COMPLEXITY LACK OF STANDARD FINANACING Credit: Sustainable Cities Collective

10 Solution: Pay for Success GI PLANNING ENVIRONMENTAL IMPACT BOND STRUCTURING & ISSUANCE BEFORE (City of Lancaster, PA) AFTER (City of Lancaster, PA) GI PROJECT DEPLOYMENT

11 Our Environmental Impact Bond Model 1 3 Investors 2 Repayment based on performance $ $ Evaluator 5 Public Entity (e.g., City, Water Utility) GI or other resilience project deployment 4 Public Entity (e.g., City, Water Utility) or Project Partner

12 EIB Case Study: DC Water Through the use of the EIB, DC Water was able manage or hedge a portion of the risk associated with large-scale implementation of GI in the District. Credit: Martina Frey By structuring a contingent payment based upon the effectiveness of green infrastructure, DC Water focused on outcomes (in that case reducing stormwater runoff) that aligned with the regulatory driver of the Consent Decree that DC Water was already structured to achieve. Bethany Bezak, Green Infrastructure Program Manager, DC Water and Sewer Authority

13 Agenda 1 What is an EIB? What is CBF s EIB Pilot Program? 2 Why should your jurisdiction apply? 3 How do I apply?

14 What s in it for your jurisdiction? CLEANER, HEALTHIER COMMUNITIES REGULATORY COMPLIANCE RISK MODERATION SUPPORTIVE INVESTORS Credit: D.C. DDOE

15 Agenda 1 What is an EIB? What is CBF s EIB Pilot Program? 2 Why should your jurisdiction apply? 3 How do I apply?

16 Project Criteria & Evaluation LOCALITIES IN MD, PA, VA W/ PERMITS DRIVING REDUCED POLLUTED STORMWATER GI PROJECTS READY TO GO: $3M+ PREFERRED BENEFIT DISADVANTAGED COMMUNITIES FINANCIAL FITNESS, DEDICATED FUNDING New Columbia, Portland, OR

17 Application Overview & Next Steps 1. Executive Summary of Need, Potential Project(s) and Impact 2. Project(s) Scope and Fit with EIB 3. Jurisdictional Capabilities (Financial, Planning, Implementing, etc) 4. Regulatory and Ancillary Benefits (Impact) of Project(s) 5. Appendix including project planning detail, letters of support and any other relevant information Seattle High Point Localities must have their own bond counsel and independent municipal registered advisor. Notify your intent to apply by October 11. Deadline for submitting is October 31. To download and submit, the application go to

18 Frequently Asked Questions If I already have access to low-cost capital, what will this provide? Ability to pilot new, innovative projects with risk shared with investors. Can this funding model work for CSO projects as well as MS4 projects? Yes, as long as there is a regulatory requirement and repayment source. Portland, OR Is this a P3? No, this is a funding methodology that can use your existing procurement and financing method. Can I propose more than one project? If so, how many? Yes, either as separate transactions or as a portfolio.

19 Frequently Asked Questions Can I propose something not Green Infrastructure? No, GI for water quality is our target with flood control, climate resiliency, and local employment coimpacts also important. How will the performance be measured? A 3 rd party evaluator (not CBF or QV) will measure results based on regulatory and co-benefit metrics as defined in the bond agreement. Pavement and swale, Chicago, IL Can I propose a project where another group is the payor such as a Water Authority? Yes, as long as payor is credit-worthy and has dedicated repayment source.

20 Contact Us More information and application: cbf.org/eib Chesapeake Bay Foundation: Lee Epstein John Campagna Quantified Ventures: Todd Appel, Director Carolyn dupont, Associate Director