Innovative Municipal Green Infrastructure ESG Financing

Delta Institute is piloting an innovative new program focused on accessible municipal financing for GI that will shift how communities deal with the impacts of climate change. We also are exploring how the investor sector can underwrite municipal projects in a low-cost, ESG approach that results in flooding mitigation and wider use of GI throughout the entire Great Lakes basin.

Great Lakes municipalities are hit with more extreme rainfall as “100-year weather events” become “20-year weather events.” Flooding, water quality, and stormwater management are critical needs that many municipalities are addressing by implementing Green Infrastructure (GI) to capture and treat hundreds of thousands—if not millions—of stormwater gallons annually. Innovative financing is needed to fund those projects, while ensuring that communities are not burdened by debt that inhibits growth and opportunity.

Why Our Work is Needed Today

Communities across the Great Lakes are dealing with increasing economic, environmental, and social impacts of flooding caused by climate change. Underserved and capacity-limited, small- and mid-sized communities will continue to bear the brunt with increased consequences leaving them behind and unable to thrive, further degrading local ecosystems and water quality. Currently, there are many opportunities to assist, but due to the fragmented nature of programs and funding—combined with who bears the burden of response—communities cannot navigate the many steps to implement improvements nor access needed funding to deal with this growing climate threat.

Delta Institute’s new innovative GI services/financing pilot program will shift how communities deal with the impacts of climate change and change how investment occurs to reduce flooding by increasing GI throughout the entire Great Lakes basin. Implementing GI in small to mid-sized municipalities with limited stormwater and tax funding for upgrades is an ongoing challenge and a regional strategy issue that has dire consequences. Our efforts directly address multiple municipal needs that impede GI installation at scale:

Financing: Under-resourced communities in the floodplain disproportionately experience the impact of failing stormwater infrastructure and whose municipal governments and sanitary/sewer districts often lack the resources and the capacity to make necessary upgrades. Financing was an anticipated barrier to GI that was substantially confirmed by our user research undertaken by Delta Institute in 2021-2022; our project directly speaks to this critical need for innovative financing intervention. Typical targeted projects have budget ranges that are below the standard thresholds or feasibility for issuing municipal bonds, and competitive grants that require 1:1 match may only pay for portions of a project with very strict parameters on allowable expense (i.e., only construction, no construction), leaving implementation of GI projects beyond the reach of many Great Lakes municipalities.

Project Funding and Administrative Capacity: Further compounding these realities are limited municipal stormwater capacity for planning, funding for staff and projects, and limited on-staff capacity to competitively manage the myriad of project management, maintenance, planning, reporting, and financing considerations that impede GI installation. A key learning and understanding that Delta Institute has is that municipal staff are asked to wear many hats, and achieve a wide array of (often competing) goals. We’re addressing this by working directly with municipal staff to alleviate this staff resource constraint by allowing capacity and technical assistance to be incorporated into GI planning, implementation, and paid for within the financial product.

Flood- and Stormwater- Planning: Flood mitigation efforts are scattered across distinct municipal departments and/or stakeholder groups. There is no integrated approach to solving flood issues in these communities and no single entity integrating climate resilience solutions into one unified service. By creating a comprehensive service delivery platform, we’re overcoming these planning barriers to increase implementation and improve water quality throughout the Great Lakes basin.

Meanwhile, a windfall of federal funding to support GI implementation projects is becoming available to communities but without the labor, expertise, and local match funds needed to apply, many municipalities will not be able to take advantage of this opportunity. This dovetails with growing interest from the investor community—and socially conscious long-term financial planners—in financing GI projects to help improve community resiliency while lessening flooding impacts.

Delta Institute is proactively addressing these pressing needs via a turn-key suite of supportive services targeted to municipal stormwater managers to assist in the financing and implementation of needed GI to mitigate flooding, improve water quality, and positively impact well-being indicators in small- and mid-sized Great Lakes municipalities.

To fund municipal GI projects, we’re developing an innovative ESG-compliant investment tool via low-cost bonds that will be designed to leverage additional GI funding via federal- and state- grants.

Providing Municipalities with low-cost, accessible GI project financing

Many GI projects have budget ranges that are below the standard thresholds or feasibility for obtaining long-term financing, such as municipal bonds. State revolving fund loans are often available for these neighborhood-scale projects but require significant up-front project design and development work that small to mid-size municipalities typically do not have the capacity or funding to complete.

Our pilot program addresses this gap in the GI funding landscape by providing both the accessible financing and vital project management support needed to implement effective and efficient neighborhood-scale GI projects. Low-cost debt financing covers the up-front costs for GI project planning and development and provides municipalities with local match funding that can unlock additional grant opportunities. Our financial partners will work with municipal staff and decision-makers to build the right financing structure that provides manageable repayment schedules, while Delta Institute provides technical support and assistance to get successful projects in the ground quickly so the community and municipality can begin to benefit from the reduced cost of flooding and long-term infrastructure maintenance as soon as possible.

Offering ESG Investors with low-risk, value-additive municipal investment options

This pilot program also offers a unique opportunity for investors looking for both low-risk and geographically aligned investments that meet ESG considerations. Investors are becoming more interested in ESG investment opportunities with high and/or safe yields as part of their comprehensive portfolio. Delta Institute provides an investment option with a safer and higher yield than traditional municipal bonds by providing performance monitoring and project implementation support that 1) ensures expedient usage of funds and 2) increases access to additional grant investment and long-term cost efficiencies. 

Our Goals

Over the next two years, Delta Institute is planning for at least 2 micro-bonds to be issued totaling $1.5M (more than a 1:1 match for most GI grant requests), enabling the installation of GI projects that will reduce stormwater impacts by 1.5M gallons, and leverage at least 2 grants/loans for additional project impact. Over the next several (3-10) years, we plan for significant scaling across the Great Lakes.

Our pilot is designed to:

    • Deliver a holistic solution to many barriers of integrating GI in a comprehensive and sustainable framework that includes both the capacity support and access to a simplified financing product—which is directly aligned with documented municipal needs.
    • Mitigate hundreds of millions of gallons of stormwater impacts across the Great Lakes basin, with directly related water quality and environmental indicator improvements.
    • Reduce the economic impacts of flooding on Great Lakes citizens, communities, the private sector, and federal and private insurance companies.
    • Expand small- and mid-sized communities’ resilience to climate change.
    • Close the capacity and resource accessibility gap that exists between smaller and larger municipalities, thus addressing issues of equity, availability, and access.
    • Provide an innovative micro-bond funding mechanism that aligns with community requirements and process, and investor priorities—while addressing ESG compliance.
    • Leverage Clean Water State Revolving Loans to pair investment into both grey infrastructure and GI, while providing readily available matching project funds.

Delta has researched the many barriers to GI implementation, the existing programs that are available, and created this GI delivery and finance model to create an accessible, comprehensive, and scalable framework that can be applied in communities across the region. It’s through this experience that we’re providing both comprehensive GI technical assistance and wraparound services as well as access to micro-bonds that have a streamlined and cost-effective structure for communities. This defragmentation will allow for communities across the Great Lakes basin to implement GI solutions at scale, reduce the economic impacts of flooding, and improve water quality across the region.

We envision a region that will have GI solutions implemented in many communities in the Great Lakes basin over the next decade. It’s essential to act now, as this service and financing model perfectly aligns with current and upcoming federal funding—amplifying impact in disproportionately impacted communities.

Our goal is by 2033 we will install at least 36 projects in 20 communities with $31.5M of bond and leveraged investment, resulting in 27M gallons of stormwater being captured annually. This is what our vision of a resilient and equitable Great Lakes Region looks like.

Our Partners

Delta Institute is deeply appreciative to the Great Lakes Protection Fund for their generous support of this impactful pilot program, which builds from a focused program design scope that the Fund underwrote in 2021-2022. Our collaboration will offer accessible financing to expand municipal GI throughout the Great Lakes. We would like to thank our project implementation partners: Stantec, Regiment Securities, and 389nm.

We would also like to recognize and celebrate our community partners, whose municipal staff have provided vital feedback and participation in this pilot program. We are appreciative of their feedback, guidance, and acumen, and look forward to years of successful partnership: Manitowoc, WI; Lansing, MI; Fond du Lac, WI; Hobart, IN; Merrillville, IN; Michigan City, IN; Muskegon, MI; Superior, WI; and Waukegan, IL.

Join Us!

If you want to learn more about our innovative municipal GI financing pilot program, are interested in participating as a pilot community or would like to potentially invest, please fill out the contact form below or email programs@delta-institute.org. Together, we can build a more sustainable and resilient Midwest. 

Learn more or join our innovative municipal GI financing pilot program

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