Financing Green Infrastructure - Is a Community-Based Public-Private Partnerships (CBP3) Right for You?
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Throughout the United States, communities are struggling to meet the demands of stormwater management requirements. EPA recognizes the need for new and innovative solutions to finance and manage stormwater runoff, especially in urban areas, to achieve and maintain the water quality goals of the Clean Water Act (CWA). In order to protect and restore water quality while meeting the challenges of climate adaptation, communities should consider whether a Community-Based Public-Private Partnerships (CBP3) will help achieve their goals when evaluating stormwater financing and infrastructure needs.
In other infrastructure sectors, public-private partnerships (P3s) have been found to generally reduce costs, improve quality control, and expedite delivery of services. Local governments around the country are facing significant challenges in financing and constructing stormwater management infrastructure required by federal and state regulations. P3 models may provide communities with an alternative for the finance, design, construction, and operation and maintenance of green stormwater infrastructure, such as green streets. By incorporating community revitalization needs, with a focus on green infrastructure for stormwater management, a CBP3 model evolves the standard P3 contractual mechanism into a true partnership that focuses on improving water quality and a community's quality of life.
A CBP3 is a partnership between a local government and a private entity. The primary goal of a CBP3 is to provide high quality services in a cost effective way. The partnership is designed to:
- provide flexibility
- provide access to advanced technology
- address dynamic community development trends and goals
- encourage long-term financial and regulatory commitments for integrating green infrastructure into stormwater management programs.
A CBP3 model is not a one-size fits all approach, but a variety of potential options. The CBP3 structure selected depends on many factors, such as project complexity, public policy goals, private sector interest, and the potential CBP3’s “value for the money,” also known as a cost advantage. The desire and ability to transfer various risks from the public sector to the private sector is also a key consideration for determining the most appropriate CBP3 structure.
Communities of all sizes across the country have successfully been using the traditional P3 approach to design, build, and maintain their transportation, solid waste, energy, and drinking water/wastewater infrastructure needs. A CBP3 includes many features of the traditional P3 model, however, it is geared toward helping communities meet the unique requirements of stormwater management systems. The CBP3 model invests in green infrastructure approaches that provide for local economic growth and improved quality of life in urban and underserved communities. CBP3s have the potential to help many communities optimize their limited resources through agreements with private parties to help build and maintain not only stormwater infrastructure needs, but other public infrastructure as well.
The CBP3 model can leverage public investment with private equity at an estimated rate of 10:1 ($10 dollars of private equity per $1 public dollar) or higher. The CBP3 model develops a strong, long-term partnership between the municipality and the private equity group, creating shared risk burden and greater accountability, by reinvesting cost savings and revenues to create a pool of funds for future projects.
Partnerships between the public and private sectors have created a range of strategies to finance, plan, design, construct, operate and maintain public assets and/or deliver services. Partnering with the private sector has been identified as a viable alternative solution that will improve and sustain the ability of local governments to protect and restore our nation’s waters by:
- creating economic feasibility for stormwater retrofits
- helping to leverage local government resources
- fostering the development of cutting edge low impact development (LID) and green infrastructure (GI) strategies and technologies
- expediting project delivery
In March 2015, one of the first stormwater focused CBP3s (i.e., Clean Water Partnership) was implemented by Prince George's County, Maryland. To learn more about the Prince George's County CBP3, please visit the Clean Water Partnership page.
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- Financing Integrated Green Stormwater Infrastructure to Improve Community Health, Resiliency -- Getting the Best Deal for the Money - In October 2016, Bloomberg BNA released an article on green infrastructure financing that discuss needs and effective financing solutions for building a comprehensive integrated green stormwater infrastructure program that combines the strengths of green and grey solutions to provide multiple community benefits, including mitigation and rehabilitation of critical infrastructure damaged by extreme wet weather events.
- Sustainable Financing Forum for Faster, Cheaper, Greener Urban Stormwater Retrofits - In December 2014, EPA Region 3 convened a Sustainable Stormwater Financing Forum that focused on building sustainable stormwater infrastructure and economic health through Community-Based Public-Private Partnerships (CBP3s) and smart financing tools. This first-of-its-kind forum – described as “ground-breaking”, “visionary”, and “unique” – hosted approximately 80 representatives of federal, state, and local governments, non-government organizations, and academia, along with private sector engineers, developers, and finance industry representatives. Presentation and forum notes are also available.
- Community-Based Public-Private Partnerships (CBP3) Sustainable Stormwater Infrastructure Summit - In December 2015, the National Council for Public-Private Partnerships (NCPPP) Exit and the U.S. Environmental Protection Agency co-hosted a CBP3 Stormwater Infrastructure Summit in partnership with the Water Environment Federation Exit, Chesapeake Bay Trust Exit and Pennsylvania Water Environment Association Exit. The CBP3 Sustainable Stormwater Infrastructure Summit focused on the new and emerging area of public-private partnerships and provided a unique opportunity for attendees to learn from stormwater and P3 experts in one place
- Community Based Public-Private Partnerships and Alternative Market-Based Tools for Integrated Green Stormwater Infrastructure - This document presents a model Community Based Public Private Partnership (CBP3) program, with a variety of emerging market-based tools, that will help municipalities meet their stormwater management regulatory and community development municipal stormwater management program needs. The primary audiences for this document are municipal officials; program managers; procurement officials; environmental, legal and financing experts; and decision-makers that are interested in providing their communities with new and innovative ways to implement and finance large-scale stormwater retrofit programs and efforts.
- Public-Private Partnerships Beneficial for Implementing Green Infrastructure - This article from Bloomberg BNA explores new ways to accelerate the rate and reduce the cost of green infrastructure investment.
- Private Capital, Public Good: Drivers of Successful Infrastructure Public-Private Partnerships (PDF)(32 pp, 9 MB) Exit - This paper by BROOKINGS provides an overview of basic public-private partnership structure, how to consider proper risk and reward sharing, and the purpose and the rationale behind these arrangements. It is based on extensive background research and directly informed by interviews with leading practitioners from the public and private sector. Primarily, this paper presents nine recommendations for public leaders as they consider P3s and is intended to serve as a guide to executing them in the public interest.
- Public-Private Partnerships in the Provision of Water and Wastewater Services: Barriers and Incentives - This document published in April 2008 by EPA's Environmental Financial Advisory Board discusses the nature of P3, their present role in the industry, and certain barriers or disincentives to wider use of P3s.
- Bringing the ‘Community’ Into P3s Just Makes Sense for Green Infrastructure Exit - An article by Storm and Stream Solutions highlights EPA's Community Based Public-Private Partnerships and Alternative Market-Based Tools for Integrated Green Stormwater Infrastructure: A Guide for Local Governments, as the first publication that provides an in-depth overview of the CBP3 approach.
- Prince George's County Approach to Meeting Regulatory Stormwater Management Requirements (PDF) Exit - The Clean Water Partnership (CWP) authored this document as an innovative business model in the field of stormwater management that aims to meet regulatory requirements by leveraging private-sector resources and promoting operational efficiencies and innovation in design, construction, and maintenance. The CWP was designed to create “green jobs” that preserve and restore environmental quality, expand the County’s small businesses, promote educational opportunities for students by collaborating with local stakeholders to achieve the County's goals.