New Orleans, Memphis Win Flood Mitigation Funding Challenge
During meetings in Washington, D.C., with various officials March 3–5, the Mississippi River Cities & Towns Initiative (MRCTI) announced an innovative new public-private financing tool to help river communities deal with some of the challenges of increased flooding.
MRCTI partnered with the firm Quantified Ventures to create the Environmental Impact Bond Challenge, with support from the McKnight and Walton Family Foundations.
Through the challenge, Quantified Ventures will bring its expertise in structuring environmental impact bonds (EIBs) to help communities finance more natural and resilient infrastructure throughout the river corridor that previously lacked access to funding.
New Orleans, La., and Memphis, Tenn., both MRCTI cities, were the first two winners of the challenge. New Orleans will use its environmental impact bond to scale green mortgage offerings from the Finance Authority of New Orleans, as well as to capitalize a Green Infrastructure Fund to implement resilience projects throughout the city.
Memphis will focus its Environmental Impact Bond on financing a suite of green infrastructure projects concentrated in the Fairgrounds and Beltline neighborhoods to reduce local flooding, improve water quality, provide community green space, and revitalize underutilized areas.
“It’s wonderful to win the first Environmental Impact Bond grant from MRCTI and Quantified Ventures, and congratulations to our neighbors a little upstream in Memphis,” said LaToya Cantrell, mayor of New Orleans. “We hope the success of these two projects yields more EIB deployments throughout our region for natural infrastructure.”
How EIBs Work
According to the MCRTI’s website, an EIB “is an outcomes-based financing tool that provides up-front capital for innovative environmental programs, either to pilot a new approach whose performance is viewed as uncertain, or to scale up solutions that have been tested on a smaller scale.” Private investors pay the upfront costs for deploying these environmental solutions.
If the project succeeds and meets its goals, the city or pubic agency pays back the private investors. If the project fails, the public entity is, it is claimed, protected from its creditors. The protect themselves from the risk they are taking on by only financing carefully vetted projects, or projects that have already been tested on a smaller sale, but which the public entity can’t afford to scale.