ImpactAlpha, June 24 — Environmental impact bonds, or EIBs, reward investors for backing projects that achieve positive environmental outcomes. Baltimore, Atlanta and Hampton, Va., have used the pay-for-success mechanism to finance green infrastructure.
Buffalo’s $54 million EIB, the largest yet, will fund rain gardens, tree plantings, and permeable pavement to reduce runoff and improve water quality.
An incentive: an “outcomes-based call feature” lets the sewer authority save on financing costs if it replaces at least 200 acres of impervious surface by 2028. The projects are expected to create around 700 “family-sustaining” community jobs, says Buffalo Mayor Byron W. Brown.
Pay for success
Morgan Stanley and impact advisory firm Quantified Ventures helped structure the bond. “Buffalo Sewer has incentivized itself to move swiftly with green infrastructure implementation,” said Quantified Ventures’ Eric Letsinger.
The Ralph C. Wilson Jr. Foundation, the Community Foundation for Greater Buffalo and the Great Lakes Protection Fund backed employee-owned Environmental Consulting & Technology to bring alternative financing structures to Buffalo.