In 2015, Hampton, Virginia, initiated a flood resiliency effort and worked across the coastal region with Norfolk, Virginia Beach, and the Hampton Roads Planning District Commission to elevate coastal resiliency as a regional priority. The communities hosted a Dutch Dialogue conversation to help the region think about water management—and how to “live with water.” Hampton wanted to not only “live with water,” but to actually implement projects on the ground that would provide multiple benefits to the community.
David Imburgia, Hampton’s Resiliency Officer, didn’t want the plan to just sit on the shelf. He wanted to implement pilot projects that would advance the plan, provide multiple benefits, and demonstrate success. He wanted those projects to be evaluated to make sure they were performing as expected and providing meaningful community outcomes. However, David knew that they didn’t have a lot of money to implement new large-scale projects, so they needed to be creative. David connected with The Chesapeake Bay Foundation, a local independent conservation organization, which introduced the idea of pursuing an Environmental Impact Bond (EIB). These bonds push the envelope further than common green bonds by predicting, evaluating, and disclosing actual outcomes of funded projects.
David anticipated that the community members would be interested in not only managing stormwater and reducing flooding, but also in creating important community spaces. He also realized that people might be willing to invest in the community to ensure the project impacts provide a diversity of resilience benefits.
With these ideas in hand, and with help from the Chesapeake Bay Foundation, David started building partnerships and making connections with people and entities who could help. The Chesapeake Bay Foundation introduced David to Quantified Ventures, an outcomes-based capital firm dedicated to health, social, and environmental impacts. The foundation also provided David with a grant to work with Quantified Ventures to create a financing approach for supporting Hampton’s resilience projects. Quantified Ventures helped David understand an emerging market of investors who want to invest in projects that have a broader resilience impact in their community, and that this investment can be done through an Environmental Impact Bond, which allows individuals or entities to invest in specific community outcomes, and monitor the performance of the projects providing these benefits. An Environmental Impact Bond is like a standard municipal bond, with a twist. In addition to the typical financial commitments a city makes in a bond, the city also rigorously predicts, evaluates, and discloses actual project outcomes accomplished by the financed projects. (Some Environmental Impact Bonds may alter the bond’s interest rates based on evaluated outcomes, although Hampton’s bond did not have this option.)
David and the Hampton team worked with Quantified Ventures to start designing the Environmental Impact Bond. They first worked to identify the outcomes Hampton could quantify as a measure of enhanced community resilience. Ultimately, the chosen Environmental Impact Bond outcome metric was the gallons of stormwater runoff the projects could absorb. Hampton hired engineers who could help design projects, predict the amount of stormwater runoff storage they would provide, and validate the post-implementation evaluation methodology.
Creating this Environmental Impact Bond allowed Hampton to attract new types of investors, signal to the community that taxpayer dollars are being put to good use, and signal to other municipalities that this is a good thing to do—measuring your outcomes and using the data to guide your investments. It provides accountability. “To find these investors, you have to call them!" said David. "Big foundations with big names and money are a good place to start.”
The initial projects Hampton prioritized for the Environmental Impact Bond are in Newmarket Creek Basin, which runs right through the city. Projects completed in the basin will have positive impacts on low- to moderate-income neighborhoods, will be visible to the rest of the community, and will demonstrate the importance of social equity to the city council. Hampton evaluated opportunities across the entire basin, and after hosting several community workshops and meetings to get input, designed a series of nature-based projects and renderings. The projects represented multiple locations throughout the basin, so that if they worked well, they could be easily replicated in other neighborhoods. Projects included retrofitting standard ditches into linear stormwater parks and looking at how roads, greenways, and public parking lots are constructed to provide multiple benefits and improve stormwater management.
[Side Note: Stormwater fees are typically used to help implement stormwater runoff projects, but some non-stormwater elements of these projects may not be eligible for this source of funding. Environmental Impact Bonds can cover a broader array of public benefits because they are designed around outcomes.]
David and the Hampton team shared project renderings with other potential partners who would benefit from the anticipated outcomes, such as open space and reduced flooding. He had conversations with the local hospital about health benefits resulting from projects, focused on improved roadwater conditions with the Department of Transportation, and discussed multi-use greenway projects with the Department of Conservation and Recreation. These connections formed important partnerships that helped provide additional project funding and ways to measure additional outcomes, including how many people use the greenways, decreases in health issues, and photo metrics for habitat creation.
