Climate Finance

Equitable Green Infrastructure in Buffalo, NY

Location: Buffalo, NY

Status: Complete

Quantified Ventures partnered with the Buffalo Sewer Authority to design and structure an Environmental Impact Bond that finances green stormwater infrastructure (GSI) to manage at least 200 acres of impervious surface in the city of Buffalo, NY. The $54 million issuance - the largest EIB to date - will accelerate improvements to water quality, job creation, and environmental justice.

Green stormwater infrastructure – such as rain gardens, tree plantings, and permeable pavement – is designed to capture and divert stormwater to prevent it from entering the sewer system at peak times. GSI projects reduce the number of combined sewer overflow events, resulting in cleaner local waterways and Lake Erie. With the bond proceeds, Buffalo Sewer’s pace of infrastructure installation is expected to increase from approximately 9.5 acres per year during 2014-2020 to more than 28 acres per year from 2021-2027.

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Problem

Municipalities nationwide are wrestling with cost-effective options to manage stormwater in locations that use combined sewer systems and/or are prone to chronic flooding. Buffalo, like many older cities, has a combined sewer system. In wet weather, untreated wastewater can overflow into creeks, rivers, and lakes. The Buffalo Climate Vulnerability Assessment estimates the city will face up to 4 inches of additional annual precipitation by mid-century, increasing the risk of flooding and putting additional strain on stormwater infrastructure.

Approach

Quantified Ventures worked with the Buffalo Sewer Authority to structure a first-of-its-kind $54 million EIB to design and implement green infrastructure to capture stormwater, reduce combined sewer overflows, and produce more green jobs. Buffalo Sewer is the first municipal issuer in the United States to link a positive incentive to performance, and the EIB includes an option to refinance or retire the bond early (beginning in year 7), should it meet or exceed the outcome threshold of 200 acres of impervious surface area managed through projects financed and implemented with bond proceeds.

Impact

The initiative will better manage stormwater from easements and on public land in key combined sewer overflow (CSO) basins, allow new opportunities for impact-oriented investors to support the greening of Buffalo, reduce stormwater fees for rate payers, and triple the authority’s pace of green infrastructure projects. Six priority combined sewer overflow basins that are home to 48 percent of Buffalo’s residents are the focus for the green infrastructure. The basins were selected based on social and economic equity considerations in addition to stormwater management need.

Buffalo Sewer is committed to delivering critical services to protect public health and support the vitality of the community, environment, and economy. Green infrastructure manages runoff, improves local waterways, increases the region’s climate change resiliency, creates jobs, and enhances overall quality of life. These projects are expected to create around 700 “family-sustaining” community jobs. The EIB was awarded the Environmental Finance U.S. municipal green bond of the year.