GUIDEBOOK of
FINANCIAL TOOLS:
Paying for
Environmental Systems
Tun****1
&
U.S. Environmental Protection Agency
Office of the Chief Financial Officer
Environmental Finance Program
August 2008
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Foreword Page i
Comprehensive Financial Tools
Section 1. Tools for Raising Revenue Page 1-1
1A. Taxes Page 1A-1
IB. Fees and Special Charges Page 1B-1
Section 2. Tools for Acquiring Capital Page 2-1
2A. Bonds Page2A-l
2B. Loans Page2B-l
2C. Grants Page 2C-1
Section 3. Tools for Enhancing Credit and Lowering Costs Page 3-1
Section 4. Tools for Building Public-Private Partnerships Page 4-1
4A. Public-Private Partnership Arrangements Page 4A-1
4B. Public-Private Partnership Case Studies Page4B-l
Section 5. Tools for Delivering Financial Outreach Page 5-1
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Targeted Financial Tools
Section 6. Tools for Accessing State and Local Financing Page 6-1
Section 7. Tools for Financing and Encouraging
Pollution Prevention and Recycling Page 7-1
Section 8. Tools for Financing Community-Based Environmental Protection Page 8-1
Section 9. Tools for Financing Brownfields Redevelopment Page 9-1
Section 10. Tools for Financing Small Businesses and
the Environmental Goods and Services Industry Page 10-1
10A. Equity Capital Page 10A-1
10B. Debt Page 10B-1
Appendices
A. Environmental Financial Advisory Board Page A-l
B. Environmental Finance Center Network Page B-l
C. Environmental Financing Information Network Page C-l
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This 2008 revision of the Guidebook of Financial Tools is a reference work examining a wide
range of different tools for financing sustainable environmental systems. The term "sustainable
environmental systems" refers to virtually any successful or potentially successful environmental
protection initiative, including public and private environmental protection programs.
Environmental protection initiatives that were not previously sustainable can be made productive
and sustainable with the proper financing. The ten sections of the Guidebook present outline
information on over three hundred financial tools that can help make environmental protection
initiatives more sustainable. This intensive revision includes the addition of a new section titled
"Tools for Accessing State and Local Financing" which includes many state grant programs.
The Guidebook is designed to assist all interested parties in the public and private sectors with
finding the means of financing environmental protection initiatives that are appropriate for them.
Sections one through five of the Guidebook examine comprehensive financial tools, such as
environmental finance organizations and websites, public-private partnerships, and traditional
means of raising revenue, borrowing capital, and enhancing credit. Guidebook sections six
through ten examine specialized financial tools, many of which are geared towards specific
geographic areas and types of projects. These specialized financial tools include approaches to
paying for pollution prevention, community-based environmental protection, and brownfields
redevelopment. They also include ways of improving access to capital for small businesses and
the environmental goods and services industry. Each financial tool in the Guidebook is divided
into a "Description" section and a "Reference for Further Information" section that includes
internet links and other references.
The Guidebook is the product of a collaborative effort among the United States Environmental
Protection Agency's (EPA) Environmental Finance Program, which includes the EPA
Environmental Finance Staff, members of the Environmental Financial Advisory Board (EFAB),
the directors and staff of the university-based Environmental Finance Center Network (EFCN),
and other contributors. The question of how to pay and who pays for environmental mandates is
a central theme for the work of the Environmental Finance Program. The 2008 Guidebook
revision and any future Guidebook revisions will remain as final drafts. One of the reasons for
the ongoing "final draft" status is that the Guidebook's contributors are continuously discovering
more unique and innovative financial tools to add to the publication. In this spirit, new financial
tools will be periodically added to the online version of the Guidebook. The Guidebook is
available online at wqjAjLepa4|gvMin|)age and hard copies are available on request.
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This section describes specific financial mechanisms which states and localities use to raise
funds for environmental protection programs and initiatives. The following means for
generating revenue are presented: general taxes, selective sales taxes, and fees. A tax is defined
as a financial charge or other levy imposed on an individual or legal entity by a state or a
functional equivalent of a state, such as a tribe. General taxes are levied on a very broad section
of the general public, such as wage earners or property owners. Selective sales taxes are levied
on the sale of particular commodities and services. A fee is defined as the price one pays as
remuneration for services, such as government administrative services and utility services. Fees
are also defined as financial charges for activities undertaken, including polluting activities such
as solid waste disposal.
Many of these tools for raising revenue are used primarily by state and local governments, and
some are used by the federal government as well. Revenues from taxes typically go into the
general funds for state and local governments. The process of gaining voter approval for
dedication or earmarking of taxes for environmental protection initiatives is often difficult,
considering that government-funded programs vigorously compete for monies and the popularity
of environmental issues rises and falls over time. Revenues from fees are often deposited into
special funds related to the product or service upon which the fees are levied, such as fees on
fertilizer and pesticide sales being deposited into a dedicated fund for pesticide and fertilizer
regulation.
Taxes are by far the largest source of revenue for state and local governments. Fees, with the
exception of user fees which raise significant revenue, are much less universally used and
generate far less revenue than taxes. Some revenue generation tools are more suitably dedicated
to specific environmental work than others. For example, large and relatively stable revenue
sources may be ideal for environmental infrastructure capital and land-related projects such as
parks, while smaller revenue sources can fund program operating functions such as personnel,
monitoring, and technical assistance. Some taxes and fees have dual purposes in that they raise
revenue in addition to acting as market devices to alter polluting behavior by requiring the
polluter to pay for engaging in that behavior.
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1. Alcoholic Beverage Taxes
2. Federal Fuel Taxes on Motorboats and Small Engines
3. Energy Taxes
4. Ecological Taxation
5. Occupancy and Public Accommodation Taxes
6. Insurance Premium Taxes
7. Litter Taxes
8. State Tax Check-off Programs
9. Earmarked Selective Sales Taxes
10. Motor Fuel Taxes
11. Motor Vehicle Sales and Registration Taxes
12. Aviation Taxes
13. Real Estate Transfer Taxes
14. Rental Car Taxes
15. Tobacco Taxes
16. Open Space Sales Taxes
17. Taxpayer Contributions Toward Toxic Waste Site Cleanup
18. Gross Receipts Taxes
19. Corporate Income Taxes
20. Estate and Inheritance Taxes
21. Individual Income Tax Deductions
22. Local Sales Taxes
23. Tangible Property Taxes
24. Real (Ad Valorem) Property Taxes
25. State Sales and Use Taxes
26. Solid Waste Collection Taxes
27. Severance Taxes
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Alcoholic beverage taxes are levied by states and the federal government on over-
the-counter purchase of alcoholic beverages. They are based on volume or value of beverages
sold, and include liquor, wine and beer. Since alcohol is distilled from agricultural products, the
federal government or state governments could potentially justify dedicating a surcharge on
alcoholic beverage taxes to agricultural runoff control or other land-based programs.
Alternatively, since breweries require a large volume of clean water and discharge wastewater
from distilling processes, revenues from an alcoholic beverage tax surcharge could be dedicated
to drinking water treatment and point source water pollution control programs. Since
administrative records of alcohol sales already exist, a tax surcharge would be administratively
simple to collect and track. The demand for alcohol is relatively unresponsive to price changes;
thus a tax increase would not necessarily cause a decrease in sales sufficient to offset revenues.
for The Tax Foundation Website:
Mtp;//wwwiaxfQandation,org/, search the Website on "alcoholic beverage taxes."
Minnesota House of Representatives House Research Website:
http://www.house.leg.state.mn.us/hrd/issinfo/ssalbvtx.htm. Tennessee's "Alcoholic Beverage
and Beer Tax Guide," Nov. 2005: http://www.state.tn.us/revenue/taxguides/alcbevguide.pdf.
on
Revenues from federal motor fuel excise taxes levied on motorboats and small
engines are dedicated to boating safety and fisheries conservation related activities under the
authority of the 2005 amendments of the federal Wallop-Breaux Act. The 2005 reauthorization
of Wallop-Breaux redirects to the Sport Fish Restoration and Boating Trust Fund approximately
$110 million per year of revenues from federal fuel taxes paid by anglers and boaters which
previously went into the general treasury. The fuel taxes directed to the Sport Fish Restoration
and Boating Trust Fund are distributed according to a formula supported by the American
Sportfishing Association and a coalition of 33 other fishing and boating organizations. The Trust
Fund amounts to about $570 million per year, which is directed to state fish and wildlife
agencies as a primary source of their funding. Activities financed with the Trust Fund include
fisheries monitoring, habitat conservation, and restoration; fishing and boating access facilities
such as docks, piers, and boat ramps; and education and safety programs for anglers and boaters.
for American Sportfishing Association Website:
http://www.asafishing.org/asa/government/wallop breaux.html. "Wallop/Breaux renewed &
expanded," Boat/USMagazine, September 2005, available at
5 10/ai nl5393958.
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Energy taxes are surcharges on bills for utilities such as electricity, heating oil, and
gas. Many U.S. states and municipalities require utilities within their borders to charge energy
taxes to their customers. When energy taxes are levied only on energy sources that emit carbon
dioxide into the atmosphere, they are called carbon taxes. Carbon taxes make polluting energy
sources such as coal and oil more expensive than renewable, non-polluting energy sources such as
wind and solar. This creates economic incentives for consumers, power companies, and utilities
to switch to renewable energy sources. Carbon taxes are not yet charged at any location in the
U.S. The State of Vermont is considering implementation of a carbon tax. The debate over
whether or not to adopt a carbon tax is currently most active in the European Union. New
Zealand seriously considered adopting a carbon tax in 2005.
for Global Policy Forum Website:
http://www.globalpolicy.org/socecon/glotax/carbon/index.htm.
Myer, Rod, "Carbon tax too costly, says NZ," Business, December 30, 2005, available at
nz/2005/12/29/1 135732693442.html. U.S. Environmental Protection Agency Website:
http://vosemite.epa.gov/gw/StatePolicvActions.nsf/uniqueKevLookup/BMOE5PVJHS7OpenDoc
ument
Ecological taxation is a fiscal policy that introduces taxes designed to promote
environmentally sustainable activities via economic incentives. This fiscal policy is referred to
as the "green tax shift" in cases where it is designed to prevent changes in overall tax revenue by
proportionately reducing taxes that are not believed to promote environmentally sustainable
activities. "Ecotax" is short for ecological taxation. The taxes that are introduced pursuant to the
policy of ecological taxation are called Pigovian taxes. Pigovian (also spelled Pigouvian) taxes
are levied to correct the negative externalities created by market activities. Examples of negative
externalities created by market activities include pollution from burning fossil fuels and increases
in incidence of asthma in a particular geographic area as cigarette smoking increases in that area.
Pigovian taxes levied for environmental protection purposes include taxes on products and
activities that contribute to environmental pollution, such as taxes on motor fuels. These taxes
encourage the consumer to use less of the product because they add to the price of the product.
of U.S. Environmental Protection Agency Website:
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!
Occupancy and public accommodation taxes, frequently called "transient
occupancy taxes," are levied on accommodations in hotels, inns, tourist houses, motels, and other
lodging used by tourists, such as campsites and campgrounds. State and local governments use
the proceeds from public accommodation and occupancy taxes for various purposes including
environmental protection initiatives that can be beneficial to tourists. For example, Delaware
dedicates 1% of its 8% public accommodation tax to its Beach Preservation Program, which is
administered by the state's Department of Natural Resources and Environmental Control. Dare
County, North Carolina uses 1% of the proceeds from its 5% occupancy tax to finance beach
nourishment projects, such as the planting of vegetation and the building of structures including
sand fences and dunes. These beach nourishment projects are done for the purpose of widening
beaches to mitigate erosion from storms and prevent damage to property near the shoreline.
for
Delaware Code: http://www.delcode.state.de.us/title30/c061/sc01/index.htm.
Dare County, North Carolina Website:
Lcom/dents/Taxes/CQUections/occBjitoi. .
Insurance premium taxes are levied on the state level. The revenues from
insurance premium taxes are frequently dedicated to pension funds. There are a couple of ways
that insurance premium tax revenues could be used for environmental protection purposes. First,
insurance premium tax revenues could be placed in pension funds screened by managers to
ensure that all capital is invested in companies, financial institutions, monetary funds, and/or
other financial entities that have taken clear steps to minimize their environmental impact. Also,
insurance premium tax revenues could be dedicated to specific environmental protection
initiatives. For example, proceeds from taxes on auto insurance premiums could be used to fund
air pollution control. Taxes on insurance premiums have a large tax base so they yield a
significant and predictable revenue stream. Revenues from taxes on the premiums of mandatory
types of insurance, such as auto liability insurance, are the most predictable.
for See "Green Investments" in Section 7 of this Guidebook.
Federation of Tax Administrators Website, with links to the tax agencies of all 50 U.S. States
and Puerto Rico:
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Litter taxes are imposed on businesses that produce, distribute, or sell consumer
products that contribute to litter problems. These taxes are levied by state governments and
municipalities. The State of Virginia levies a litter tax on manufacturers, wholesalers,
distributors, and retailers of consumer products. Ninety-five percent of Virginia's litter tax
revenues are used for litter prevention and recycling grants. The other five percent of Virginia's
litter tax revenues goes to the Virginia Department of Environmental Quality to administer the
grant program and provide support for the Litter Control and Recycling Fund Advisory Board.
The State of Washington imposes a litter tax on industries that sell, manufacture, or distribute
consumer products and packaging. Twenty percent of the proceeds from Washington's litter tax
funds the Community Litter Cleanup Program, thirty percent of the proceeds funds waste
reduction and recycling efforts, and the remaining fifty percent funds other litter cleanup efforts.
The city of Oakland, California imposes a litter tax on fast food restaurants, retailers, and other
businesses and uses the revenues from the tax to pay crews to pick up litter.
for The Tax Foundation Website:
httpi//www^ Virginia Department of Environmental
Quality Website: htt|i^/w^¥wjie£jM Washington State
Department of Ecology Website: http;//w¥w,ecy^
State tax check-off programs allow taxpayers to "check-off contributions to state
programs on state personal income tax returns. All state tax check-offs, with the exception of
those directed to political campaign funds, are donations from a taxpayer's refund. Many U.S.
states use check-off programs to raise money for environmental protection initiatives. For
example, Ohio's income tax check-off programs for endangered wildlife have helped foster the
return of bald eagles and have helped preserve the habitats of rare plants such as the lakeside
daisy. Oregon's tax check-off for wildlife funds habitat restoration and species management for
the 88% of Oregon's wildlife that is not hunted, trapped, or angled. Kentucky's state income tax
check-off program provides funds for the Non-game Division of the Kentucky Department of
Fish and Wildlife Resources and the state's Nature Preserves Commission.
for Federation of Tax Administrators Website:
http://www.taxadmin.org/FTA/rate/Checkoff03 .html . Ohio Department of Natural Resources
Website: http://www.ohiodnr.com/features/jan06taxcheckoff.htm.
Oregon Department of Fish and Wildlife Website:
...... checkoff/.
Kentucky State Nature Preserves Commission Website:
jiat^
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Selective sales taxes, unlike general sales taxes, are applied to specific
commodities. Any product or service could be subject to a state or local selective sales tax,
provided that voter approval is gained in jurisdictions where it is required. Most selective sales
taxes are either limited to a specific time period, or used to raise a specific dollar amount, and
then ended. Any state or locality may seek to establish a selective sales tax and earmark it for a
widely supported environmental purpose, such as parks, recreation, open space, nature centers
and trails, and environmental education. The Coconino Parks and Open Space Program in
Coconino County, Arizona is funded with a one-eighth of one-cent sales tax, which has been
extended to 2012 and is devoted to the protection of natural areas and the creation and
enhancement of county parks. Colorado Springs, Colorado's Trails, Open Space and Parks
Program (TOPS) has used revenues from a one tenth of one percent sales tax, which has been
extended to 2025, to preserve more than 3,100 acres of open space throughout the city.
for The Trust for Public Land Website:
cdLcfmTcontent id=19602&fQlder id=1365.
Motor fuel taxes are imposed on the state and federal levels and are levied on
gasoline and other fuels. All 50 U.S. states and the District of Columbia charge gasoline taxes.
State gasoline tax rates generally range from 10 cents to 33 cents per gallon. The U.S. federal
motor fuel excise tax (per gallon) is 18.4 cents on gasoline, 13.6 cents on Liquefied Petroleum
Gas (LPG), 18.4 cents on gasohol, 19.4 cents on aviation gas, and 4.4 cents on jet fuel. Each
time the federal motor fuel tax is charged, 0.1 cent per gallon goes to finance the federal Leaking
Underground Storage Tank (LUST) Trust Fund. State and federal motor fuel tax revenues are
typically dedicated to highway construction and maintenance. Revenues from state and federal
motor fuel taxes could potentially be earmarked to fund air pollution control and related
research.
for Internal Revenue Service Website: Mtj)^ywj¥wJrjKgov/.
Contact the Revenue Departments and/or Departments of Transportation for individual states.
State of South Dakota Department of Transportation Website (has link to information on state
gasoline taxes throughout the U.S.): http://www.sddot.com/geninfo fuel .asp.
U.S. Environmental Protection Agency Website: http://www.epa.gov/OUST/ltffacts.htm. See
"U.S. Environmental Protection Agency: Leaking Underground Storage Tank Trust Fund
Grants" in Guidebook Section 2c.
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All 50 U.S. states charge taxes on the purchase and registration of new and used
motor vehicles. Motor vehicle sales taxes are levied on vehicle sales and title transfers. Motor
vehicle registration taxes are levied at the time of initial registration and registration renewal for
vehicles. Registration is provided to document payment of motor vehicle registration taxes.
Generally, the funds raised with taxes on motor vehicles are used to pay for highway-related
state programs. Many states have statutory or constitutional limits on the earmarking of the
revenues from motor vehicle sales and registration taxes. In states without these limits, a portion
of the revenues from these taxes could be earmarked to air pollution control programs, public
transit programs, bike trail construction and maintenance, or other environmental protection
related initiatives. For example, the Illinois Department of Natural Resources Bike Path Grant
program is funded through the state's vehicle title transfer tax, which is levied on cars, trucks,
and trailers.
for Federation of Tax Administrators Website, with links to
the tax agencies of all 50 U.S. States and Puerto Rico:
Illinois Trail Riders Website: http://www.illinoistrailriders.com/Horse%20Trails.htm.
Airlines and their customers pay a number of taxes and fees to a variety of
authorities, both in the United States and abroad. The stated purposes of aviation taxes and fees
mandated by the U.S. government include environmental protection, homeland (national)
security, disease control, and airport operations and maintenance. Revenues from the U.S.
federal Commercial and Noncommercial Aviation Jet Fuel Taxes and the U.S. federal
Noncommercial Aviation Gasoline Taxes could potentially be used to fund programs to address
air pollution caused by the burning of fuel by airplanes. Also, these aviation fuel taxes create an
incentive for airlines to conserve fuel because they add to the cost of the fuel. The U.S. Federal
Leaking Underground Storage Tank (LUST) Fuel Tax is an aviation tax that is used to raise
funds for the U.S. Environmental Protection Agency's Leaking Underground Storage Tank
(LUST) Trust Fund. The LUST Trust Fund provides states with grants for the purpose of
addressing releases from Leaking Underground Storage Tanks containing petroleum.
for Air Transport Association Website:
http://www.airlines.org/economics/taxes/. See "U.S. Environmental Protection Agency:
Leaking Underground Storage Tank Trust Fund Grants" in Section 2c of this Guidebook.
Global Policy Forum Website: MtixZ/wwy^JQ^^^
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Real estate transfer taxes are charged to the buyer and/or seller of real property at
the time of sale, based on a percentage of sale value of the property, a flat deed registration tax,
or a combination. Sales of residential, commercial, and industrial properties are subject to real
estate transfer taxes. Rates and dispositions for these taxes vary from state to state. Localities
must seek state legislative approval in some states, such as North Carolina, before they can
impose the tax. Some states make collection of these taxes a county responsibility while
directing the revenues to the state general fund; other states give local governments the authority
to collect and keep the tax revenues. Many states and communities use proceeds from real estate
transfer taxes to establish dedicated funds for natural resource protection initiatives including the
establishment of parks and preservation of open space. Transfer taxes can inflate real estate
values and slow the market. However, dedication of real estate transfer tax revenues to popular
land protection programs enhances the acceptability of the taxes.
for U.S. Environmental Protection Agency Website:
The Trust for Public Land Website:
http://www.tpl.org/tier3 cdl.cfm?content item id='1060&folder id=825
State and local sales taxes are frequently charged on car rentals; and the dollar
amounts of these taxes are growing in many locations. State and municipal governments are
increasingly using rental car taxes to finance civic projects. Rental car taxes could be used to
finance infrastructure improvements, such as increases to the capacity of wastewater and
drinking water treatment plants, that are needed to meet the needs of seasonal tourists. In
addition, revenues from rental car taxes could be used to fund air pollution control programs.
Rental car tax revenues might also be used to finance public transportation programs and
projects. Washington State uses revenues from its rental car tax to fund its Regional Transit
Authority, which is devoted to financing a high capacity, rapid public transit system.
for Yu, Roger, "Heavy taxes crash down on car rental
industry," USA Today, available at: http;//wwwjjj^^
rentals-taxes-usat_x.htm. The Tax Foundation Website:
http://www.taxfoondation.Org/blog/show/l 172.html. Smarter Travel Website:
http://www.smartertravel.com/car-rental/Beware-hidden-rental -fees. html?id='l 1308.
Washington State Department of Revenue Website:
rentajcarasEx
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Tobacco taxes include cigarette taxes and taxes on other tobacco products. The
2006 U.S. federal cigarette excise tax is $.39 per pack. All 50 U.S. states and several U.S.
territories have cigarette taxes. Most U.S. states have taxes on other tobacco products as well.
Some states earmark a portion of revenues from taxes on cigarettes and/or other tobacco products
for environmental purposes. The State of Washington dedicates a portion of its cigarette tax
revenues to water quality protection and salmon recovery programs. The State of Idaho uses a
portion of its cigarette tax revenues for water quality protection initiatives.
for Campaign for Tobacco-Free Kids Website:
http://www.tobaccofreeldds.org/reports/prices/. National Conference of State Legislatures
Website: http://www.ncsl.org/programs/health/Cigarette.htm.
Federation of Tax Administrators Website: ://www.taxadmin.org/fta/rate/tax_stru. .
The Tax Foundation Website: httg;//_wwwj_a^^^
Washington State Department of Revenue Website:
http://dor.wa.gov/content/taxes/other/tax ci
Russell, Betsy Z., "Cigarette tax stays at 57 cents, three Panhandle lawmakers join ,"
Spokesman Review, The (Spokane), March 30, 2005, available at:
http://wwwJM
Open space sales taxes are levied at the county level to raise money for parks and
open space preservation initiatives. For example, in 2004, Adams County, Colorado voters
approved a twenty year extension of a one fifth of one percent sales tax that is used to fund the
preservation of open space and the creation and maintenance of parks and recreation facilities.
In 1990, Sonoma County, California voters approved a quarter cent sales tax that will be
extended through 2011 and is used to fund an open space, clean water, and farmland protection
measure. Arapahoe County, Colorado electors voted in 2003 to approve a 0.25% open space
sales and use tax, effective through 2013, that is used to fund the preservation of open space.
for The Trust for Public Land Website:
http://www.tpl.org/tier3 cdl.cfm?content item id=4521&folder id=1365.
Adams County, Colorado Website:
httji://webjii3^^^
Articles from Petaluma Argus-Courier, a California newspaper:
http://wwwl.arguscourier.com/apps/pbcs.dll/article?AID=/20061004/NEWS01/61003017.
Arapahoe County, Colorado Website:
http://www.co.arapahoe.co.us/Departments/PW/OpenSpaceProgram/salesandusetax.asp
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In 1995, the polluter pays fees under the U.S. federal Superfund law expired. The
polluter pays fees that expired included the crude oil tax, the chemical feedstock tax, and the
corporate environmental income tax. These fees could potentially be reinstated by Congress, and
groups such as the U.S. Public Interest Groups (PIRGs) are working to make that reinstatement
happen. Since the expiration of the Superfund polluter pays fees in 1995, the financial burden
for cleaning up toxic waste sites has switched entirely to U.S. taxpayers. Between 1995 and
2006, the burden to taxpayers for cleaning up Superfund sites increased in all U.S. states by
hundreds of millions of dollars. For example, the cost to taxpayers for cleaning up Superfund
sites in California, a state with 93 Superfund sites, increased from $36,837,101 in 1995 to
$461,523,140 in 2004-2005. Taxpayers now pay for all Superfund-led toxic waste site cleanups,
spending well over $1 billion annually to protect public health from industrial pollution.
for U.S. Public Interest Groups (PIRG) Website:
^
Gross receipts taxes are levied on the gross amount of money or other
compensation, such as barter, that a business receives for its transactions in a given state. The
gross taxable amount includes all reimbursed expenses billed to the customer. Examples of these
expenses are charges for meals, travel, hotels, shipping, handling, and postage. In some states,
gross receipts taxes are assessed in lieu of sales taxes or corporate income taxes. Examples of
gross receipts style taxes include Texas's franchise tax on gross receipts of businesses, which is
levied at a rate of 0.5% for retailers and 1% for other businesses, New Mexico's gross receipts
tax, Kentucky's alternative gross receipts tax, Michigan's Single Business Tax, Washington's
Business and Occupations Tax, and Ohio's Corporate Activity Tax. Gross receipts tax revenues
from particular businesses could be dedicated to initiatives addressing the environmental impacts
created by that business. For example, revenues from the gross receipts of dry cleaning
businesses could be used to fund small source air emissions reduction programs.
for Tax Foundation Website: http://www.taxfoundation.org/,
search the Website on "gross receipts taxes." Contact the taxation and revenue offices for
specific states to find out if they levy these taxes. State of New Mexico Taxation & Revenue
Website: htt®'J/www,state,n^
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Corporate income taxes, also called corporate franchise taxes, are based upon the
net income earned by corporations. They are levied at the state and federal levels. State and
federal dedication of corporate income taxes to environmental protection is not common. Still,
corporate income tax revenues could be dedicated to finance environmental programs that stem
from a particular corporate activity. For example, if two percent of revenue were collected from
mining companies, those funds could be earmarked for erosion control, habitat restoration, and
other activities that mitigate the environmental impacts of mining. Similarly, revenues from
bottling companies could be used to finance state recycling programs. With a relatively broad
revenue base, corporate income taxes can be charged at relatively low rates and still generate
significant revenues. They can be used to add pollution control to the overall costs of
production.
for National Conference of State Legislatures Website:
Tax Foundation Website: hjlp;//w¥wJaxf(MM^^ and
http://www.taxfoundation.org/publications/show/1479.htnil
Estate taxes and inheritance taxes are levied on inherited property at or above a
specified value. In the United States tax code, estate taxes are paid by the executor of the estate
before the heirs receive it, while inheritance taxes are paid by the heirs after ownership of the
estate is passed on to them. These taxes provide a broad revenue base. States could earmark a
portion of estate and inheritance taxes to general environmental programs. In addition, estate
and inheritance taxes can be structured to provide tax relief for property owners making outright
land donations and/or placing conservation easements on inheritance land, even during a donor's
lifetime. Many states structure estate and inheritance taxes to provide tax relief to donors for
land donated to state or local governments or nonprofit land trusts. The donated land can be
purchased and managed initially by state or local land trusts, such as The Nature Conservancy,
until the appropriate state or local agency assumes responsibility.
for Internal Revenue Service Website:
http://www.irs.gov/businesses/small/arti cle/0,,id=98968,00. html.
The Nature Conservancy Website:
,m
The Trust for Public Land Website: htt^//wwwJpLorg/, search the Website on "estate tax."
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Individual income taxes, also called personal income taxes, are assessed at the state
and federal levels, and sometimes at the county and municipal levels, based on a percentage of
income earned by individuals. Some states, such as Maryland, Virginia, and Colorado, allow
landowners who donate easements to take deductions on their state income taxes based on the
fair market value of the donated easement. The federal government allows individual income tax
deductions for land conservation easement donations as well. On August 17, 2006, the President
signed into law a substantial expansion of the federal conservation tax incentive for land
conservation easement donations. The new federal law raises the deduction a donor can take for
donation of a conservation easement from 30% of their adjusted gross income in any given year
to 50%. The law also allows qualifying farmers and ranchers to deduct up to 100% of their
income.
for The Trust for Public Land Website:
|iO]i^/wjw
Little Traverse Conservancy Website: http://www.landtmst.org/TaxInfo/NewTaxlnfo.htm.
Land Trust Alliance Website: http://www.lta.org/conserve/options.htm. Piedmont
Environmental Council Website: http://www.pecva.org/conservation/stateincometax.asp.
Maryland Department of Natural Resources Website: httpi//www;.dn£._state._m^^
Colorado Department of Revenue Website:
See "Conservation Easements" in Section 8 of this Guidebook.
Local sales taxes are often add-ons to state general sales and use taxes. They may
also exist where there is no state sales tax. Depending on state constitutions, statutes, and home
rule traditions, most local governments must seek voter approval to levy local sales taxes. State
authorization processes vary. States may give approval to all counties or communities, or limit it
to specific localities. Local taxes are usually limited to a specified time period, or a dollar
collection total, and are dedicated to a specific use. The dedicated revenue stream may be used
to back local general obligation or revenue bonds or to pay for a specific environmental
protection program directly. The revenues from local taxes are sometimes used to capitalize
local revolving funds for environmental protection purposes. Local sales taxes can support a
multitude of environmental protection programs. Local sales tax revenues are often dedicated to
initiatives such as open space acquisition, wetlands protection, or watershed protection.
for National Conference of State Legislatures Website:
^
Tax Foundation Website: : //www. taxfoundati on . org/re search/topi c/9 . html .
See Department of Revenue Websites for individual states.
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Tangible property taxes are levied on the estimated or assessed value of items of
personal property, such as automobiles and boats, but not land. Such taxes are charged on a
recurrent basis, frequently annually or biannually, and sometimes are limited to property worth
in excess of a specified dollar value. These taxes are used by state and local governments for a
variety of purposes, but they are not typically earmarked for environmental protection purposes.
Still, there are many potential environmental protection related uses for these taxes. State and
local governments could structure tangible property taxes to mitigate the negative environmental
impacts of the use of specific types of tangible property. For example, the revenues generated by
a tax on air conditioners could be used for Freon disposal; revenues from a tax on lawnmowers
and small engines could be used to fund small source air emissions reduction programs. States
could also structure personal property taxes to encourage emissions reduction and/or energy
efficiency by discounting tax rates on energy efficient, low emissions vehicles and high-
efficiency appliances such as heaters, refrigerators and air conditioners.
for National Conference of State Legislatures Website:
http://www.ncsl.org/programs/fiscal/fpphqsrs.htm.
Real property taxes, also called ad valorem taxes, are charged to property owners
as a percentage of the assessed value of real estate or personal property. They are administered
by local governments and require voter approval. Property taxes are an important form of
revenue for local governments and they are often used as a funding mechanism for parks and
open space measures. There are two main ways localities use property taxes to fund
environmental projects. The first is to earmark a specific portion of annual revenues, which is
rare. The second is to direct a property tax increase or surcharge, temporary or permanent, to a
specific purpose. Revenues from property taxes can go to local trust funds, serve as collateral for
general obligation or revenue bonds, and leverage state funds. Property taxes are not well
accepted by tax payers compared to other types of taxes, but they provide a steady source of
revenue and are less affected by downturns in the economy compared to sales and income taxes;
and revenues from them can be accurately predicted.
for The Trust for Public Land Website:
httpj//_w_w_wip^^ National Conference
of State Legislatures Website: jrttix/Ajo^
Investopedia: http://www.investopedia.com/terms/a/adval .asp
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State sales taxes are a form of excise charged as a percentage of gross retail sales
of tangible property. Since state sales taxes only apply to purchases within a state's borders, they
are usually accompanied by use taxes that apply to the use, storage, or other consumption within
the state of goods or services purchased out of state. The revenue base generated by state sales
and use taxes is broad and relatively stable. Some states earmark a specified percentage of their
sales and use tax revenues for specific purposes. Revenues from state sales and use taxes could
be used to fund many different types of environmental protection initiatives and projects. For
example, New Jersey earmarks a percent of its sales taxes for land conservation through its
Green Acres Program. It is important to consider, however, that some states may have statutory
limitations on general sales tax increases and earmarking.
for U.S. Environmental Protection Agency Website:
http://www.epa.gov/owow/nps/MMGI/funding.htmltf6.
Tax Foundation Website: jjttji^/wywjaxfo^^ and
New Jersey Green Acres Program Website: http://www.state.nj.us/dep/greenacres/.
Many waste management service providers charge solid waste collection taxes to
their customers. For example, the State of Washington requires solid waste collection firms
within its borders to charge solid waste collection taxes to each of their customers. Washington
uses the revenues from these taxes to provide financial assistance to local governments for repair
and maintenance of public works projects, such as streets and sewers. The revenues from the
solid waste collection taxes go into Washington's Public Works Assistance Account, which is
administered by the Washington State Public Works Board. Minnesota is an example of another
state that requires waste management service providers within its borders to charge waste
collection taxes, called solid waste management taxes, to their customers. Seventy percent of the
revenues from Minnesota's solid waste management tax, or at least $33.76 million, are deposited
into the state's Solid Waste Fund. The remainder is deposited into Minnesota's general fund
with biennial appropriations for county recycling block grants and related solid waste activities.
for Washington State Public Works Board Website:
http://www.pwb.wa. gov/. Washington State Department of Revenue Website:
htt]3^/dor_Avajgc>v/contgnt/t^ Minnesota Department of Revenue
Website: httj3://w3¥wjMgl^
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Severance taxes are excises on natural resources extracted or "severed" from the
earth. They are quantified based on the level of resource extraction or the market or gross value
of the resources extracted or produced. Most U.S. states levy some form of severance taxes.
They are usually payable by the severer or producer. In some states payment is made by the first
purchaser. Severance taxes include fuel/mineral taxes (based on the volume of coal, gas, oil, or
minerals withdrawn), timber taxes (based on the volume of timber logged), and oyster/shellfish
taxes (based on the volume or value of shellfish harvested). Several major energy producing
states in the U.S. reported a significant rise in 2005 severance tax collections related to the recent
rise in energy prices. Severance taxes could be used by any state, and revenues dedicated to
activities that mitigate the environmental impacts of natural resources extraction, such as habitat
restoration. Severance taxes can yield significant revenues, which could be sufficient to dedicate
to capital generation for environmental infrastructure such as wastewater treatment plants.
for National Conference of State Legislatures Website:
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1. Water and Sewer Capacity Credits
2. Bond Issuance Fees
3. Connection Fees
4. Franchise Fees
5. Septic System Inspection Fees
6. Hunting and Fishing License Fees
7. Aquifer Protection Area Fees
8. Water and Wastewater Utility User Fees
9. Permitting Fees for Projects Affecting Navigable Waters
10. Professional Certification Fees
11. Pay as You Throw Fees
12. State Public Water Supply Withdrawal Fees
13. Tolls
14. Transporter Fees
15. Water Rights Application Fees
16. Septic System and Well Permit Fees
17. Recycling and Disposal Fees
18. Fertilizer and Pesticide Fees
19. National Pollutant Discharge Elimination System Permit Fees
20. Emission Charges
21. Exactions
22. Special Assessments
23. Impact Fees
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Water and sewer capacity credits, also called access rights, are charged on a one-
time basis to new users requesting access, and old users requiring increases in capacity, to water
and sewer facilities. In exchange for payment, applicants are guaranteed future access to a
contracted amount of system capacity that has been reserved for their use. This is important
because possible sewer moratoriums at a later date could prohibit new residential or commercial
development. Many local governments and utility authorities sell water and sewer capacity
credits to finance expansion of, or upgrades to, water and sewer systems. Water and sewer
capacity credit programs are structured differently in different communities. Columbus, Ohio
and the Upper Merion Municipal Utility Authority in Pennsylvania are examples of two
jurisdictions that utilize capacity credits charged to customers as a financing mechanism for
water and sewer facilities.
for University of Maryland Environmental Finance Center
Website: http://www.efc.umd.edu/appendixB.html, see "Case: Developer Financing" at that
URL. City of Columbus, Ohio Website: htt|r//dow[to\^^
Bond issuance fees above and beyond the standard bond "cost of issuance" fees
could be imposed by governments and special authorities on environmental protection related
municipal bonds such as infrastructure construction bonds. Cost of issuance fees are assessed as
a percentage of total bond value on many different types of municipal bonds. Additional bond
issuance fees could be levied by any state or local government or special authority issuing bonds,
and the revenues dedicated to a general infrastructure capital account. Fee proceeds might be
used to lower specific debt reserve fund requirements, pay for bond insurance or legal fees, or
provide low or no interest loans for environmental protection purposes.
for See Section 2 of this Guidebook for general information
about using bonds to finance environmental protection initiatives. The Bond Market
Association, Fundamentals of Municipal Bonds., Fifth Edition: New York, NY, 2001, available
through the Bond Market Association Website at
http://www.bondmarkets.com/story.asp?id=788.
National Council of Health Facilities Finance Authority Bond Terminology page:
http ://www.nchffa. com/Bond%20Terminol ogy. . InvestinginBonds.com Glossary of Bond
Terms: http^/wwwjnvej^
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Connection fees, also called hookup fees, are charged to property owners at the
time they connect with existing municipal drinking water and wastewater treatment facilities.
Connection fees are generally levied by local governments or county governments. Some local
governments charge low or no connection fees, particularly for businesses, essentially
subsidizing the costs for drinking water and wastewater treatment and distribution with general
revenues. Charging connection fees would provide local governments with a reliable source of
revenues to finance drinking water and wastewater treatment plants and allow general revenues
to be used for other purposes. Stockton, California and Camden County, New Jersey are
examples of jurisdictions charging water and sewer connection fees.
for Raftelis Financial Consultants, Inc. Website:
http://www.raftelis.com/default.html. phone # 704-373-1199.
Raftelis, George, Comprehensive Guide to Water and Wastewater Finance and Pricing, third
edition, CRC Press, 2005; available at http://www.amazon.com.
Stockton, California Website: httj3^/w¥Wj[to^^
Camden County, NJ Website:
Franchise fees can be imposed on any private enterprise that must purchase a
franchise to operate a commercial business. In order to become a franchise, a business has to
pay a franchise fee. Franchise fees generally start at less than $10,000, and they can exceed
$100,000. Mobile and home-based businesses usually pay franchise fees below $10,000.
Franchise fees are sometimes charged to utilities and other businesses as a percentage, often
around 3%, of their gross. New private businesses will often purchase franchises to market
parent goods or services of parent companies. In that scenario, franchise fees are often imposed
by state or local governments on the new businesses. Franchise fees levied by state and local
governments could be dedicated to environmental protection programs. Some states and
localities use revenues from franchise fees to finance parks and recreation facilities. For
example, Denver, Colorado uses revenues it receives from franchise fees charged to public
utilities to help fund public safety, parks and recreation, public works, and other city services.
for AllBusiness.com, Inc. Website:
http://www.allbosiness.com/buving-selling-bosinesses/francMsing-franchise-fee/2182-l.html.
Denvergov.org: http://www.denvergov.org/Mayor/1688press2033.asp.
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Septic system inspection fees are the charges for inspections of septic systems
carried out by states and counties. Some states and counties require septic system inspections to
be done periodically; and they charge septic system fees to finance the inspections. Prospective
home buyers routinely have septic system inspections done before they purchase their homes.
The State of Arizona mandates septic system inspections and finances them with septic system
fees; and Leelanau County, Michigan considered doing the same. Septic system inspection fees
capture revenues from households not connected to municipal sewers, but potentially impacting
water quality due to septic tank leakage. Septic system inspection fees could be used to finance
the creation of septic tank management districts to monitor and prevent spillage. Approximately
25% of the population in North America relies on septic tanks for sewage treatment.
for Arizona Department of Environmental Quality Website:
http://www.azdeq.gov/environ/water/permits/wastewater.htmltfonsitefees.
"Septic inspection resurrected," Leelanau Enterprise, available at
Many states in the United States charge fees for the initial awarding and the
renewal of hunting and fishing licenses. The revenues from these fees are often used for
environmental programs geared towards protecting fish and wild game habitat and for regulation
of hunting and fishing. Saltwater fishing license fees are used to raise funds for marine fisheries
management programs in many states. Saltwater fishing license fees provide between one and
three million dollars annually in smaller states, and up to seventeen million dollars annually in
larger states, for marine fisheries management. In a survey of state marine fisheries management
agencies conducted by Angling4Oceans, every respondent reported that the existence of
saltwater fishing licenses improved their agencies' ability to support angling opportunities
because the revenues from license sales were dedicated to resource management. Wisconsin is
an example of a state that funds fish and wildlife conservation programs with revenues from
hunting and fishing license fees. Seventy -three percent of the budget for Wisconsin's Fish and
Wildlife Account comes from fees charged for hunting and fishing licenses and stamps.
for U.S. Fish and Wildlife Service Website:
http://www.fws.gov/policy/605fw3.html & http://www.fws.gov/policy/605fw2.html.
Wisconsin Department of Natural Resources Website:
Angling 4 Oceans Website:
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Aquifer Protection Area fees are charged for withdrawals of subterranean water
and on-site sewage disposal within Aquifer Protection Areas. Aquifer Protection Areas are
delineated around wells serving as public water supplies. For example, the State of Washington
authorizes counties within its borders to establish Aquifer Protection Areas and charge Aquifer
Protection Area fees. The revenues raised with these fees are used to fund initiatives including
the construction of wastewater treatment facilities and the preparation of a comprehensive plan
to protect, preserve, and rehabilitate subterranean water. Spokane County, Washington charges
Aquifer Protection Area fees for water withdrawal and on-site sewage disposal within the
Spokane-Rathdrum Aquifer Protection Area. In 2004, a ballot measure to collect the Aquifer
Protection Area fees for twenty more years was approved by Spokane County voters.
for Washington State Legislature Website:
http://apps.leg.wa.gov/RCW/default. aspx?cite=36. 36.
Spokane County Website:
"Spokane County Voters extend aquifer fees; Aquifer Protection Area," Spokesman Review,
Nov. 11, 2004, available at:
http://findarticles.eom/p/articles/mi qn4186/is 200411 11/ai nil 705929.
User fees are the charges to industrial, commercial and residential customers for
the use of water and wastewater utility services. These fees are used to finance the utility
services. Customers receiving services are connected to central publicly or privately-owned
facilities. Water meters and pollutant tracking have led to sophisticated billing procedures and
rate structures based on volume and toxicity. Utilities can assess rates to cover their full costs
including capital cost recovery ("full cost pricing"), or subsidize the costs of service with general
revenues. User fees are limited to localities. A basic issue in rate-setting is the rate base and
structure. Ascending block rates are sometimes used for conservation and other purposes.
for Raftelis Financial Consultants, Inc. Website:
l, phone 704-373-1199.
Raftelis, George, Comprehensive Guide to Water and Wastewater Finance and Pricing, 3rd
edition, CRC Press, 2005; available at http://www.amazon.com.
American Waterworks Association, Principles of Water Rates, Fees, and Charges, 5th edition,
2000; available at http_:/Jwww.aww&.m
See "U.S. Environmental Protection Agency: Water and Wastewater Pricing Website," a tool in
Section 5 of this Guidebook. U.S. Environmental Protection Agency Water and Wastewater
Pricing Website: http://www.epa.gov/water/infrastructure/pricing/index.htm.
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for
://www.s\rana.org/w\\w/F.DUCATF7CF.R
Construction Institute Website:
http://www. constniction.org/index. plip?src=gendocs&link=ProfessionalCertification&submenu=Education.
for of 1B-6
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as
In communities with pay-as-you-throw (PayT) programs, residents are charged for
the collection of municipal solid waste (ordinary household trash) based on the amount they
throw away. This creates an economic incentive for residents to recycle more and generate less
waste. PayT programs are a form of unit pricing, also called variable rate pricing. Most
communities with PayT programs charge residents a fee for each bag or can of waste they
dispose of. In some communities, residents are billed based on the weight of their trash. The
U.S. Environmental Protection Agency supports the pay-as-you-throw approach to solid waste
management because it encourages environmental sustainability, economic sustainability, and
equity. Communities with PayT programs in place have reported significant increases in
recycling and reductions in waste, due mainly to the waste reduction incentive created by PayT.
This suggests that PayT Programs are environmentally sustainable. Well-designed PayT
programs are economically sound because they generate the revenues communities need to cover
their solid waste costs. PayT programs are equitable because residents pay less if they generate
less waste.
for U.S. Environmental Protection Agency Website:
http://www.epa.gov/epaoswer/non-hw/payt/intro.htm.
Eco-cycle Website: http://www.ecocycle.org/zero/pay_throw.cfm.
Green Works Website: : //www. green works. t v/wastemanagement/pay t. .
Waste Age Website: h|t|r//wjige^
State public water supply withdrawal fees are charged for permits for large
quantity water withdrawals, generally 10,000 gallons per day or more. Virginia and Michigan
are examples of states that charge these water withdrawal fees. Virginia charges public water
supply withdrawal fees to subdivisions, public water systems, stores, and other entities for the
right to withdraw water in quantities ranging from 10,000 gallons to over 100,000 gallons per
day. "Large quantity withdrawals" are defined by the State of Michigan as water withdrawals of
greater than 100,000 gallons per day averaged over a consecutive 30-day period. Michigan
requires permits for certain new or increased large quantity water withdrawals, including water
withdrawals from a Great Lake and water withdrawals from inland lakes or streams; and the state
charges a $2,000 fee for these permits. The demand for public water, particularly by industry, is
relatively inelastic, resulting in stable and predictable revenues from these fees.
for Virginia Department of Environmental Quality Website:
,^
Announcement of new water withdrawal law for Michigan:
http://www.deq.state.mi.os/documents/deq-wd-withdrawallaw-sommary.pdf.
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Tolls are fees charged for vehicle passage on thruways, highways, roads and
bridges to offset expenses for construction, operation and maintenance. States charge tolls to
raise money for transportation budgets. The Transportation Act for the 21st Century (TEA-21),
signed into law in 1998, has provisions in it permitting states to use specified toll revenue
expenditures as credits towards the non-federal matching share of grants for public transit
programs authorized by the Act.
In addition, tolls can be used to raise the funds necessary to add features to roads that minimize
environmental impacts or encourage environmentally friendly activities such as walking or
biking. For example, Florida's Suncoast Parkway is a toll road that is designed for minimum
impact on the environment and maximum use by nonmotorized traffic. It has features including
a bike trail alongside it and wildlife crossings which may not have been possible to fund without
the use of tolls.
for See "Transportation Equity Act for the 21st Century" in
Section 2c of this Guidebook. See the U.S. Department of Transportation Website at
http://www.fhwa.dot.gov/Tea21/tollcred.htm for information on TEA-21, and at
http://www.tfhrc.gov/pubrds/03sep/01.htm for information on Florida's Suncoast Parkway.
Transporter fees are charged by states to individuals and corporations for the right
to transport solid waste, hazardous waste, petroleum products, and radioactive waste. Revenues
from these fees are used by states to pay the costs of hazardous waste monitoring and spill
response and other environmental protection initiatives. For example, hazardous waste
transporters pay a fee based on the quantity of waste they collect and/or deliver in Massachusetts.
The revenues raised with this fee are used to fund the cleanup of hazardous waste sites and spills
in Massachusetts. Also, transporters pay a fee for hazardous waste transportation in
Pennsylvania. Revenues raised with this fee are deposited into Pennsylvania's Hazardous Sites
Cleanup Fund. The State of Connecticut charges application fees for permits for the
transportation of waste oil, petroleum and chemical liquids, hazardous waste, and biomedical
waste. The revenues from these fees go into the state's Environmental Quality Fund, which can
be used for any environmental protection purpose authorized by the fund's commissioner.
for Massachusetts Department of Environmental Protection
Website: htt]3^/w¥wynaj>jj^^
Pennsylvania Code: htt|x//www^
Connecticut Department of Environmental Protection Website:
http ://dep. state, ct.us/pao/weedfact/wastrans.htm.
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State water rights application fees are imposed on applicants for water
appropriations. A water appropriation is an authorization granted by a state to make private,
beneficial use of the state's water resources. Approved appropriations exist in the form of
permits authorizing the use of either ground water or surface water. Fees are charged for
applications for new appropriations; and they may be charged on a recurrent basis as well. Most
western states charge water rights application fees. Revenues from water rights application fees
are used to cover the costs states incur when they carry out various activities necessary to process
the applications for new appropriations. These activities include site investigation, performance
of environmental and hydro geologic analyses, investigation into whether the water is available
or would impair other water users, and preparation of a report with the investigators' findings
and a recommendation of whether or not to approve the application.
for Bureau of Land Management Website:
http://www.blm.gov/nstc/WaterLaws/abstractl.htiTil. Washington State Department of Ecology
Fact Sheet: httj3^/wwwjicy^^ South Dakota Department of
Environment & Natural Resources Website:
http ://www. sd.us/denr/des/waterri ghts/faq wr.htm.
Many states, counties, and municipalities charge fees for the issuance of
construction and use permits for septic systems and wells. Septic system permit fees are charged
for permits required for new septic system installations, review of abandoned septic systems,
septic system operators' licenses, and septic system pumping. Well permit fees are charged for
permits required for the drilling of residential wells, well repairs and modifications, and
inspections of wells, and for permits required for licensing companies and individuals who
construct wells. Randolph, New Jersey and Monroe County, Michigan are examples of
jurisdictions that charges fees for septic system and well permits. Delaware is an example of a
state that charges fees for well permits. These fees help to cover the administrative costs of
issuing these permits. The permits help to ensure that septic systems and wells are properly
constructed and maintained in accordance with environmental laws and health regulations.
for for Town of Randolph, New Jersey Website:
http://www.randolphnj.org/townhall/septic wells permits/.
Monroe County, Michigan Website:
Delaware Division of Water Resources Website:
http://www.dnrec.state.de.us/water2000/Sections/WatSupp/WellPeriTiits/WSSWellPermits.htm.
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Recycling and disposal fees are levied on hard-to-dispose items that contribute
heavily to solid waste disposal problems, such as tires and lead acid batteries. Florida, Maine,
South Carolina, Texas, and Wisconsin charge fees at the point of sale on lead acid batteries. The
revenues raised with fees on lead acid batteries are used to fund the proper disposal of the
batteries and solid waste disposal programs in general. Alaska, Maryland, Nevada, Maine, and
Florida are examples of U.S. states that charge fees on purchases of new tires. The revenues
raised with these fees on new tires are used to fund recycling of the tires.
for Battery Council International Website:
Lo
U.S. Environmental Protection Agency Website:
Comptroller of Maryland Website: http://business.marylandtaxes.com/faq/tirefaq.asp.
Alaska Tax Division Website: : //www . tax . state . ak .us/program s/ti re/f aq . asp .
Florida Department of Revenue Website: http://dor.myflorida.com/dor/taxes/vehicle_fees.html.
Federation of Tax Administrators Website, with links to the revenue departments of all 50 U.S.
States and Puerto Rico: httB;//wwwJaMdmjn,OTj>/fta/llnk/.
Fertilizer and pesticide fees include dealer license fees, assessment and inspection
fees, and registration fees. States often use these fees to raise money for agriculture related
environmental protection initiatives. Iowa, Montana, and Nebraska are examples of U.S. states
that have enacted fertilizer and/or pesticide fees. The State of Iowa charges pesticide fees
authorized by the 1987 Groundwater Protection Act. A portion of the revenues raised with these
pesticide fees is placed in the agriculture management account of Iowa's groundwater protection
fund. Montana charges pesticide and fertilizer registration fees and uses the revenues it raises
with the fees to fund groundwater quality monitoring work. Nebraska charges fertilizer
inspection fees and pesticide registration fees and dedicates the revenues raised with the fees to
programs for regulating fertilizers and pesticides.
for The New Rules Project Website:
http;//ww¥jiewTu^ Leopold Center For Sustainable
Agriculture Website: http://www.leopold.iastate.edu/about/igpa.htm.
City of Iowa City Website: ://www.icgov.org/water/groundwateract.htm.
State of Montana Website: http://www.agr.state.mt.us/licensing/fees.asptffeedl.
Nebraska Department of Agriculture Website:
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The National Pollutant Discharge Elimination System (NPDES) Permit Fees
legislation, passed in 2004, amends the Natural Resources and Environmental Protection Act
(NREPA) and authorizes state environmental departments to collect NPDES Permit Fees
consisting of annual permit fees and permit application fees. The NPDES Permit Fees are used
as a means to obtain the appropriate funding to effectively operate the NPDES program. In
addition, the Permit Fee Incentive for Clean Water Act (CWA) Section 106 Grants, an
amendment proposed in 2006, would be a means for the U.S. Environmental Protection Agency
(EPA) to provide a financial incentive for states to utilize a fee program that is adequate to
provide sufficient funding when implementing an authorized NPDES permit program. EPA
proposed this CWA Section 106 amendment, through an official publication in the Federal
Register in 2007, to provide the Agency with the authority to allot a permit fee incentive amount.
This action would not be effective prior to fiscal year 2008.
for U.S. Environmental Protection Agency Website:
and http_:/Jwww.eQa,go^^
Michigan Department of Environmental Quality Website:
http://www.michigan.gov/deq/0,1607,7-135-3313 3682 3713-901 30-,00.html.
Illinois Environmental Protection Agency Website: http://www.epa.state.il.os/fees/npdes.html.
Emission charges, also called emission fees, are levied based on the volume and
toxicity of pollutants emitted into the atmosphere by industries, municipal facilities such as
power plants, and motor vehicles. States charge a type of emission-based permit fee under Title
V of the Clean Air Act, which requires states to charge permitted sources the equivalent of $25
per ton of regulated pollutants emitted. Since the purpose of this requirement is to help states
recover the full cost of permit issuance, these fees are also called permit fees. In addition,
Distance-Based Emission Fees, which are sometimes charged at the state level, are mileage-
based charges that reflect a vehicle's emissions rate. Vehicles with lower emissions pay lower
Distance-Based Emission Fees than vehicles with higher emissions. A major advantage of
emissions charges and fees is that they create a strong incentive for those paying them to
innovate and thus discover less expensive ways of reducing pollution. Emissions charges attack
the pollution problem at its source by putting a price on the "right to pollute." The "right to
pollute" has historically been free and thus overused.
for Environmental Economics, Third Edition, Chapter 12,
McGraw-Hill: 2001, available at httpj//wwwjahJiejgim/eOT^
Online TDM Encyclopedia: http://www.vtpi.org/tdm/tdm59.htm# Toc29092444. Connecticut
Department of Environmental Protection Website:littp://dep.state.ct.us/pao/airfact/titlevhtin
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Exactions, also called proffers, are conditions or financial obligations imposed on
developers to aid local governments in providing public services needed to support new
developments. They are administered by local governments. Exactions can take a number of
different forms. They can include financing of existing infrastructure facilities or infrastructure
improvements, donations of in-kind services, and donations of land, water and sewer lines, and
road and parking facilities. Exactions can also take the form of impact fees paid in lieu of the
types of donations described above. Exactions have the benefit of allowing more flexibility than
impact fees because they are not required to be financial contributions. They may be offered
voluntarily by developers; and local governments often negotiate them with each developer.
Most localities use exactions in some form. Some localities assign building permits
competitively based on the level of exactions offered by different developers.
for See "Impact Fees" in this section of the Guidebook.
Facsnet: http://www.facsnet.org/tools/env_luse/nat9exactions.php3.
Public Policy Institute of California Website: jjttji^/wywjjjjkx^^
County of Albemarle, Virginia Website:
http://www.albemarle.org/department.asp7departm ent=planning&relpage=7084.
Special assessments are recurrent surcharges levied by local jurisdictions on sub-
groups of the population. Some localities levy them in the form of taxes; others levy them in the
form of fees. The sub-group paying the recurrent charges receives benefits from an
environmental service or improvement not enjoyed by others in the area. For example, if a
community wants to finance wastewater treatment plant improvements that contribute to lake
cleanup, residents with waterfront property could be charged a special assessment. Special
assessments are generally charged by local governments and authorized by local ordinance.
They are often barred by constitution from use by states. Special assessments are used to fund
water works systems, sanitary sewer systems, installation or repair of water and sewer service
lines, flood protection projects, and other purposes. Minneapolis, Minnesota; Fargo, North
Dakota; and Manhattan, Kansas are examples of cities charging special assessments.
TaxProfBlog Website:
http://taxprof.tvpepad.com/taxprof blog/2007/01/baker on using .html.
Minneapolis, Minnesota Website: http://www.ci.minneapolis.mn.us/special-assessments/.
Fargo, North Dakota Website: htt]3^/wwwjitv^^
Manhattan, Kansas Website: httpj//wwwjijim^^^
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Impact fees are frequently assessed on the construction of new buildings. Local
governments and county governments levy impact fees. The revenues from impact fees are used
to pay for improvements to services and amenities necessary to serve the occupants of the new
buildings, including expansions of police and fire stations, sewer and water supply systems,
parks, libraries, and schools, and the building of new roads. In addition, impact fees are
frequently assessed based on the projected environmental impacts of a construction project; and
the revenues from the fees are used to mitigate the project's environmental impacts.
Environmental impacts of construction projects include erosion of land where vegetation has
been removed and additional storm water runoff due to the installation of pavement and other
impervious surfaces. Collier County, Florida and Fremont, California are examples of
jurisdictions that charge impact fees on new construction projects.
for Wisconsin Realtors Association Website:
Collier County, Florida Website: htt^7/w^^LCQllier^Qyjiet/Tnde2c^sp2£?Bage^l538. Fremont,
California Website: http://www.ci.fremont.ca.us/Construction/Fees/DevImpactFeel.htm.
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This section presents the three major ways in which governments and the private sector acquire
capital to invest in environmental protection initiatives including pollution prevention: bonds,
loans, and grants. Bonds and loans entail repayments of principal and interest, although interest
rates may be governmentally subsidized. Grants are awarded for specifically designated
purposes and do not require repayment. These three different means for acquiring capital are
presented in subsections 2a (bonds), 2b (loans), and 2c (grants). Each means for acquiring
capital covered in this section serves a distinct purpose and has certain limitations.
A bond is a written promise to repay borrowed money on a definite schedule, and usually at a
fixed rate of interest, for the life of the bond. Some types of bonds are tax exempt. Bonds
represent a large source of capital, but can be a complex and more expensive way to borrow.
The high expense results from the legal and other fees and administrative time required for
issuing bonds. In some cases voter approval is required for issuing bonds.
Loans typically involve fewer and lower transaction costs than bonds. Interest rates on
government loans may be subsidized, particularly for small communities. Like grants,
government loans are made with very specific goals in mind, are often accompanied by specific
mandates, and are limited by legislatively appropriated dollar amounts. Most government loans
have complicated application procedures and deadlines. Commercial loans are more flexible
than government loans, but are typically more expensive for public and private borrowers.
Grants are generally regarded as more desirable than loans and bonds. However, since grants are
designed by the awarding agency or organization to meet certain, often specific, goals, they may
carry additional mandates as compared to loans and bonds; and those mandates may be costly to
meet. Grants tend to have difficult application procedures and deadlines. Grant money often
comes from tax dollars. The redistribution of federal and state tax revenues to some
communities and not others can be controversial. Many grant programs must be approved
annually by legislative bodies.
There are, of course, many additional types of bonds, loans, and grants that are not covered in
this section. Additional grants and loans are described in Section 6, which is the "State and
Local Tools" section, and in other sections of the Guidebook as well. Information on additional
loans and grants not listed in the Guidebook can be found through many sources, including the
Catalogue of Federal Domestic Assistance (CFDA) and Grants.gov. The CFDA is a searchable
database with detailed information on all federal financial assistance programs. Grants.gov is a
searchable database with comprehensive information on over 1,000 grant programs offered by all
federal grant making agencies.
All of the means for acquiring capital covered in this section (bonds, loans, and grants) are
available for use alone or in combination to fund specialized environmental protection initiatives.
An example of combining different financing mechanisms is when states utilize loans or bonds
2-1
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to acquire dollars needed for matching fund requirements on grants. When carefully matched
with the recipient's needs these tools, whether used alone or in combination, can be very
effective in the future success of environmental protection initiatives.
2-2
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1. Advance Refunding Bonds
2. Anticipation Notes
3. Appropriation-Backed Bonds
4. Asset-Backed Securities
5. Capital Appreciation and Zero Coupon Bonds
6. Certificates of Participation
7. Derivatives
8. Double-Barrel Bonds
9. General Obligation Bonds
10. Mini/Baby Bonds
11. Moral Obligation Bonds
12. Private Activity Bonds
13. Revenue B onds
14. Short-Term Municipal Bonds
15. Special Assessment Bonds
16. Special Tax Bonds
17. State Revolving Fund (SRF) Revenue Bonds
18. Tax Increment Bonds
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Advance refunding is the issuance of a new bond to pay off another outstanding
bond prior to the date on which the earlier bond can be redeemed or paid. Advance refunding is
undertaken primarily to adjust outstanding debt to current interest rates, and/or to alter debt
reserve requirements. The proceeds from the sale of the refunding bonds are used to buy taxable
government securities, which are deposited in an escrow account. The escrow account is
structured so that the principal and interest earned on the securities are enough to pay all
principal, interest, and call premium, if any, on the outstanding bonds up to and including the call
date. The 1986 Tax Reform Act limits each governmental activity bond issue to one advance
refunding if the original issue was after 1985. Thus, bond leveraged State Revolving Funds are
limited in their use of advance refunding.
for Graham, William; Shinn, P.; Petersen, J., State Revolving
Funds Under Tax Reform, Council of Infrastructure Financing Authorities (GIF A) Monograph
No. 2, Washington, D.C.: June 1989, to order contact CIFA at cifa@navigantconsulting.com.
GIF A Website: MtE://wwwj;ifa^
WM Financial Strategies Website: httj)^ywj¥wjTiui^^
Investopedia.com Website: httpj//wwwJnyeMop^^^^
Anticipation notes are short-term bond instruments repaid with anticipated
revenues from various sources. They can be used to acquire immediate capital when other
funding sources are delayed or not yet identified. For example, if a city anticipated a future
federal grant for a project, the government might issue a revenue anticipation note to meet
interim construction costs. State and local governments widely use anticipation notes. There are
four primary types of anticipation notes: 1.) Tax Anticipation Notes (TANs), which are short-
term, tax-exempt notes issued in anticipation of tax receipts and paid from those receipts; 2.)
Revenue Anticipation Notes (RANs), which are issued in anticipation of other sources of future
revenues, such as federal or state aid; 3.) Bond Anticipation Notes (BANs), which are designed to
provide financing until a future bond offering is made, and 5.) General Obligation (GO) notes,
which are not backed by any particular revenue source, but by the full faith and credit of the
issuing government. Interest rates for anticipation notes are typically higher than those for
longer-term securities.
for
First Public, LLC Website: hjtp;//www.^^
Investopedia.com Website:
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Appropriation-backed bonds are state special obligation bonds using a pledge of
future state direct appropriations, typically annual appropriations, as the form of pay back to the
bondholders. Such bonds may be either tax-exempt or taxable. State bond issuance is
authorized by state legislatures, and the issuing authority may enter into a service contract or
lease arrangement with the state or state agency undertaking the activity being financed. These
bonds can be useful as a financing device to cover special needs which may fall outside of the
normal budgeting cycle of state legislatures. Appropriation-backed bonds have been challenged
legally in a number of states, on the grounds that legislative appropriation of funds does not
constitute adequate assurance for the bondholders. This has made many states cautious about
using them. In some states, use of such bonds is prohibited by the state constitution.
for The Bond Market Association, Fundamentals of
Municipal Bonds., Fifth Edition: New York, NY, 2001, available through the Bond Market
Association Website at hJj3j//wwwJxMidm^
New York State Citizen's Guide: httB;//wwwJ3ud^^^^
An asset-backed security is a type of bond that is backed by a pool of financial
assets. The financial assets in the pools backing these securities include credit card debt,
accounts receivables, and mortgages. The mortgage-backed security market is so large,
however, that it is often seen as separate from other asset-backed securities. For asset-backed
securities, assets are pooled to make otherwise minor and uneconomical investments worthwhile,
while reducing risk by diversifying the underlying assets. When a large portfolio of liquid assets
is pooled together; the assets can be converted into instruments that may be offered and sold
freely in the capital markets. A significant advantage of asset-backed securities is that they bring
together a pool of assets that otherwise could not be traded easily in their existing form. That
advantage could help small communities to use asset-backed securities for the purpose of
funding environmental protection initiatives.
for Hayre, Lakhbir, Solomon Smith Barney Guide to
Mortgage-Backed and Asset-Backed Securities: John Wiley & Sons, Inc., 2001, available at
www. am azon. com.
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Capital appreciation bonds (CABs) and zero coupon bonds (zeros) are used in the
issuance of state and local general obligation and revenue-backed debts. CABs and zeros
provide investors a guaranteed reinvestment rate, so they are most attractive to investors when
interest rates are expected to fall. They are original issue discount bonds that are sold at face
value (par). The issuer is not required to make periodic interest payments on CABs and zeros.
Instead, the interest component is held by the issuer and compounded at a stated rate so the
investor receives a lump sum multiple of the principal and interest when the bond matures.
CABs and zeros are sold at deep discount from their face value. At maturity date, the security is
redeemed at face value. The investor receives a rate of return based on the appreciation from the
discounted price to the full face value. CABs are different from zeros in that the investment
return on CABs is in the form of compounded interest rather than accreted original issue
discount. CABs result in more bond proceeds for the same use of debt capacity (total par value)
than do zero coupon bonds.
Springsteel, Ian, "Who Needs Equity?: zero-coupon
convertible bonds," CFO: Magazine for Senior Financial Executives, July 2001, available at
http://www.findarticles.eom/p/articles/mi_m3870/is_7_17/ai_77290112. Investorguide.com
Website: http://www.investorguide.com/igupl-advanced-bond-concepts.htm.
of
Certificates of participation (COPs) are financial instruments used to finance
capital projects. COPs are backed by the leasing of real property and physical assets, such as
wastewater plants or equipment. The assets are held by a trustee, and the certificate issuer pays
yearly lease payments to the certificate holders until the debt is repaid. If the certificate issuer
defaults on the lease payments, the trustee is responsible for selling the physical assets and using
the proceeds to reimburse the certificate holders. Certificates of participation can only be issued
to finance capital projects where a real asset exists that is suitable as collateral, and only in
jurisdictions where local authorities are allowed to negotiate long-term leases. COPs are similar
to mortgage bonds and asset-backed bonds, but are not legally classified as such, so state and
local governments can issue them without voter approval and without affecting their overall
bonding capacity. Certificates of participation do not count against debt capacity limits. COP
payments to private investors are tax-exempt. This financing mechanism is used in more than
half of U.S. states.
for O'Meara, Kelly P., "Creative financing: dozens of
municipal projects in Los Angeles County have been financed using bondlike instruments called
COPs, which critics charge have allowed officials to enter into ," Insight on the News, April
15, 2002, available at http://www.findarticles.com/p/articles/mi_ml571/is_13_18/ai_84804831.
Orrick Website: http://www.orrick.com/practices/public finance/1 easeRevenue.asp.
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A derivative is a financial instrument which derives its value from a specific,
underlying market or index. From an accounting perspective, a derivative is defined as having
two characteristics: 1.) the holder has the right to participate in some or all of the price change
experienced by the underlying market or index, and 2.) the instrument's value at maturity can be
settled in cash as opposed to taking ownership of the underlying market or index. For example, a
bond paying an interest rate based on changes in the stock market may be called a derivative
because its value changes in response to a market. The market may be measured by an index
such as Standard and Poor's 500. Many different financial instruments; including swaps, caps,
options, puts, calls, and collars; are classified genetically as derivative products. These financial
instruments all derive their value from the performance of specific indices or cash markets.
for The Bond Market Association; Temel, Judy W.; The
Fundamentals of Municipal Bonds, 5th ed.; John Wiley & Sons, Inc.; 2001, available at
A double-barrel bond is a municipal revenue bond secured by a pledge of two or
more sources of payments, typically a user fee and, secondarily, by the credit of the issuing
government through ad valorem taxes, which are taxes based on the assessed value of property.
State and local governments use double-barrel bonds to finance environmental improvements,
including renovation of wastewater treatment plants, construction of drinking water utilities, and
creation of stormwater management districts. The revenue stream pledge may be in the form of
multiple taxes, such as the real estate transfer tax or special assessment taxes. Double-barrel
bonds can provide cheaper capital than conventional revenue bonds for projects that generate
revenue. They are a good means for states or localities, particularly those with low credit ratings
or low debt capacity, to obtain lower interest rates on bond issues compared to conventional
revenue bonds.
for "General Obligation Bonds" in this section of the
Guidebook. The Bond Market Association; Temel, Judy W.; The Fundamentals of Municipal
Bonds, 5th ed., John Wiley & Sons, Inc.; 2001, available at http://www.amazon.com.
Answers.com: http://www.answers.com/topic/municipal-bond.
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General Obligation (GO) bonds are backed with the guarantee that the issuing
government will use its taxing power to repay them. GO bonds are regarded as safer than bonds
backed by a single revenue source, and generally command lower interest rates and lower
reserve fund requirements. There are two primary types of GO bonds: unlimited ad valorem tax
debt and limited ad valorem tax debt. Ad valorem taxes are based on the assessed value of
property. Unlimited ad valorem tax debt occurs when the government pledges its full faith and
credit with no limitations on possible property tax rates. Limited ad valorem tax debt occurs
when the government pledges its full faith and credit, but with a cap or restriction on possible
property tax rates. Occasionally, a GO bond may be backed by a specific revenue source. State
and local governments use GO bonds to finance capital projects for environmental protection
initiatives such as lands purchases. State referendum environmental bonds, which are often very
large, are GO bonds paid for by a variety of sources of revenue including appropriations. GO
bonds are suitable for financing projects that require large amounts of capital up-front. Voter
approval is frequently required for GO bonds.
for The Bond Market Association; Temel, Judy W.; The
Fundamentals of Municipal Bonds, 5th ed., John Wiley & Sons, Inc.; 2001, available at
http://www.amazon.com. Answers.com: http://www.answers.com/topic/monicipal-bond.
Municipal Bond Information Guide: http://www.southwest.msus.edu/RDIC/gobond.html.
Mini Bonds are characterized by direct marketing from issuers to investors. They
are also called baby bonds because of their relatively low face or par values which are generally
below $1000. Modeled after federal savings bonds, they bring segments of the bond market
within reach of small investors and open a source of funds to issuers without access to the large
institutional market. Mini bonds have characteristics designed for investors with various
objectives. For example, some are structured as capital appreciation bonds so investors do not
have to reinvest periodic interest earnings (see "Capital Appreciation and Zero Coupon Bonds"
in this section of the Guidebook). Mini bonds have been used extensively at the state and local
levels since the 1970's. They could be used to finance relatively small, targeted environmental
investments, such as nonpoint source pollution control measures and stream restoration.
for Melvin, Sean P., "Itsy-bitsy bonds: Raising money: No
more waiting around till your company hits the multimillion-dollar mark- now bonds are for
businesses of all sizes," Entrepreneur, January 2002, available at
Business Editors, "Lower Colorado River Authority-TX-Rev Mini -Bonds RTD ' AAA,'"
Business Wire, New York, Feb. 3, 2000, available at
http://www.findarticles.eom/p/articles/mi mOEIN/is 2000 Feb 3/ai 59169468.
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A moral obligation bond is a bond secured with revenues from a financed project,
as well as a non-binding pledge that any deficiency in pledged revenues will be reported to the
state legislature, which may appropriate state monies to make up the shortfall. Under most state
laws, if a draw down of the bond's debt reserve occurs, the bond trustee must report the amount
used to the governor and the state legislature. The state legislature is then authorized to
appropriate the requested amount to repay the bondholders, although there is no legally
enforceable obligation to do so. New York, the first state to issue moral obligation bonds, used
the bonds to finance a housing authority. Moral obligation bonds can be used to acquire project
capital at lower rates than revenue bonds. They generally do not count against debt issuance
limitations. Moral obligation bonds can obtain interest rates almost as low as general obligation
bonds because they are backed by the pledge of repayment.
for Council of Development Finance Agencies Website:
The Bond Market Association;
Temel, Judy W.; The Fundamentals of Municipal Bonds, 5th ed., John Wiley & Sons, Inc.; 2001,
available at http ://www. . .
Investopedia.com: http://www.investopedia.eom/terms/m/moralobligationbond.asp.
"Private activity" or "exempt" is a term used to describe industrial development
bonds and other similar types of bonds which meet one of a number of tests under federal tax law
measuring private involvement in a bond financing. The most commonly used definition
includes bonds which meet both the private business use test and the private payment definition.
The private business use test is met when no more than ten percent of bond proceeds are used by
an entity other than a state or local government unit. The private payment test is satisfied when
no more than ten percent of debt service on the bonds is directly or indirectly paid or secured by
a private entity. Most of these restrictions fall under the 1986 Tax Reform Act. State and local
private activity bonds may be issued on a tax-exempt basis for specifically identified purposes if
a myriad of specific rules are satisfied. Although interest on such bonds is exempt from the
regular income tax, interest on the bonds (other than for bonds issued for 501(c)(3) charitable
organizations) is an item of "tax preference" for purposes of the alternative minimum tax.
Private Activity Bonds are used to fund facilities for the furnishing of water and sewage, solid
waste disposal facilities, and qualified educational facilities.
for The Bond Market Association; Temel, Judy W.; The
Fundamentals of Municipal Bonds, 5th ed., John Wiley & Sons, Inc.; 2001, available at
http://www.amazon.com. Internal Revenue Service, Tax Exempt and Government Entities, "Tax
Exempt Private Activity Bonds," 2004, available at http://www.irs.gov/pub/irs-pdf/p4078.pdf.
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"Revenue bond" is a broad term used to describe bonds on which the debt service
is payable mainly from revenue generated through the operation of the project being financed, or
from other non-property tax sources. They may be issued by state and local governments, or by
an authority, commission, special district, or other unit created by a legislative body for the
purpose of issuing bonds for facility construction. Revenue bonds now account for the clear
majority of municipal bonds used to finance water, sewer, and solid waste infrastructure in the
United States. Revenue bonds are usually tax-exempt. Bond interest rates may be higher for
revenue bonds compared to general obligation bonds, and even higher for taxable revenue bonds.
Revenue bonds do not count against debt ceilings, but the national rating agencies take them into
account in financial capability analyses. State Revolving Fund (SRF) bonds, private-activity
industrial development bonds, and mortgage lease-backed bonds are examples of revenue bonds.
for The Bond Market Association; Temel, Judy W.; The
Fundamentals of Municipal Bonds, 5th ed.; John Wiley & Sons, Inc.; 2001, available at
Municipal Bond Information Guide: http;//www,iQ^^^^
State of Montana Website: http://www.mtfinanceonline.coni/tvpesofbonds.asp.
Traditionally, the phrase "short-term municipals" has meant short-term municipal
bonds and short-term securities known as notes. There are two main types of notes, anticipation
notes and general obligation notes. All of these instruments generally have maturities ranging
from a few months to a few years, have fixed interest rates, and are issued in anticipation of a
bond issue, grant proceeds, or tax collections. In the 1980s a new, broader class of "short-term
municipals" was developed. These new "short-term municipals" are known as demand
obligations or variable rate demand obligations. They are long-term bonds with yields
determined as if they were short-term notes. The bond holders can demand purchase of their
bonds at par (the principal due at maturity), plus accrued interest. The interest rates vary at
predetermined intervals, and are higher than the rates for many other types of bonds. State and
local governments issue "short-term municipals" of all types, traditional and new, to meet capital
needs while waiting for long-term funding revenues. These bonds are issued to fund activities
such as urban renewal and wastewater treatment.
for The Bond Market Association; Temel, Judy W.; The
Fundamentals of Municipal Bonds, 5th ed., John Wiley & Sons, Inc.; 2001, available at
Answers.com:
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Special assessment bonds are issued by local governments and/or special
authorities and are secured by special taxes, charges, or fees. These bonds are sold to finance
specific public infrastructure improvements that directly benefit the property owners in limited,
identifiable areas. Assessments are levied on properties in the areas in direct relation to the
benefits received from the projects. The assessments are based on property measurement
systems related to the benefits such as street front-footage or square footage owned. The system
for collecting assessments is usually tied to the collection of ad valorem property taxes, which
are taxes based on the assessed value of property. Most special assessment bonds have
maturities of 15 years or less. Examples of projects funded by special assessment bonds include
the construction, maintenance, and/or repair of water and sewer lines, storm drains, sidewalks,
and roadways, and public improvements including parks, bicycle paths, and landscaping.
for "Special Tax Bonds" and "Tax Increment Bonds" in this
section of the Guidebook. Standard and Poor's Corporation, Standard and Poor's Municipal
Finance Criteria, S & P Publications: 1993. The Bond Market Association; Tern el, Judy W.;
The Fundamentals of Municipal Bonds, 5th ed.; John Wiley & Sons, Inc.: 2001, "special
assessment bonds" listed in index under "Bonds," available at http://www.amazon.com.
Special tax bonds are backed by pledges of proceeds from specific tax sources.
They are usually issued by local governments to finance specific types of facilities or
environmental protection initiatives. For environmental purposes, particularly for the financing
of parks and open space purchases, localities use special tax bonds financed out of local sales tax
surcharges or property tax surcharges. Such surcharges may be approved for a limited time
period or to collect a specified amount of money. Special tax bonds have long been issued by
highway authorities, paid for out of highway taxes, to finance highways, roads and bridges.
Special tax bonds combine some of the characteristics of revenue bonds, general obligation
bonds, and special assessment bonds.
for "Revenue Bonds," "General Obligation Bonds," and
"Special Assessment Bonds" in this section of the Guidebook. The Bond Market Association;
Temel, Judy W.; The Fundamentals of Municipal Bonds, 5th ed.; John Wiley & Sons, Inc.; 2001,
"special-tax" is listed in the index under "Bonds," available at
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State Revolving Fund (SRF) revenue bonds are issued to expand, or leverage, loan
funding sources for local projects that meet the eligible project criteria under the Clean Water
State Revolving Fund (CWSRF) and the Drinking Water State Revolving Fund (DWSRF).
States use SRF dollars as security or as a source of revenue for the payment of principal and
interest on bonds. Although SRF revenue bonds are issued at market rates, local borrowers
receive loans at below market interest rates, subsidies provided in part by investments of the
large bond debt reserve funds. SRF revenue bonds may be issued to provide for the required
20% state match to SRF federal capitalization grants. Many CWSRFs have received AAA
ratings for their SRF revenue bonds. The bond leveraging approach has resulted in more loans
being made, and more projects being funded, compared to the direct loan approach.
for See "U.S. Environmental Protection Agency:
Clean Water State Revolving Fund" and "U.S. Environmental Protection Agency:
Drinking Water State Revolving Fund" in Guidebook Section 2b.
"Fitch Rates Missouri SRF's $23.5MM Revenue Bonds 'AAA,'" Business Wire, Sept. 23, 2005,
available at httpj//wwwjjnii^^^
Water Infrastructure Network Website:
://win-water.org/1 egislati vecenter/103101 farrell. . Oklahoma Water Resources Board
Website: ://www. owrb. state, ok. us/financing/news/fane ws. .
Tax
Tax increment bonds, which differ slightly from special assessment bonds, are tax-
exempt bonds issued by local governments for special assessment or improvement districts
where the benefit from the project being financed is specifically manifested through higher
property values. Tax increment financing is used to generate revenue for bond repayment from
the incremental change in property values caused by the financed improvement. After the
creation of a special financing district by ordinance, two sets of tax records are maintained, one
that reflects the property's value before the enhancement, and a second that reflects growing
assessed values (and payments) after the enhancement and serves as the source of bond
repayment. Tax increment financing bonds for revitalization projects may be backed by revenue
pledges in addition to anticipated increases in property value, called "value capture," which
makes them highly leveraged.
for "Tax Increment Financing" in Guidebook Section 8.
"Special Assessment Bonds" in this section of the Guidebook. The Bond Market Association;
Temel, Judy W.; The Fundamentals of Municipal Bonds, 5th ed.; John Wiley & Sons, Inc.; 2001,
"tax-increment" listed under "Bonds" in index, available at http://www.amazon.com.
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1. U.S. Department of Agriculture Business and Cooperative Programs: Economic
Development Loans
2. U.S. Department of Agriculture Business and Cooperative Programs: Renewable Energy
and Energy Efficiency Program
3. U.S. Department of Agriculture Rural Utilities Service: Water and Waste Disposal
Systems Loans for Rural Communities
4. CoBank Loan Programs
5. Commercial Loans
6. U.S. Environmental Protection Agency: Clean Water State Revolving Fund
7. U.S. Environmental Protection Agency: Drinking Water State Revolving Fund
8. U.S. Environmental Protection Agency: State Revolving Fund Pre-Financing and Short-
Term Loans
9. U.S. Environmental Protection Agency: Clean Water State Revolving Fund Private
Beneficiary Loans
10. North American Development Bank
11. Private Investment
12. Environmental State Revolving Funds
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These zero interest U.S. Department of Agriculture loans are used to promote
sustainable rural economic development and job creation projects. Loans may be used to fund
business expansions, startups, and incubator projects, community facilities, medical facilities,
community infrastructure necessary for economic development and job creation purposes, and
educational facilities and equipment. Electric and telephone utilities, and third parties applying
through those utilities, are eligible for consideration for these loans. Examples of projects
funded with these loans include the establishment or expansion of factories or businesses,
medical facilities, and water and sewer industrial development parks. Most of the environmental
projects funded involve water or wastewater systems. These loans could be used to help finance
directly and leverage other capital for additional wastewater and drinking water utilities, and to
fund non-point source improvements. The maximum loan amount is $740,000.
for U.S. Department of Agriculture Business and Cooperative
Programs Website: htt]3^/wwwjTjrjij^ These loans are also listed in
the Catalog of Federal Domestic Assistance (CFDA), and on the Catalog's Website at
http://12.46.245.173/cfda/cfda.html search on program # 10.854.
The Farm Security and Rural Investment Act of 2002 established the Renewable
Energy Systems and Energy Efficiency Improvements Program under Title IX, Section 9006.
This program provides direct loans, loan guarantees, and grants to agricultural producers and
rural small businesses to assist them with purchasing renewable energy systems and making
energy efficiency improvements. The minimum amount of these loans is $5,000, less any
project grant amounts, and the maximum loan amount is $10 million. Funds are awarded
through this program for the installation of a wide range of wind, solar, biomass, geothermal, and
conservation technologies. Guaranteed loans can be used for making capital improvements to
existing renewable energy systems, but direct loans cannot.
for U.S. Department of Agriculture Website:
http://www.rurdev.usda.gov/rbs/farmbill/. Applications should be submitted to the U.S.
Department of Agriculture Rural Development state office in the state where the project is
located. This program is listed on the Catalogue of Federal Domestic Assistance at
Mtp;//12AO4iJ13MdaMda,htmi, search on program # 10.775.
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for
These U.S. Department of Agriculture loans provide assistance for meeting rural
water and waste disposal needs in cities and towns with populations of 10,000 or less. The loans
are intended for providing basic human amenities, alleviating health hazards, and promoting the
orderly growth of the rural areas of the nation by meeting needs for new and improved rural
water and waste disposal facilities. Funds may be used for the installation, improvement, or
expansion of rural water facilities and the repair of distribution lines and well pumping facilities.
In addition, funds may also be used for the installation, repair, improvement, or expansion of
rural waste disposal facilities and the collection and treatment of sanitary, storm, and solid
wastes. Eligible applicants include municipalities, counties, and other political subdivisions of a
state, such as districts and authorities, associations, cooperatives, nonprofit corporations, and
federally recognized tribes. No maximum loan amount has been established through statute.
for U.S. Department of Agriculture Website:
http_:/J_www_.mda._goy/m^ These loans are also listed in the Catalog of Federal
Domestic Assistance (CFDA), and on the Catalog's Website at
http://12.46.245.173/cfda/cfda.html search on program #10.760.
CoBank is a private financial institution that offers a broad range of flexible loan
programs, specially tailored financial services, and leasing services to agribusinesses, rural
communications systems, Farm Credit Associations, and water, waste disposal, and energy
systems. CoBank operates as a financial cooperative and is part of the Farm Credit System, a
$140 billion national network of independently owned and operated credit and financial
institutions providing services to agriculture and aquatic producers and rural homeowners. A
broad range of competitively priced and flexible short-term, intermediate and long-term loan
programs are offered through CoBank. Short-term loans, which usually mature within 12 to 18
months, are available through CoBank to finance current or seasonal assets, inventories, accounts
receivable, commodities and other short-term needs. Intermediate and long-term loans are
available for the construction of new facilities, the remodeling or expansion of existing facilities,
land or equipment purchases, and the financing of other long-term assets and working capital.
Short-term loans and intermediate and long-term loans are available at fixed and variable rates.
for CoBank Website: http://www.cobank.com/.
Farm Credit Services Website: htto://wwwJj|rmg
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Most commercial banks and financial institutions in the United States have public
finance departments that provide state and local governments with loans to finance a wide
variety of capital projects and purchases. States and local governments tend to use commercial
loans when lower-interest financing is unavailable and/or to fill short-term financing needs in
anticipation of revenues from other sources (i.e., so-called bridge loans). Commercial loans are
usually provided at set costs keyed within a range of market-based interest rates. They tend to
have higher interest rates and less favorable payback terms as compared to government loans.
Commercial lenders such as banks are very low-risk lenders and they usually seek to protect
themselves and their loans by securing collateral in one or more of three ways: primary collateral
in the form of assets (preferably liquid), secondary collateral such as guarantees, and cash flow.
For governments, a portion of future revenues or taxes often represents the ultimate security for
commercial loans. The application process for commercial loans tends to be much faster than for
government loan programs. Commercial lenders usually have no set eligibility criteria and may
have no predetermined limits on the total amounts of loan capital that they make available.
for Most commercial banks have public finance departments
and/or environmental services departments that assist with inquiries on loan programs. Those
that do not either handle inquiries from their general finance/loan operation departments or refer
people to other banks.
Under Title VI of the 1987 Clean Water Act, states receive federal monies to
capitalize Clean Water State Revolving Fund (CWSRF) loan programs. Through CWSRF
programs, loans are made to communities to provide low cost financing for a wide range of
different projects for the protection of water quality. Examples of activities funded with these
loans include nonpoint source pollution control, watershed protection and restoration, estuary
management, wetlands restoration, brownfields remediation, and improvements to municipal
wastewater treatment infrastructure. Loans are made at low interest rates (0 percent to market
rate) for terms of up to 20 years. In addition, states use CWSRF money to repurchase debt to
get these loans to 30 years. States may set the criteria for determining which municipalities can
access the loans each year. All 50 U.S. states and Puerto Rico operate CWSRFs.
for U.S. Environmental Protection Agency Office of
Wastewater Management Website: http;//www,epa,^ phone
202-564-0752. See "Clean Water State Revolving Fund Private Beneficiary Loans" and "State
Revolving Fund Pre-Financing and Short-Term Loans" in this section of the Guidebook and
"State Revolving Fund Revenue Bonds" in Guidebook Section 2a.
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The 1996 Safe Drinking Water Act (SDWA) Amendments authorize funding for
the Drinking Water State Revolving Fund (DWSRF) program to provide public water systems
with the financing needed to further public health under the SDWA. The DWSRF program
provides states with capitalization grants that may be used for two major purposes. The first
purpose is capitalization of state revolving loan funds to provide low cost loans, with 20-30 year
terms, to public water systems. The second purpose is funding of "set-asides." Activities
eligible for DWSRF loans include: projects to upgrade or replace drinking water treatment,
transmission, distribution, and storage facilities, and consolidation of drinking water systems.
Initiatives that are funded with DWSRF set-asides include: technical assistance to water systems,
drinking water source (source water) protection, and water system operator certification.
for U.S. Environmental Protection Agency Office of
Groundwater and Drinking Water Website: htt|r//wwwj^3a^^
phone 202-564-3750. See "State Revolving Fund Pre-Financing and Short-Term Loans" in this
section of the Guidebook and "State Revolving Fund Revenue Bonds" in Guidebook Section 2a.
Short-Term
Some Clean Water State Revolving Fund (CWSRF) and Drinking Water State
Revolving Fund (DWSRF) loan programs make short-term loans for planning, design and initial
construction in localities which may later receive long-term CWSRF and DWSRF loans. In
addition, State Revolving Fund loans may be used to pre-fmance other federal or state drinking
water loans or grants. State Revolving Fund pre-financing loans have been used for Rural Utility
Service wastewater loans, Housing and Urban Development wastewater grants, and state loans
and grants. The State of New York's short-term financing program provides interest free
financing, for terms of up to three years, to recipients developing projects eligible for long-term
DWSRF financing. Also, the State of Texas offers short-term, variable rate CWSRF loans that
can be converted to long-term, fixed rate CWSRF loans at any time prior to project completion.
for U.S. Environmental Protection Agency Office of
Wastewater Management Website: http://www.epa.gov/owm/cwfinance/cwsrf/index.htm, phone
202-564-0752. New York Department of Health Website:
http_:/J_www.health^
Texas Water Development Board Website:
http://www.twdb.state.tx.us/assistance/financial/fin infrastructore/cwsrffund.asp
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The Clean Water State Revolving Fund (CWSRF) program, unlike the Drinking
Water State Revolving Fund (DWSRF) program, is statutorily limited to awarding loans for
publicly owned projects. However, occasionally CWSRF loans are made through a municipal
lease arrangement that allows the private sector to use the funds, as defined under the federal tax
code. Under this type of arrangement, a CWSRF makes loans to a publicly owned entity, state or
municipal, which has leased a facility to an entity in the private sector. The public entity acts as
a conduit for loan funds to the private beneficiary. The private beneficiary makes lease and/or
loan payments to the public entity through an operating lease or service agreement. The funds
used for CWSRF private beneficiary lending, called economic development loans, are derived
only from SRF "retained earnings," comprised of direct loan interest repayments and investment
earnings on recycled dollars, as opposed to federal capitalization grant dollars. Thus, the number
of such loans is automatically capped by the amount of retained earnings annually.
for See "U.S. Environmental Protection Agency: Clean Water
State Revolving Fund" in this section of the Guidebook. State Revolving Funds program
management should consult their U.S. Environmental Protection Agency (EPA) Regional
Offices before awarding private beneficiary loans. U.S. EPA Office of Wastewater Management
Website: http://www.epa.gov/owm/cwfinance/cwsrf/index.htm, phone 202-564-0752.
The North American Development Bank (NADBank), and its sister organization,
the Border Environmental Cooperation Commission (BECC), were created in 1994 under the
auspices of the North American Free Trade Agreement (NAFTA). NADBank and the BECC
were created for the purpose of funding environmental infrastructure projects along the United
States/Mexico border. NADBank is a bilaterally-funded, international organization, capitalized
and governed equally by the United States and Mexico. The BECC reviews proposals for
environmental projects in the region along the United States/Mexico border and certifies them
for loan funding by the NADBank. The mission of NADBank is to serve as a binational partner
and catalyst in communities along the United States/Mexico border in order to enhance the
affordability, financing, long-term development, and effective operation of infrastructure that
promotes a clean, healthy environment for the people of the region. NADBank can provide
financial assistance to public and private entities involved in developing environmental
infrastructure projects in areas near the border. Projects financed by the NADBank must address
environmental issues within 100 kilometers of either side of the United States/Mexico border.
for North American Development Bank Website:
http://www.nadb.org/. See "Border Environmental Cooperation Commission" in Guidebook
Section 5. Border Environmental Cooperation Commission Website: http://www.cocef.org/.
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Private investment is defined here as loans and other financial assistance
originating from sources other than commercial banks and/or finance companies. Sources of
private investment can include, but are not limited to, insurance companies, pension funds,
venture capital funds, individual venture capitalists, corporation partners, and general capital
investors. Private investment funds billions of dollars worth of new business start-ups in the
United States each year. The entrepreneurial ventures funded with this private investment
include the environmental goods and services sector as well as other environmental protection
related activities. The potential uses of private investment for supporting environmentally-
related businesses and/or activities are only limited by the degree of profit associated with them.
If it can be demonstrated that an idea or activity will make money, then private investment can
be found to support it. The application process for private investment is typically much faster
than for government loan programs. Private investors usually have no set eligibility criteria and
may have no predetermined limits on the total amount of loan capital available. Private investors
tend to demand a significantly higher rate of return on their money than other sources of capital.
for Funding information on venture capital funds is available
in directories such as, Who's Who in Venture Capital, April 2005, Grey House publishing,
available at: : //www. grey house. com/venture^w w. . Venture Capital Resource Directory:
Environmental revolving funds are state run lending institutions that are often
modeled after the Clean Water State Revolving Fund (CWSRF) and the Drinking Water State
Revolving Fund (DWSRF) described in this section of the Guidebook. Many states throughout
the U.S., including Michigan, Kentucky, Ohio, and Alaska, have environmental revolving funds
awarding loans for a wide variety of environmental protection initiatives including water
pollution prevention, wastewater treatment, and brownfields revitalization. Environmental
revolving funds allow states to plan and target limited resources to their highest priority needs.
for Council of Infrastructure Financing Authorities Website:
http://www.cifanet.orgA see the publications list on the Website. Small Business
Environmental's directory of state financial assistance programs: http ://www. smallbiz-
enviroweb.org/funding/fundstat.html. Michigan Department of Environmental Quality Website:
htt|3://wwwMcMgan:govM \5_4\W^QWtfnA. Kentucky
Infrastructure Authority Website: httpj//Ma,ky,,,gQy/loill/. Ohio Environmental Protection
Agency Website: http://www.epa.state.oh.us/cleanohio.html. Alaska Department of
Environmental Conservation Website: http://www.dec.state.ak.us/water/muniloan/index.htm
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1. U.S. Department of Agriculture Forest Service: Cooperative Forestry Assistance Grants
2. U.S. Department of Agriculture Rural Development: Grants for Water and Wastewater
Revolving Funds
3. U.S. Department of Agriculture Forest Service: Forest Stewardship Program Grants
4. U.S. Department of Agriculture Forest Service: Urban and Community Forestry Program
5. U.S. Department of Agriculture Business and Cooperative Programs: Rural Business
Enterprise Grants
6. U.S. Department of Agriculture Rural Utilities Service: Solid Waste Management Grant
Program
7. U.S. Department of Agriculture Rural Utilities Service: Technical Training and
Assistance Grant Program
8. Appalachian Regional Commission Grants
9. U. S. Department of Commerce Economic Development Administration:
Public Works and Economic Development Grants
10. U.S. Department of Commerce National Oceanic and Atmospheric Administration:
Coastal Services Center Grants
11. U. S. Department of Commerce National Oceanic and Atmospheric Administration:
Coastal Zone Management Act Administration Awards
12. U.S. Environmental Protection Agency: Environmental Education Grant Program
13. U.S. Environmental Protection Agency: Environmental Justice Small Grants Program
14. U.S. Environmental Protection Agency: Performance Partnership Grants
15. U.S. Environmental Protection Agency: Program Grants
16. U.S. Environmental Protection Agency: Section 319 Nonpoint Source Pollution Control
Grants
17. U.S. Environmental Protection Agency: Superfund Technical Assistance Grants
18. U.S. Environmental Protection Agency: Leaking Underground Storage Tank Trust Fund
Grants
19. U.S. Environmental Protection Agency: Underground Storage Tank Categorical Grants
20. U.S. Environmental Protection Agency: Wetlands Program Development Grants
21. U.S. Environmental Protection Agency National Center for Environmental Research:
Science to Achieve Results (STAR)
22. U.S. Environmental Protection Agency: Drinking Water State Revolving Fund Loan
Principal Forgiveness
23. U.S. Department of Homeland Security Federal Emergency Management Agency:
Superfund Amendments and Reauthorization Act, Title III Grants
24. Foundation and Corporate Giving
25. U.S. Department of Housing and Urban Development: Community Development Block
Grant Entitlement Communities Grants
26. U.S. Department of Housing and Urban Development: State Community Development
Block Grants Program for Non-Entitlement Areas
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27. U.S. Department of Interior Fish and Wildlife Service: Standard Grants Program for
Wetlands Protection
28. U.S. Department of Interior Fish and Wildlife Service: North American Wetlands
Conservation Act Small Grants Program
29. U.S. Department of Transportation: Transportation Equity Act for the 21st Century
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The U. S. Department of Agriculture Cooperative Forestry Assistance program
provides formula grants and project grants to state forestry agencies to assist in the advancement
of forest resources management with respect to non-federal forests and other rural lands. Among
the program's objectives are encouragement of the production of timber, control of insects and
diseases affecting trees and forests, control of rural fires, improvement and maintenance of fish
and wildlife habitat, the planning and conducting of urban and community forestry programs,
and efficient utilization of wood and wood residues, including the recycling of wood fiber. State
agencies can provide these grant funds to state forestry or equivalent agencies for forest
stewardship programs on private, state, local, and other nonfederal lands. These agencies can
use the grant funds for a wide range of initiatives pursuant to the program's objectives listed
above. The average size for an individual grant award is $1,000,000.
for U.S. Department of Agriculture (USD A) Website:
^^^
http://www.fs.fed.us/spf/coop/library/grantguide.pdf, and
: //www . f s . f ed .u s/spf/coop/program s/eap/i n dex . shtml . USDA phone 202-205-1657.
These grants are listed on the Catalogue of Federal Domestic Assistance at
http://12.46.245.173/cfda/cfda.html. search on program #10.664.
of
U.S. Department of Agriculture grants for water and wastewater revolving funds
are awarded to private nonprofit organizations to capitalize revolving loan funds. The revolving
loan funds are used by the nonprofits to make small, short-term loans to help fund expenses
including pre-development costs for water and wastewater disposal projects. The loan funds are
also used for short-term costs incurred for replacement equipment, small-scale extension of
services, or other small capital projects that are not part of the regular operations and
maintenance activities of existing water and wastewater systems. Grant applicants are required
to have the legal capacity and authority to perform the obligations of the grant, and the necessary
expertise and experience in making and servicing loans. Loan applicants must demonstrate that
they are unable to finance the proposed projects with their own resources or through commercial
credit at reasonable rates and terms. Facilities receiving the loans must primarily serve rural
residents and rural businesses.
for U.S. Department of Agriculture Website:
http://www.iisda.gov/rus/water/index.htm. Search on program # 10.864 in the Catalog of Federal
Domestic Assistance at http://12.46.245.173/cfda/cfda.html.
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Forest
iSII!
The U.S. Department of Agriculture Forest Stewardship Program awards project
grants for the purpose of managing nonfederal forest lands. Landowners of nonfederal lands,
nonprofits, tribes, and other state, local, and private agencies acting through state foresters,
equivalent state officials, or other official representatives are eligible to apply for these grants.
The objectives of the program are to promote and enable the long-term active management of
nonfederal forest lands to sustain the multiple values and uses that depend upon such lands.
The program awards funding for the delivery of information and professional assistance to
owners of nonfederal forest lands. Funds are also awarded for afforestation, reforestation, and
active management of nonfederal forest lands, and improved forest seedling production and
distribution. These grant awards range from $25,000 to $2,000,000, with an average award of
$450,000.
for U.S. Department of Agriculture Forest Service Website:
i, phone: 202-205-6206. These grants are listed in the
Catalogue of Federal Domestic Assistance at http://12.46.245.173/cfda/cfda.html, search on
program # 10.678.
The U.S. Department of Agriculture Urban and Community Forestry Program
awards project grants to assist state foresters, equivalent state agencies, interested members of
the public, and private nonprofit organizations in implementing urban and community forestry
programs. The program's objectives include planning, establishing, managing and protecting
trees, forests, green spaces, and related resources in and adjacent to cities and towns to improve
urban livability, link government, private, and grassroots organizations and resources, and
engage people in citizen-based, grassroots volunteer efforts to assist in retaining and protecting
their natural environment. All states, as well as the District of Columbia, Puerto Rico, the U.S.
Virgin Islands, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam,
and other U.S. possessions and territories are eligible to apply for these grants. Each grantee is
required to furnish a 50% match in the form of cash, services, or in-kind contributions.
for U.S. Department of Agriculture (USDA) Website:
http_:/J_www.fs._fed_^ USD A phone: 202-205-1657. These grants are listed on the Catalogue
of Federal Domestic Assistance at http;//l2,,46,245 J_73/cfda/cfdaJitoil, search on program #
10.675.
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U.S. Department of Agriculture Rural Business Enterprise Grants provide funds for
the financing or development of small or emerging businesses. These grants may be used for
developing employment opportunities with private businesses and industries to improve the
economy in areas and communities with populations of less than 50,000. Public bodies, private
nonprofit corporations and federally recognized Indian tribes are potentially eligible to receive
these grants for the purposes of assisting a business. The grants are not awarded directly to the
business. Grant funds may be used for establishing revolving loan funds for various rural
development related purposes, construction of buildings, construction of water supply and waste
disposal facilities, and programs providing educational and job training instruction.
for U.S. Department of Agriculture Website:
http://www.rurdev.usda.gov/rbs/busp/rbeg.htm. Call the Rural Business Service National Office
Specialty Lenders Division at 202-720-1400. Search on program # 10.769 in the Catalogue of
Federal Domestic Assistance at
These U.S. Department of Agriculture grants provide assistance for meeting rural
water and waste disposal needs in cities and towns with populations of 10,000 or less. These
grants may be used for evaluating landfill conditions to determine threats to water resources.
They may also be used for providing technical assistance and/or training to landfill operators,
communities (to help them reduce the solid waste stream), and operators of landfills that are
closed or will be closed in the near future. Eligible applicants include private nonprofit
organizations that have been granted tax exempt status by the Internal Revenue Service and
public bodies including local governmental-based multi-jurisdictional organizations.
Applications for these grants are accepted from October 1 through December 31 of each calendar
year. Recipients of these grants for fiscal year 2006 include the Association of Vermont
Recyclers, the Center for Ecological Technology in Massachusetts, and the Central Arkansas
Planning and Development District.
for U.S. Department of Agriculture Website:
http://www.usda.gov/ms/water/SWMG.htm. These loans are also listed in the Catalog of
Federal Domestic Assistance (CFDA), and on the Catalog's Website at
Mtp;//12AO4iJ13MdaMda,htmi, search on program # 10.762.
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This U.S. Department of Agriculture (USDA) grant program provides assistance
for meeting rural water and waste disposal needs in cities and towns with populations of 10,000
or less. The objectives of this federal grant program are to identify and evaluate solutions to
water and waste disposal problems in rural areas, assist applicants in preparing applications for
water and waste grants made through state offices, and improve operation and maintenance of
existing water and waste disposal facilities in rural areas. Private nonprofit organizations that
have tax exempt status with the Internal Revenue Service are eligible to apply for these grants.
Funds from these grants may be used to: 1.) identify and evaluate solutions to water and waste
problems of associations in rural areas, 2.) assist associations that have filed a pre-application
with the USDA in the preparation of water and/or waste loan and/or grant applications, 3.)
provide training to association personnel that will improve the management, operation, and
maintenance of water and waste disposal facilities, and 4.) to pay expenses associated with
providing technical assistance and/or training.
for U.S. Department of Agriculture Website:
http://www.usda.gov/rus/water/tatg.htm. These loans are also listed in the Catalog of Federal
Domestic Assistance (CFDA), and on the Catalog's Website at
http://12.46.245.173/cfda/cfda.html. search on program #10.761.
Appalachian Regional Commission (ARC) grants are awarded to states, public
bodies, and private nonprofit organizations for projects that create opportunities for self-
sustaining economic development and improved quality of life for the people of Appalachia.
ARC grants are either administered by ARC or by a federal agency selected by the grantee.
There are four different types of Appalachian Regional Commission grants that fund
environmental protection related activities: regional development grants, area development
grants, local development district assistance grants; and research, technical assistance, and
demonstration project grants. Demonstration Project grants fund analysis of funding gaps in
drinking water and wastewater projects in the region. Environmental protection related projects
funded with the other three grant types listed above include water and wastewater treatment
systems. Funds for these grants are appropriated annually to the ARC by Congress.
for Appalachian Regional Commission Website:
Search on program numbers 23.001 (regional
development), 23.002 (area development), 23.009 (local development district assistance), and
23.011 (research, technical assistance, and demonstration projects) in the Catalog of Federal
Domestic Assistance at http://12.46.245.173/cfda/cfda.html.
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of
lie
Public Works and Economic Development Program grants are administered by the
U.S. Department of Commerce Economic Development Administration. These grants fund
projects that enhance regional competitiveness and promote long-term economic development in
economically distressed areas. The purpose behind these grants is to help communities and
regions revitalize, expand, and upgrade their physical infrastructure to attract new industry,
encourage business expansion, diversify local economies, and generate or retain long-term
private sector jobs and investment. U.S. states, political subdivisions of states, territories, cities,
counties, Indian tribes, and consortiums of Indian tribes are eligible to apply for these grants.
Grant eligible projects include construction and maintenance of water and sewer facilities,
industrial park infrastructure improvements, construction of vocational facilities, redevelopment
of brownfields, and eco-industrial (ecological) development. These grants cover 50%-100% of
project costs depending on economic need as defined by the Department of Commerce.
for U.S. Department of Commerce Website:
http://www.eda.gov/AboutEDA/Programs.xml. Search on program # 11.300 in the Catalogue of
Federal Domestic Assistance at http://12.46.245.173/cfda/cfda.html.
of
The National Oceanic and Atmospheric Administration (NOAA)'s Coastal
Services Center provides funding each year for special projects undertaken by the coastal
management community. Funding is awarded in the form of competitive grants and cooperative
agreements. These grants fund projects aimed at addressing coastal management issues in ways
that promote maintenance or improvement of natural resources while also allowing for economic
growth. The Coastal Services Center, along with many other NOAA agencies, issues an annual
Omnibus notice in the Federal Register that describes grant funding availability. The number,
nature, and amount of these grants, and who is eligible, varies from year to year. In addition, the
Coastal Services Center's announcements of available competitive grants and cooperative
agreements, along with application deadlines, are available on the Website below.
for National Oceanic and Atmospheric Administration,
Coastal Services Center Website: http://www.csc.noaa.gov/funding/.
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of
The National Coastal Zone Management (CZM) Program, authorized by the
Coastal Zone Management Act of 1972, provides grants in the form of cooperative agreements to
coastal states and territories for administering coastal management programs. The CZM
Program is administered by the Department of Commerce, National Oceanic and Atmospheric
Administration (NOAA). The main goal of the CZM program is to preserve, protect, develop,
and where possible restore and enhance the resources of the nation's coastal zone. Only Coastal
and Great Lakes states and territories with coastal management programs approved by the
Secretary of Commerce are eligible to receive CZM program funding. Thirty-four coastal and
Great Lakes states and territories are receiving funding. Illinois is the only potentially eligible
state that is not receiving funding. The only entities that may apply for CZM Program grants are
the designated lead agencies for the coastal zone management program in each state or territory.
The average size of award to each state or territory is $2.25 million. Tribes and other third
parties are not eligible to receive coastal zone management grants. However, any state or
territory that chooses to can make its coastal zone management funds available to tribes.
for National Oceanic and Atmospheric Administration
(NOAA) Website: http://coastalmanagement.noaa.gov/programs/coast div.html. Call Elisabeth
Morgan at NOAA at 301-713-3155, ext. 166. These grants are listed in the Catalogue of Federal
Domestic Assistance at htt|x//12Jj^^ search on program # 11.419.
Grant
The National Environmental Education Act of 1990 authorizes the Environmental
Education Grant Program. The program is administered by the U.S. Environmental Protection
Agency (EPA). The goal of the program is to support environmental education projects that
enhance the public's ability to make informed and responsible decisions that affect
environmental quality. To be grant eligible, an environmental education project must be based
on sound science and promote environmental stewardship. The project must enhance critical
thinking, problem solving, and effective decision making skills and teach individuals to weigh
various sides of an environmental issue to make informed and responsible decisions. Grantees
must provide non-federal matching funds of at least 25% of the project being funded. Each year
the U.S. EPA issues a Solicitation Notice, published in the Federal Register and available on the
Website below, that includes all the necessary application forms and instructions. Colleges and
universities, local and tribal education agencies, state education or environmental agencies,
nonprofit organizations, and non-commercial educational broadcasting entities are eligible to
apply for grants under this program.
for U.S. Environmental Protection Agency Website:
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The U.S. Environmental Protection Agency (EPA) Office of Environmental Justice
established the Environmental Justice Small Grants Program (EJSG) in 1994. The purpose of
the EJSG is to support and empower communities that are working on solutions to local
environmental and/or public health issues. The U.S. EPA defines Environmental Justice as the
fair treatment and meaningful involvement of all people regardless of race, color, national origin,
or income with respect to the development, implementation, and enforcement of environmental
laws, regulations and policies. Organizations officially designated by the Internal Revenue
Service as 501(c)(3) nonprofits, and nonprofits recognized by the state, territory, commonwealth,
or tribe in which they are located, are eligible to apply for these grants. The applicant must
demonstrate having worked directly with, or provided services to, the affected community. An
"affected community," for the purposes of these grants, is a community that is disproportionately
affected by environmental harms and risks and has a local environmental and/or public health
issue that is identified in the grant proposal.
for U.S. Environmental Protection Agency Website:
http://www.epa.gov/compliance/environmentaljustice/grants/ei-smgrants.html, phone 202-564-
2515, or 800-962-6215.
Performance Partnership Grants (PPGs) are multi-program grants made to state and
tribal agencies by the U.S. Environmental Protection Agency (EPA) from funds allocated and
otherwise available for categorical grant programs. They provide states and tribes with the
opportunity to combine funds from two or more categorical grants into one or more PPGs. PPGs
are authorized by the 1996 Omnibus Consolidated Rescissions and Appropriations Act (PL 104-
134). There are twenty environmental program grants eligible for inclusion as Performance
Partnership Grants in fiscal year 2006. PPGs give states and tribes increased flexibility to
address their highest environmental priorities, thus increasing equity and environmental
incentives. They provide incentives for states and tribes to improve their environmental
performance and draw links between program goals and outcomes. PPGs also cut administrative
burdens/costs for recipients and EPA by reducing the numbers of grant applications, budgets,
work plans and reports. States and tribes must develop environmental indicators and
performance measures for PPGs.
for U.S. Environmental Protection Agency Website:
http://www.epa.gov/ocir/nepps/pp grants.htm.
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U.S. Environmental Protection Agency (EPA) program grants are awarded for
various purposes including state and local program research, demonstrations, development, and
implementation. The dollar amount, application criteria, and requirements differ from grant to
grant, depending on Congressional authorization, statutory goals, and internal EPA grant
policies. Some grant programs are specifically authorized for a particular purpose, while other
programs give significant discretion to the EPA office administering the grants. EPA grants fund
programs for the protection of all environmental media, including air, water, and soil. A number
of EPA grants are targeted to research and demonstration projects; other grants provide support
for state and local program activities that coincide with federal environmental quality priorities.
Applicants must compete for limited funds, and they must sign EPA grant agreements before
receiving financial awards.
for U.S. Environmental Protection Agency Grant Awards
Database: http://vosemite.epa.gov/oarm/igms egf.nsf/HomePage?ReadForm. The Catalog of
Federal Domestic Assistance at http://12.46.245.173/cfda/cfda.html contains detailed
information on EPA program grants and other federal grant programs.
319
Section 319(h) of the Clean Water Act authorizes formula grants for state, tribal,
and territorial water quality agencies to fund projects and programs designed to help reduce
nonpoint sources of water pollution within identified priority watersheds. State foresters, private
landowners, and private nonprofit organizations may apply through state lead agencies for these
Section 319 grants. Grantees must utilize these funds to implement U.S. Environmental
Protection Agency approved nonpoint source pollution management programs. A 40 percent
nonfederal match, in the form of supplies, equipment, and/or funding, must be provided by
grantees. Regulatory and nonregulatory programs assessing the success of specific nonpoint
source pollution control projects may be eligible for these grants. In addition, enforcement,
technical assistance, training, technology transfer, demonstration projects, and monitoring for
nonpoint source projects may be eligible. An example of a potentially eligible project is the
implementation and evaluation of Best Management Practices (BMPs) for animal waste.
for U.S. Environmental Protection Agency (EPA) Office of
Wetlands, Oceans, and Watersheds (OWOW) grants program phone: 202-566-1155, Website:
http://www.epa.gOv/owow/nps/319hfunds.html. A list of state NPS coordinators to contact for
grant applications is available on OWOW's Website. "EPA Funds Available for Forestry
Projects": hltp;//wwwj^^
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Superfund Technical Assistance Grants (TAGs) are authorized by the Superfund
Amendments and Reauthorization Act of 1986. TAGs provide money for activities that help
communities participate in decision making at eligible Superfund sites. Initial grant awards of
up to $50,000 are available to qualified community groups so they can contract with independent
technical advisors to interpret technical information about their Superfund site and help the
community understand that information. The technical advisors interpret and explain technical
reports, site conditions, and the U.S. Environmental Protection Agency's proposed cleanup
proposals and decisions at Superfund sites. Additional funds beyond the $50,000 may be
awarded for very large or complex sites. TAGs are available at Superfund Sites that are on, or
proposed to be on, the U.S. Environmental Protection Agency's National Priorities List. They
must be Superfund sites for which a response action has begun.
for U.S. Environmental Protection Agency (EPA) Website:
the site lists contact information for the TAG
coordinator for each EPA regional office.
The Leaking Underground Storage Tank (LUST) Trust Fund Program,
administered by the U.S. Environmental Protection Agency, provides project grants in the form
of cooperative agreements to support state corrective action and enforcement programs that
address releases from leaking underground storage tanks containing petroleum. Grant funds are
used to provide resources for the oversight and cleanup of petroleum releases from leaking
underground storage tanks where owners and operators are unknown or are unwilling or unable
to take corrective actions themselves. States may also oversee responsible party cleanups. A ten
percent state cost share is required. The program can be used not only to address the immediate
problem of leaking underground petroleum storage tanks, but also to raise public awareness of
the pollution threat to groundwater caused by leaks from these tanks.
for U.S. Environmental Protection Agency Website:
://www.epa.gov/OUST/ltffacts.htm and http://www.epa.gov/swerust 1 /20clenup.htm.
Contact Lynn Depont at the U.S. EPA at 703-603-7148.
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The U.S. Environmental Protection Agency (EPA) provides funding to states,
tribes, and/or intertribal consortia through the Underground Storage Tanks (UST) categorical
grants to encourage owners and operators to properly operate and maintain their USTs for the
prevention and detection of releases caused by spills, overfills, and corrosion. EPA awards
grants to states for new activities authorized by the Energy Policy Act of 2005. EPA recognizes
that the size and diversity of the regulated community puts state authorities in the best position to
regulate USTs. However, EPA will use funds for direct implementation of release detection and
prevention programs on tribal lands where EPA is legally responsible for carrying out the UST
program. State UST grant activities focus on developing state programs with sufficient authority
and enforcement capabilities to operate in lieu of the federal UST program. UST state grant
activities also focus on ensuring that owners and operators routinely and correctly monitor all
regulated tanks and piping in accordance with UST regulations. There is a 25 percent matching
requirement for state grants and no matching requirement for tribal or intertribal grants.
for U.S Environmental Protection Agency (EPA) Website:
http://www.epa.gov/swenjstl/overview.htm. Contact Lynn Depont at the EPA at 703-603-7148.
These grants are listed on the Catalogue of Federal Domestic Assistance at
http://12.46.245.173/cfda/cfda.html. search on program # 66.804.
Wetlands Program Development Grants (WPDGs) provide funding for projects
that promote the coordination and acceleration of research, investigations, experiments, training,
demonstrations, surveys, and studies related to the causes, effects, extent, prevention, reduction,
and elimination of water pollution. U.S. Environmental Protection Agency (EPA) regional
offices administer these grants. States, tribes, local governments, interstate associations, inter-
tribal agencies, intertribal consortia, and national nonprofit, nongovernmental organizations are
eligible to apply for WPDGs. WPDGs can be used to build and refine any element of a
comprehensive wetlands protection program. Priority for funding is given to projects that
address the three priorities identified by the U.S. EPA: 1.) developing a comprehensive
monitoring and assessment program, 2.) improving the effectiveness of compensatory mitigation,
and 3.) refining the protection of vulnerable wetlands and aquatic resources.
for U.S. Environmental Protection Agency (EPA) Office of
Wetlands, Oceans and Watersheds (OWOW) Website:
http://www.epa.gov/owow/wetlands/grantgoidelines/, contact information for the EPA regional
offices that administer these grants is available on the Website.
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for
The Science to Achieve Results (STAR) program, administered by the U.S.
Environmental Protection Agency's National Center for Environmental Research, funds research
grants in numerous environmental science and engineering disciplines. The STAR program
awards these grants to scientists and engineers at universities and nonprofit organizations,
funding targeted research that complements EPA's intramural research program. Cutting edge
science and proof of concept-type projects consistent with EPA's mission and vision for
environmental protection are funded with these grants. Past research funded with STAR grants
has covered a wide range of technology areas focusing on green chemistry and engineering.
Green chemistry utilizes innovative chemical technologies that reduce or eliminate the use or
generation of hazardous substances in the design, manufacture, and use of chemical products.
Green Engineering is the design, commercialization, and use of economical processes and
products while reducing the generation of pollution at the source and minimizing risk to human
health and the environment. STAR grants average about $350,000 per year for three years.
for U.S. Environmental Protection Agency (EPA) Website,
Environmental Technology Opportunities Portal: http://es.epa.gov/ncer/grants/.
U.S. EPA Website, Green Chemistry page: http://www.epa.gov/greenchemistry/.
U.S. EPA Website, Green Engineering page: http://www.epa.gov/oppt/greenengineering/.
The 1996 Safe Drinking Water Act (SOWA) established the Drinking Water State
Revolving Fund (DWSRF), administered by the U.S. Environmental Protection Agency and
capitalized by federal capitalization grants awarded to states. The states use the grant dollars to
award loans to localities for public water systems. The SDWA permits states to use up to 30%
of their federal capitalization grants for loan principal forgiveness to communities that the states
defined as disadvantaged. Principal forgiveness is, in effect, a grant. Principal forgiveness is
available for publicly and privately owned public purpose drinking water projects.
for "U.S. Environmental Protection Agency:
Drinking Water State Revolving Fund" in Guidebook Section 2b. U.S. Environmental
Protection Agency (EPA) Website: http://www.epa.gov/safewater/dwsrf/nims/disadvrg.pdf.
Also see the Federal Register Notice and the Fact Sheet under "DWSRF Program Rule" and the
Annual Report and Report to Congress on the EPA Website at:
http;//www,epa,^ Localities should consult their state
DWSRF officials. Contact Peter Shanaghan at the EPA at 202-564-3848 with general questions.
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of
III
The Superfund Amendments and Reauthorization Act (SARA), Title III provides
grants to fund education and training in emergency planning, preparedness, mitigation, response,
and recovery associated with hazardous chemicals. This funding is available to federally
recognized Tribal Nations only. SARA, Title III requires Tribal Nations to establish State
Emergency Response Commissions to administer hazardous materials planning and preparedness
within tribal boundaries. Title III recognizes tribal responsibility as equal to states in terms of
the protections of lives and property from chemical hazards. Individuals eligible for the training
funded with Title III grants include public officials, fire and police personnel, medical personnel,
first responders, and other tribal response and planning personnel. Training funded with these
grants includes federal activities and conferences, state training programs, private sector training,
university training centers, and other training sources. These grants may also be used to pay
contractual services acquired for the purpose of training and educating the Tribal Nations.
for U.S. Federal Emergency Management Agency Website:
Foundation and corporate grants are a significant and growing source of funding
for environmental protection projects. Most grants of this type fund well defined projects, with
specified time frames, costs, and deliverables, that meet the immediate priorities of the funding
source, and are not funded by governments. Foundation and corporate grant programs tend to
favor the most innovative environmental projects. Grants are frequently awarded for
environmental research, education, planning, and demonstration projects. Examples of
organizations awarding grants for environmental protection projects include the Ben & Jerry's
Foundation, Patagonia, Inc.; Ford Motor Company, and the Charles Stewart Mott Foundation.
for The Foundation Directory: http://fconline.fdncenter.org/.
Foundation Center Website: httjj^yfoujidationcentgro^ Environmental
Grantmaking Foundations, 1 1th ed., available through htt|)i//w^¥w^envl!^^
National Directory of Corporate Giving, 12th ed., available through the Foundation Center at
http ://foundationcenter. org/marketplace/. Ford Motor Company Website:
http://www.ford.com/en/goodWorks/fundingAndGrants/conservationEnvironmental/default.htm.
Charles Stewart Mott Foundation Website: http ://www.m ott. org/program s/envi ronm ent. asp .
Ben & Jerry's Foundation Website: http_:/jwww.bmj_er^
Patagonia Website: http;//w¥W4Mtag^^
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The Community Development Block Grant Entitlement Communities Grants
program seeks to develop viable urban communities by providing decent housing and a suitable
living environment, and by expanding economic opportunities, principally for low and moderate
income individuals. The program, administered by the U.S. Department of Housing and Urban
Development (HUD), provides annual grants on a formula basis to cities and counties defined as
entitlement communities. HUD defines entitlement communities as principal cities of
Metropolitan Statistical Areas (MSAs), other metropolitan cities with populations of at least
50,000, and qualified urban counties with populations of at least 200,000 (excluding the
population of entitlement cities located in such counties). Environmental protection related
activities funded with these grants include the construction of water and wastewater treatment
facilities, and activities related to energy conservation and renewable energy resources.
for The U.S. Department of Housing and Urban Development
Website: httpj//wwwjiud^
Search on program # 14.218 in the Catalogue of Federal Domestic Assistance at
http://12.46.245.173/cfda/cfda.html.
for
The Community Development Block Grants (CDBG) Program for non-entitlement
areas helps provide communities with decent housing, a suitable living environment, and
expanded economic opportunities for low to moderate income citizens. States are grated
authority by the U.S. Department of Housing and Urban Development (HUD) to administer
these grants. The grants finance activities in non-entitlement areas, defined as cities with
populations of less than 50,000 that are not principal cities of Metropolitan Statistical Areas
(MSAs) and counties with populations of less than 200,000. Puerto Rico and all U.S. states
except Hawaii receive funds to administer these grants to localities. HUD administers the
program for non-entitled counties in the State of Hawaii because the state has permanently
elected not to participate in the State CDBG Program. Environmental protection related
initiatives funded with these grants include planning activities, acquisition of property for public
purposes, and the construction of water and wastewater treatment facilities.
for U.S. Department of Housing and Urban Development
(HUD) Website: http;//wwwjij^^
Search on program # 14.228 in the Catalogue of Federal Domestic Assistance at
http://12.46.245.173/cfda/cfda.html.
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of &
The Standard Grants Program provides funding for public-private partnerships
carrying out projects in the United States, Mexico, and Canada. To be eligible for funding
through this program, projects must involve the long-term protection, restoration, and/or
enhancement of wetlands and associated upland habitats for the benefit of waterfowl and other
migratory birds that depend upon wetlands habitat. Projects carried out in Mexico may also
include technical training, environmental education and outreach, organizational infrastructure
development, and sustainable-use studies. The Migratory Bird Conservation Commission meets
each year to approve the total amount of funding to be distributed to projects under the Standard
Grants Program in the following fiscal year.
for U.S. Fish & Wildlife Service Website:
http://www.fws.gov/birdhabitat/Grants/NAWCA/Standard/index.shtm, contact information for
grant coordinators in the U.S., Canada, and Mexico are listed on the Website. This program is
listed as the "North American Wetlands Conservation Fund" in the Catalogue of Domestic
Assistance at http://12.46.245.173/cfda/cfda.html, search on program # 15.623. The program is
also listed at: http://www.grants.gov/search/search.do?mode=VlEW&oppId=7818.
U.S. of &
This Small Grants Program provides funding for public-private partnerships
carrying out projects in the United States that further the goals of the North American Wetlands
Conservation Act. To be eligible for funding through this program, projects must involve the
long-term protection, restoration, and/or enhancement of wetlands and associated upland habitats
for the benefit of waterfowl and other migratory birds that depend upon wetlands habitat.
Grantees are required to come up with matching funds. The Migratory Bird Conservation
Commission meets each year to approve the total amount of funding to be distributed to projects
under the Small Grants Program in the following fiscal year.
for Contact Small Grants Coordinator Keith Morehouse at the
U.S. Fish and Wildlife Service: phone 703-358-1888, e-mail: keith_morehouse@fws.gov.
U.S. Fish and Wildlife Service Website:
http://www.fws.gov/birdhabitat/Grants/NAWCA/Small/index.shtm.
This program is listed as the "North American Wetlands Conservation Fund" in the Catalogue of
Domestic Assistance at hjt^yi2^^245_JJ3JcJida/cfidaJltol, search on program # 15.623. The
program is also listed at: http://www.grants.gov/search/search.do?mode=VIEW&oppId=7818.
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Act for the
The Transportation Equity Act for the 21st Century (TEA-21), signed into law in
1998, authorizes over $200 billion to improve the nation's transportation infrastructure, enhance
economic growth, and protect the environment. State and local governments coordinate TEA-21
transportation project planning and funding processes. Through additions to both the Surface
Transportation Program and the National Highway System, TEA-21 provides funding for
environmental protection initiatives. TEA-21 provides this funding through grants and set-asides
for a wide variety of water quality enhancement and transportation enhancement initiatives.
Eligible water quality enhancement initiatives include wetlands mitigation banking, wetlands
restoration, the mitigation of water pollution due to highway runoff, and the construction of
pump out and dump station facilities in marinas. Eligible transportation enhancement activities
include the construction of bicycle and pedestrian pathways, the acquisition of conservation or
scenic easements, and rails-to-trails projects.
for U.S. Environmental Protection Agency Website:
http ://www. epa. gov/owow/tea/teafact, html. U.S. Department of Transportation Website:
http://www.fhwa.dot.gov/tea21/implinks.htm and http://www.fhwa.dot.gov/tea21 /sumover.htm.
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Environmental protection needs and expectations are continuing to grow, while the resources
available to meet those needs and expectations are increasingly constrained at all levels of
government. Federal, state and local governments and the private sector are exploring the use of
more efficient, effective, and innovative solutions to help address these major challenges. They
are aggressively looking for and creating ways and opportunities to lower environmental costs,
increase environmental investment, and build environmental capacity by creating partnerships
with state and local governments and the private sector to fund environmental needs.
Federal, state, and local governments and the private sector are also looking for ways to enhance
their credit so they can make their financial resources go further. Credit enhancement serves as
an assurance to lenders and bondholders that credit is available, and that they will be repaid if the
debtor government or private party should default or delay payment. Small businesses and local
governments with poor credit ratings or no credit ratings may be able to gain access to capital
markets and loan funds through credit enhancements, thus increasing the equity of access and
allowing environmental projects to move forward.
This section presents and evaluates a number of the important mechanisms that these
governments are testing and using to lower costs, enhance and build credit, increase investment,
and build capacity through partnerships. It also looks at these mechanisms in terms of their
contributions to financing environmental protection needs on a sustainable basis. The
mechanisms reviewed in the section vary widely, ranging from specific analytical financial
management tools to common-sense financial practices to broad, sweeping, innovative
government programs and initiatives.
Some of the tools and initiatives discussed, such as refinancing and financial capability analysis,
have been used for years. Others, such as cost-benefit analyses, cost-effectiveness analysis, and
full-cost pricing are not new, but their use in the environmental arena may be new or growing.
Still others, such as risk management and comparative risk ranking, have been used by one
environmental media or by one level of government, and their use is now being incorporated in
new areas or by new parties. One thing that these tools all have in common is that they represent
approaches for lowering costs or enhancing credit, and for helping to address the long-term
needs for financing environmental protection initiatives that are facing the nation.
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1. Pooled Financing Programs
2. U.S. Small Business Administration: Surety Bond Guarantees
3. Bond Insurance
4. State Bond Banks
5. State Loan and Bond Guarantees
6. Performance Bonds
7. Letters of Credit
8. Lines of Credit
9. Senior and Subordinated Debt Structuring
10. State Revolving Fund (SRF) Interest Rate Subsidies
11. State Revolving Fund (SRF) Cross-Collateralization
12. Accelerated Depreciation
13. Activity-Based Costing
14. U.S. Department of Housing and Urban Development Community Development
Block Grant Program: Section 108 Loan Guarantees
15. Amortization of Pollution Control Facilities
16. Appropriate Technology
17. Barter
18. Fiscal Impact Analysis
19. Full Cost Pricing
20. Expensing of Assets
21. Pay-As-You-Go
22. Refinancing Loans
23. Reforestation Tax Deduction and Amortization
24. Rehabilitation Tax Credits
25. Risk Management
26. Discounting
27. Value Engineering
28. Environmental Due Diligence
29. Financial Due Diligence
30. Benchmarking
31. Deduction of Agricultural Conservation Expenses
32. Comparative Risk Ranking
33. Cost-Effectiveness Analysis
34. Financial Capability Analysis
35. Cost-Benefit Analysis
36. Capital Planning and Budgeting
37. Employee Stock Ownership Plans
38. Life Cycle Assessment and Design
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Pooling is the act of uniting, or an agreement to unite, an aggregation of properties
belonging to different individuals, with a view to common liabilities or profits. Financing
mechanisms such as loans and bonds are often pooled in arrangements called pooled financing
programs or credit pools. Pooled financing programs can be used to lower interest rates, lower
issuance costs, and increase flexibility for loans, bonds, and other financing mechanisms.
Through credit pools, local government agencies and other organizations can take advantage of
economies of scale by sharing the costs of issuing bonds or other debt instruments and securing
lower interest rates. Regional credit pools are often used to finance local capital infrastructure
projects such as water, sewer, and road improvements. The Florida Municipal Power Agency's
Pooled Loan Project finances various electric, gas, water, sewer, and other utility related
projects. The Association of Bay Area Governments (ABAG) in the San Francisco Bay Area
manages 46 credit pools that have funded over 131 projects totaling more than $319 million.
ABAG's credit pools have been used to fund a variety of projects, including construction and
renovation of municipal and public safety buildings, and water, sewer, and drain projects.
for Florida Municipal Power Agency Website:
http://fmpa.com/html/niember services/pooled loan.html.
Association of Bay Area Governments Website:
http://www.abag.ca.gov/services/finance/pooling/summary.htm.
The U.S. Small Business Administration (SBA) guarantees surety bonds for
contracts up to $2 million, covering bid, performance, and payment bonds for small and
emerging contractors who cannot obtain surety bonds through customary commercial channels.
A surety bond guarantee is an agreement between a surety and the SB A. Surety bond guarantees
provide that the SBA will assume a predetermined percentage of loss in the event that the
contractor should breach the terms of the contract. The SBA's guarantees give sureties an
incentive to provide bonding for eligible contractors, improving the contractors' chances of
obtaining bonding. Contractors must qualify as small businesses based on the SBA's criteria and
meet the surety's bonding qualifications to be potentially eligible for SBA surety bond
guarantees. Professional agents or brokers specializing in providing surety bonds and the U.S.
Department of Treasury, Financial Management Service, can provide information regarding
specific sureties. Most large property and casualty insurance companies have surety
departments.
for U.S. Small Business Administration (SBA) Website:
http://www.sba.gov/services/financialassistance/basics/sbarole/surebond geninfo.html. See
"Surety Bonds" in Section lOb of this Guidebook and "Performance Bonds" in this Section of
the Guidebook. U.S. Department of the Treasury Website:
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State bond banks are public authorities created to help communities, especially
smaller ones without substantial financial expertise or credit history, to access the reduced loan
rates and other efficiencies of the tax-exempt bond market. By pooling smaller bond issues and
providing state credit backing, state bond banks cut the cost of borrowing for communities. The
Maine Municipal Bond Bank and the Virginia Resources Authority are examples of state bond
banks. Bond banks are used to finance public facilities including wastewater and drinking water
treatment systems and solid waste processing facilities. Bond banks provide three main
economic advantages to localities: 1.) economies of scale in bond issuance, resulting from the
elimination of duplication of fixed issuance costs, negotiated underwriting, administrative cost
savings, and the use of specialized techniques to further reduce interest costs such as variable
rates or zero coupon bonds, 2.) a pool of credit is generally perceived as more creditworthy than
an individual credit because default risk is diversified, and 3.) improvements in credit quality via
enhancement devices such as moral obligation pledges and revenue intercept mechanisms.
for Council of Development Finance Agencies Website:
http;//ww¥jidja^ Maine Municipal
Bond Bank Website: http://www.mainebondbank.com/. Virginia Resources Authority Website:
http://www.virginiaresoorces.org/.
Loan and bond guarantees are a form of credit assistance offered by states to
recipients including counties, localities, and businesses. State guarantees are a very effective
form of leveraging that can considerably reduce the costs of borrowing for bond issuers and loan
recipients. Minnesota is an example of a state with a bond guarantee program. Minnesota's
program reduces county borrowing costs on general obligation bonds by providing limited state
guarantees of the payments on those bonds, thus allowing counties to receive higher bond
ratings. Through the program, counties in Minnesota are provided with guarantees on general
obligation bonds issued for the construction of solid waste facilities and other types of facilities
specified by the state. An example of a state loan guarantee program is the Oregon Credit
Enhancement Fund. This fund has guaranteed over 118 loans totaling over $27 million since
1994. The average credit enhancement loan awarded through this fund is for $230,000.
Businesses and facilities meeting specific criteria are eligible for loan guarantees through the
Credit Enhancement Fund. Any business that uses loan proceeds to clean up a brownfield site is
eligible.
for Minnesota Department of Employment and Economic
Development Website: liQii^/wwwxiee^^
State of Oregon Economic and Community Development Corporation Website:
http://www.econ.state.or.us/cef.htm. See "General Obligation Bonds" in Section 2a of this
Guidebook.
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Performance bonds are surety bonds issued by insurance companies on behalf of
contractors, such as construction companies, to protect clients from the potential consequences of
the contractors' failure to complete contracts in accord with plans and specifications.
Performance bonds are frequently issued to secure the contactors' promises on the many public
construction projects, such as wastewater treatment plant construction projects, that are
performed by private sector firms in the United States. These bonds indicate that a financially
responsible party, such as a commercial bank or insurance company termed the "surety," stands
behind the contractor. Performance bonds permit the surety, upon contractor default, to either
pay the bond penalty, or finance or hire a new contractor. Performance bonds are often required
by the owners of the land to be developed or facility to be built. By furnishing these bonds,
contractors may obtain credit, such as construction loans, at lower rates. These bonds limit
surety liabilities to set amounts specified in bond agreements and contracts. Performance bonds
can help environmental protection initiatives such as brownfields redevelopment projects which
might otherwise be viewed as too risky or complex to move forward on a timely basis.
for Surety Information Office Website:
http://www.sio.org/html/why bonds reqd.html.
See Section 2a of this Guidebook for general information about bonds.
of
Letters of credit (LCs) are documents that increase the basic security behind bonds
and loans. LCs are generally issued by commercial banks and are used for two purposes: to
enhance credit and enhance liquidity. A letter of credit represents a contract between the issuing
bank and the bond trustee. In LCs issued for credit enhancement purposes, the issuing bank
irrevocably agrees to provide funds to meet debt service payments in the event that the bond
issuer or loan recipient is unable to do so and the LCs specify that funds will be used only for
bond or loan repayment. In LCs designed for liquidity enhancement, the issuing bank provides
liquidity enhancement by agreeing to advance any funds necessary to purchase bonds tendered
by investors. LCs are used to increase market access for issuers who may have difficulty selling
their bonds due to perceived weaknesses in their ability to meet their obligations. It is important
that the bank issuing the LC has a sound financial history, a diverse loan portfolio, and adequate
assets. Communities or companies that are ineligible for other types of credit enhancements
could use LCs. LCs may be utilized to enhance the security behind bonds or loans used to
finance environmental protection projects such as the construction of drinking water treatment
plants or recycling facilities.
for See "Lines of Credit" in this section of the Guidebook.
Temel, Judy W.; The Fundamentals of Municipal Bonds, 5th ed.; John Wiley & Sons, Inc.; 2001,
pp. 190-191, available at http://www.amazon.com.
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of
A Line of Credit (LOG) is an arrangement between a bank or other financial
institution and a customer that establishes a maximum loan balance that the financial institution
will permit the borrower to maintain. LOCs are different from standard loans in that borrowers
do not pay interest on the parts of their lines of credit that they do not use. Like letters of credit,
lines of credit enhance the basic security behind debt instruments including bonds and loans.
This is because the customer can access the LOG in times of financial hardship if needed to
make payments on bonds and loans. The critical difference between letters of credit and lines of
credit is that with lines of credit there are conditions under which the provider would not have
advance funds under a draw. These conditions could potentially include default on the
borrower's other debts, bankruptcy of the borrower, or a rating change, to name only a few. The
analyst has to look at each individual line of credit to assess the degree of credit enhancement it
provides. LOCs could be used by communities or companies that are ineligible for other types
of credit enhancements. Lines of credit could potentially be utilized to enhance the security
behind bonds used to finance environmental protection initiatives such as wastewater treatment
plant construction.
for See "Letters of Credit" in this section of the Guidebook.
Temel, Judy W.; The Fundamentals of Municipal Bonds, 5th ed.; John Wiley & Sons, Inc.; 2001,
pp. 190-191. The Free Dictionary Website: http:.;/fiiiaiicial-dictioiiarv.thefrcedictioiiarv.com.;Linc+of+Credil+-+LOC.
Senior and subordinated debt structuring, also called subordinated debt, provides
for two categories of debt for the loan recipient. The debt in the "senior" category is required to
be repaid first should default or payment delays occur. The debt in the "subordinate" category is
required to be repaid only after the senior debt, or lenders, are paid. This type of debt structuring
is a credit enhancement for the senior debt or lender. Gladstone Capital is an example of a
finance company that invests in senior subordinated loans. Subordinated debt structuring is used
as a credit enhancement in State Revolving Fund (SRF) bond leveraged lending. For example,
the New York State Environmental Facilities Corporation uses a senior subordinated debt
structure for its Clean Water State Revolving Fund (CWSRF) and Drinking Water State
Revolving Fund (DWSRF) revenue bonds. The Environmental Facilities Corporation uses the
proceeds of offered bonds that are subordinated to senior bonds issued in its Master Financing
Indenture (MFI) pooled financing program to finance or refinance water pollution control and
drinking water projects.
for New York State Environmental Facilities Corporation
Website: http://www.nysefc.org/docs/2006c.pdf. Gladstone Capital Website:
http://www.gladstonecapital.com/profile seniorsubdebt.htm. See "State Revolving Fund (SRF)
Revenue Bonds" in Section 2a of this Guidebook. U.S. Environmental Protection Agency
Website: http:.;/www.epa.gov.;owiTi;cwfiiiaiice.;cwsrfindex.htm & http:'Vvnvw.epa.gov/safcwateri'dwsrfi'iiidcx.html.
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Interest rate subsidies on loans are a form of credit enhancement that is provided
under the Clean Water State Revolving Fund (CWSRF) and Drinking Water State Revolving
Fund (DWSRF) loan programs. Under federal statutes, states administering CWSRF and
DWSRF loan programs are authorized to set specific loan terms, including interest rates, from
zero percent to market rate, and repayment periods of up to twenty years. Interest rate subsidies
on loans are, in effect, a credit enhancement for borrowers. This is because the subsidies reduce
the cost of the loans, and thus increase the likelihood of loan applications being approved by
increasing the perceived likelihood of repayment. These interest rate subsidies reduce the costs
of environmental infrastructure for communities. The Texas Water Development Board is an
example of an entity that offers interest rate subsidies on its CWSRF and DWSRF loans.
for See "U.S. Environmental Protection Agency: Clean Water
State Revolving Fund," and "U.S. Environmental Protection Agency:
Drinking Water State Revolving Fund" in Section 2a of this Guidebook. U.S. Environmental
Protection Agency Website: http:.;/www.epa.gov.;owin.;cwfmaiice.;cwsrf/basics.litm&
http:'iywww.epa.goV'i'safcwater/dwsrfi'freqiumtqucstions.html#3.
Texas Water Development Board Website: http://www.twdb.state.tx.us.;assistancc/Fmancial/fiii Mrastructuro/cwsrffund.asp
O6 hllp://www.lwdb.slate.Ix.us/assislaiice/rinancial/Tin infraslruclure/dwsrf.asp.
Cross-collateralization between the Clean Water State Revolving Fund (CWSRF)
and the Drinking Water State Revolving Fund (DWSRF) was authorized by the Departments of
Veteran's Affairs and Housing and Urban Development under the Independent Agencies
Appropriations Act (Public Law 105-276) in 1999. The Act authorizes funds from one SRF
program to be used to secure the other SRF program against default. This allows a DWSRF to
benefit from existing CWSRF credit quality, diversification, and coverage levels, or vice versa.
The U.S. Environmental Protection Agency (EPA) announced its policy on transfer and cross-
collateralization of SRFs in the Federal Register on October 13, 2000. EPA emphasizes in the
Federal Register notice that cross-collateralization can assist states in increasing the availability
of SRF funds where they are most needed, enhancing bond ratings, and lowering borrowing costs
without increasing risks. Through cross-collateralization, states may combine, or pool, assets of
the CWSRF and the DWSRF programs and use them as security for bond issues. New Jersey is
an example of a state that has received approval for a cross-collateralization structure and has
issued bonds with the structure in effect.
for U.S. Environmental Protection Agency (EPA) Website:
http:'1 •\vww.epa.gov ••'owm''cwfiiiance'i'cwsrf'/imiovatioiis.htm, http:'1 ••'www.epa.gov''safcwater/dwsrf1'indcx.html and
http://www.epa.gov/redrgstr/EPA-WATER/2000/October/Day-13/w26353.htm. See "U.S. EPA Clean Water State
Revolving Fund" and "U.S. EPA Drinking Water State Revolving Fund" in Guidebook Section
2b.
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Activity-based costing (ABC), a cost accounting methodology, is a method of
allocating costs to products and services. It is generally used as a tool for planning. The use of
ABC supports activity-based management that portrays an organization as a series of activities
related to customer desires and costs. In ABC, functional costs, direct and indirect, are assigned
to an organization's activities and those activities are traced to related products or services.
Strategic management accounting based on the ABC methodology supports a long-term
approach to decision making. In ABC, engineering process improvement is considered as a
source of cost reduction. There are commercially available computer software packages for
employing ABC on mainframes, networks, and personal computers. ABC is commonly used in
cost accounting analyses, especially in the private sector. Information generated through the use
of ABC gives visibility to how effectively resources are being used and how all relevant
activities contribute to the costs of a product or service. Such information may help with
decisions about whether to restructure or privatize environmental protection related activities.
for SAS Institute Website: littp://www.sasxoni/soliitions/abin/.
InfogOal.COm: http:.;.••www.infogoal.com/category.php?n-19.
Valuebased management.net: http://www.valuebasedmanagement.net/rnethods_abc.html.
Accounting Software Research Website: http://www.asaresearch.com/articles/abc.htm.
of
Section 108 is the loan guarantee provision of the U.S. Department of Housing and
Urban Development (HUD) Community Development Block Grant (CDGB) program. Section
108 provides communities with financing for economic development, housing rehabilitation,
public facilities, and large-scale physical development projects. All projects and activities
funded through Section 108 are required to either principally benefit low and moderate income
persons, aid in the elimination or prevention of slums and blight, or meet urgent community
needs. Entitlement and nonentitlement communities, as defined by HUD, that are eligible for
funds under the CDBG program, are potentially eligible for Section 108 loans. The maximum
repayment time for Section 108 loans is twenty years. HUD has the ability to structure Section
108 principal amortizations to match the needs of projects and borrowers. Section 108 financing
can be used for environmental protection purposes including construction of or modifications to
public facilities such as wastewater treatment plants, improvements to streets and sidewalks that
aid in storm water drainage, and redevelopment of abandoned sites that prevents the need to
utilize open space for development projects.
for U.S. Department of Housing and Urban Development
Website: http://www.hud.gov/offices/cpd/communitydevelopment/programs/108/. See the HUD
Community Development Block Grant tools in Guidebook Section 2c.
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of
Amortization, similar to depreciation, is a method of recovering the capital costs of
intangible assets over a fixed period of time by deducting them or writing them off. Under U.S.
Internal Revenue Service (IRS) rules and U.S. federal law, the cost of a certified pollution
control facility can be amortized over 60 months. A certified pollution control facility is defined
by the IRS as a new identifiable treatment facility used in connection with a plant or other
property in operation before 1976 to reduce the waste of resources and to prevent the creation of
or reduce pollution and contamination to the water and atmosphere. The pollution control
facility must be certified by state and federal certifying authorities. Amortization reduces taxable
income for the affected tax years, thereby reducing the real cost of the pollution control facility
by the amount that income taxes are reduced. For tax purposes, the distinction is not always
made between amortization and depreciation. Still, amortization remains a viable financial
accounting concept in its own right.
for Consult a tax practitioner.
Internal Revenue Service Website: http_:/Jwww.irs,go^
Cornell University Law School Website:
http://www.law.cornell.edu/uscode/html/uscode26/usc sec 26 00000169—OOP-.html.
BNET Business Directory Website: http://dictionary.bnet.com/defmition/Amortization.html.
The question of what technology is most appropriate must be made considering the
environmental, cultural, and economic situations that the technology is intended for. Through
the selection of appropriate technology, total life-cycle costs for that technology can be lowered
substantially. Appropriate technology is selected based on realistic appraisals of input
requirements and impacts on society and the environment. Basic types of technology that rely on
locally available materials, geography, and resources may be most appropriate for certain areas
and circumstances. For example, windmills are a less advanced form of technology than solar
panels, but in very windy areas with little sunshine they would clearly be a more appropriate and
cost effective choice for power generation. Choices among mixes of different technology
characteristics work best in some situations. In some cases, organizations provide communities
and groups with assistance in finding the appropriate technology. For example, the National
Environmental Services Center (NESC) helps communities to determine the appropriate
technology to meet their drinking water and wastewater treatment needs. Also, the National
Center for Appropriate Technology serves economically disadvantaged people by providing
them with information about and access to appropriate technologies.
for
National Environmental Services Center Website: Mip;//www,mfc,wyu,edu.
National Center for Appropriate Technology Website: http://www.ncat.org/about hi story.html.
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Barter is a type of trade that does not use money or any other medium of exchange,
but instead involves the trade of goods and/or services. Barter trade is also called reciprocal
trade. The Internal Revenue Service (IRS) defines a barter exchange for tax purposes as "any
person or organization with members or clients that contract with each other (or with the barter
exchange) to jointly trade or barter property or services." Barter income is taxable under IRS
rules, but the IRS does provide some exceptions to those tax rules, listed on the IRS website.
There are a number of organizations involved in promoting barter. The International Reciprocal
Trade Association is a nonprofit organization of companies dedicated to promoting just and
equitable standards of reciprocal trade and raising the value of reciprocal trade to businesses and
communities worldwide. The National Association of Trade Exchanges is an association of
independent trade exchange owners who share their experiences and resources. Companies in
the environmental goods and services industry, such as companies producing energy efficient
appliances and equipment for reducing pollution, could use barter to preserve cash flow and
transform surplus inventory into goods and services.
for International Reciprocal Trade Association Website:
hui!:^i2i2ijrta;co^ National Association of Trade Exchanges Website: ^^^JMS^ESL-
Internal Revenue Service Website: liUp://www.irK.gov;lmsinesses/small/article/0..id-113437.00.htnil.
Barter- Relevance and Relation to Money Website: iittp://www.ex.ac.uk/-RDavies/arian/bartcr.htmi.
Full cost pricing is a method of factoring all current, past, and future costs;
including operations, maintenance, and capital costs; into the prices for products and services.
For example, public and private utilities such as water and wastewater treatment plants could
utilize full cost pricing by setting user fees to recover all of the costs associated with maintaining
facilities and providing services, including capital, operations, maintenance, debt service, and
replacement. Full cost pricing could also be used in some jurisdictions to recover the costs of
building and maintaining roads and highways. Rather than using full cost pricing, government
entities often rely on tax dollars to partially or fully subsidize the costs of providing public
services and facilities. For example, local governments may subsidize user fees for drinking
water and wastewater utilities to assist low income households. Private businesses utilize the full
cost pricing method much more frequently than government entities. Use of full cost pricing can
help facilities and services to be financially self-sustaining. Full cost pricing systems that charge
people more when they use more of a resource may encourage consumers to conserve valuable
and limited natural resources such as water.
for U.S. Environmental Protection Agency Website:
http://www.epa.gov/waterinfrastroctiire/pricing/Aboot.htm &
http://www.epa.gov/waterinfrastructure/fullcostpricing.html.
Victoria Transport Policy Institute Website:
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Section 179 of the United States Internal Revenue Code allows businesses to
immediately deduct the costs of certain types of property as expenses on their income taxes,
rather than requiring the property to be capitalized and depreciated. This type of tax deduction is
called expensing of assets. Under Section 179, businesses are allowed to elect current expense
deductions in the year the qualifying property is placed in service, which gives them a more
immediate tax benefits than does a depreciation deduction over a specified recovery period.
Expensing is a widely and commonly used current-year income tax minimization strategy. The
use of expensing increases current year cash profits by decreasing taxable income and
consequent federal tax liability. Qualifying property is acquired for use in a trade or business
and includes tangible personal property such as machinery and equipment. Assets that are used
for environmental protection purposes, such as equipment for delivery of pollution remediation
services, and equipment for generating renewable energy, including photovoltaic cells, solar hot
water heaters, and windmills, can qualify for expensing of assets.
for Internal Revenue Service Website:
http://www.irs.gov/publications/p946/index.html. Consult a tax practitioner.
Cornell University Law School Website:
http://www.law.cornell.edu/uscode/uscode26/usc sec 26 00000179—-OOO-.html.
Pay-as-you-go is a system for funding public infrastructure that relies on tax and
fee revenues, intergovernmental transfers, and/or trust fund balances rather than the issuance of
debt. User fees and earmarked taxes tend to be the revenue foundations of pay-as-you-go
systems. Specific percentages of general fund revenues are sometimes committed to pay-as-you
go infrastructure projects for state and local governments. Reserve funds and trust funds are
often utilized in pay-as-you-go systems to accrete sufficient cash amounts. The Highway Trust
Fund, which provides financing for the national system of interstate and defense highways, is an
example of that type of fund. Pay-as-you-go systems are often used to purchase assets such as
communications equipment and transportation vehicles. In some jurisdictions, such as Buffalo,
New York, pay-as-you-go systems are used to finance the capital costs of water and wastewater
treatment systems. The pay-as-you-go approach is feasible for environmental protection projects
that have sufficient political support to compete against other budget priorities.
for U.S. Department of Transportation Federal Highway
Administration Website: htt^jVw^vwJfhwa^dQtgQy/ and
http://www.fhwa. dot, gov/infrastructure/byrd.htm.
Northeast Midwest Institute Website: http://www.nemw.org/HWtrustfund.htm. City of Buffalo,
Minnesota Website: http://www.ci.buffalo.mn.us/utilities/service/SACReport2004.pdf.
League of Women Voters of California Education Fund Website:
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Refinancing means applying for a secured loan to pay off an existing loan secured
by the same assets. Through refinancing, monthly payments can be lowered on mortgages and
other types of loans through a number of different methods. These methods include changing the
loan to a lower interest rate, and extending the period of the loan, so as to extend the re-payment
over a longer period of time. The most common consumer refinancing is done for home
mortgages. Refinancing may be undertaken for the following reasons: 1.) to reduce interest rates
on loans, 2.) to pay off other debts, 3.) to reduce periodic payment obligations (sometimes by
taking out longer-term loans), 4.) to reduce risk by refinancing from a variable rate to a fixed rate
loan, 5.) to liquidate some or all of the equity that has accumulated in real property during the
tenure of ownership. Refinancing is done when the economic climate is one of lower interest
rates compared to the time when the loan was originated. Most commercial lending institutions
refinance loans. The refinancing need not be handled by the original lender. The money saved
through refinancing of loans taken out for environmental protection purposes can be invested in
additional environmental protection initiatives.
MortgageLoan Website: http://www.mortgageloan.com/refmance-mortgage.
Internal Revenue Service (IRS) rules allow taxpayers in the United States to deduct
a limited amount, up to $10,000 per year, of qualifying reforestation costs for each qualified
timber property they own or lease. In addition, taxpayers can elect to amortize over 84 months
any reforestation costs not deducted. There is no annual limit on the amount that taxpayers can
elect to amortize. Amortization is a method of recovering (deducting) certain capital costs over a
fixed period of time. Qualifying expenses for tax deductions and/or amortization are limited to
costs which must otherwise be capitalized and included in the adjusted basis of the property,
such as costs for site preparation, seeds or seedlings, labor, tools, and depreciation on equipment
used in planting. To qualify for tax deductions and/or amortization, a timber property must be
located in the United States, and it must consist of at least one acre planted with tree seedlings in
the manner normally used in forestation or reforestation for commercial production of qualifying
timber products. Tax deductions and amortization can make reforestation investments
financially feasible for landowners.
for Consult a tax practitioner.
Internal Revenue Service Website: http;//wwwlri,.jQv^ &
http://www.irs.gov/instmctions/it/ar01.html. Private Landowner Network Website:
http://www.privatelandownernetwork.org/yellowpages/resource.asp7i d=6285.
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Federal tax credits to support private investment in the rehabilitation and
reconstruction of historic buildings are authorized by the U.S. Internal Revenue Service (IRS)
and U.S. Code, Title 26, Section 47. Generally, the percentage of expenditures that taxpayers are
allowed to take as credits are 10% for buildings placed in service before 1936 and 20% for
certified historic structures. For qualified rehabilitation costs paid or incurred after August 27,
2005, and before January 1, 2009, on buildings located in the Gulf Opportunity zone, the
rehabilitation credit is increased from 10% to 13% for pre-1936 buildings, and is increased from
20% to 26% for certified historic structures. The term "certified historic structure" is defined as
any building (and its structural components) which is listed in the National Register or is located
in a registered historic district and is certified by the Secretary of the Interior as containing
criteria which will substantially achieve the purpose of preserving and rehabilitating buildings of
historic significance to the district. Renovation, restoration, and reconstruction activities qualify
as rehabilitation under IRS rules. Enlargement and new construction do not qualify. These tax
credits help to make rehabilitation and reconstruction of existing buildings more affordable,
helping to prevent the need to utilize open space to build new buildings.
for Internal Revenue Service Website:
http://www.irs.gov/businesses/small/industries/arti cle/0,,id=97599,00.html.
Cornell University Law School Website:
w1c^ sec 26
Risk management involving the creation of pre-loss plans can be part of strategic
planning that reduces costs and financial liabilities for organizations in the public and private
sectors. Pre-loss plans are designed to minimize the adverse impacts of risks on the resources,
earnings, cash flows, profitability, and credit ratings of organizations. These plans are most
effective when they take into consideration public interest, public safety, and environmental
protection. Financing and preparation techniques designed to help mitigate risks and prepare
organizations for potential risks are included in pre-loss plans. In many cases, pre-loss plans
involve risk transfer via the purchase of environmental insurance. Environmental insurance is a
tool for managing a party's environmental liability by transferring some of the associated
financial risk to another party under the limited provisions of the policy. Businesses in the
environmental goods and services industry use risk management and pre-loss plans to help
mitigate the risks associated with activities such as the cleanup of contaminated properties. The
American Risk and Insurance Association is an organization devoted to the study and promotion
of risk management and insurance.
for American Risk and Insurance Association Website:
http://www.aria.org/. See "Environmental Insurance" and "Environmental Risk Management in
the Real Estate Industry" in Section 9 of this Guidebook.
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In finance and economics, discounting is the process of finding the present value,
also called the discounted value, that a given amount of cash will have at a future date. The
present value of a cash flow is determined through the reduction of its value by an assigned
discount rate, expressed as a percentage, for each unit of time between when the cash flow is to
be valued and the present time. In most cases the discount rate is expressed as an annual rate. In
financial accounting, discounting is the essence of most capital investment appraisal, comparing
present cash flows with expected future cash flows. Discounting of an environmental protection
measure is done by assigning a cash value and a discount rate to that environmental protection
measure. For example, a cash value and a 10% annual discount rate could be used to estimate
the present value that environmental economic benefits associated with salmon habitat
restoration would have at a future date. The National Oceanic and Atmospheric Administration
(NOAA) does discounting calculations of that nature to weigh the benefits and costs of coastal
restoration projects and various environmental management programs. Discounting can provide
a basis for making choices between investments in different environmental protection initiatives.
for National Oceanic and Atmospheric Administration
(NOAA) Coastal Services Center Website:
http://www.csc.noaa.gov/coastal/economics/discounting.htm.
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Environmental due diligence is an investigation process carried out to ensure that a
property is free of environmental contamination from current or past practices. One of the most
important requirements for real estate transactions financed by institutional lenders is that
environmental due diligence be done in a way that satisfies statutory requirements for conducting
all appropriate inquiries as defined by the U.S. Environmental Protection Agency (EPA). The
EPA published the All Appropriate Inquiries Final Rule (Final Rule) in the Federal Register on
November 1, 2005. The Final Rule sets federal standards for the conduct of all appropriate
inquiries. Starting on November 1, 2006, parties must comply with the requirements of the Final
Rule, or with the standards of the Phase I Environmental Site Assessment Process, to satisfy the
statutory requirements for conducting all appropriate inquiries. Adherence to the standards of
the Final Rule or the Phase I Environmental Site Assessment Process is required for protecting
property owners from liability under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA).
for Bureau of National Affairs Website:
http://www.bna.coni/products/ens/eddg.htni. Environmental Data Resources Website:
www.edrnet.com/reports/whitepapers/LendingtoSmall.pdf. Lawrence, Gary M., Due Diligence
in Business Transactions, Law Journal Press, 1994; available at
^^
SCS Engineers Website: httg^/wwwj>c^^
Financial due diligence is a series of tests that must be passed for a financing deal
to qualify for an investment. The financial due diligence process is initiated when a business
plan is sent to the potential investor, who applies preset criteria to screen out unacceptable deals.
This screening includes a quantitative and qualitative analysis of how the business has performed
financially to get a sense of earnings on a normalized basis. An identification and analysis of the
assets and liabilities to be acquired is also included as part of the screening. In addition, an
investigation is made into whether federal and state taxes have been filed appropriately by the
seller. Financial due diligence is used by institutional investors and lenders considering
commitment of funds to a venture.
for Lawrence, Gary M., Due Diligence in Business
Transactions, Law Journal Press, 1994; available at
Financial Evaluations & Examinations, Inc. Website: http:''/www.feeinc. com/burke. html.
See "Business Plans" & "Venture Capital" in Guidebook Section lOa. Plante & Moran, PLLC
Website: http://www.pltmtemoranxoni/Sendces/Consullmg/StrategyGlobalSer\'ices/Reso[irces/Articles/Dite+Diligence.litm.
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Benchmarking is a management system in which organizations in the public and
private sectors evaluate their processes and procedures in relation to best practices, develop plans
on how to adopt the best practices, and establish measures of success called benchmarks. Most
organizations find that benchmarking more than pays for itself. Oregon Shines is an example of
a state run benchmarking system that is still in progress. It is a 20-year vision developed in 1989
to monitor the state's progress in emerging from an economic recession and improving public
health and quality of life in the state. Connecticut, Florida, Maine, Minnesota, North Carolina,
and Vermont have performance-based benchmarking systems similar to the Oregon model. An
example of an environmental protection related benchmarking initiative is the survey that is
being developed by the Book Industry Study Group (BISG) and the Green Press Initiative (GPI).
The BISG and the GPI are working together, with support from industry sponsors, to produce a
benchmarking survey that will establish a baseline for measuring the progress of the U.S. book
industry in environmental protection related areas including paper recycling and climate impacts.
for Book Industry Study Group Website:
http://www.bi sg.org/publicati ons/environmental_benchmarking. html.
Leichter, Howard M.; and Try ens, Jeffrey, Achieving Better Health Outcomes: the Oregon
Benchmark Experience, Milbank Memorial Fund, New York, 2002, available at:
U.S. Internal Revenue Service rules allow landowners and their tenants to deduct
qualifying soil and water conservation expenses and erosion control expenses from their gross
income for federal income tax purposes. These expenses must be incurred to protect land that
the landowners or tenants are using or have used in the past for farming. The tax deduction
cannot amount to more than 25% of the taxpayer's gross income from farming. Expenses can be
deducted only if they are consistent with a plan approved by the U.S. Department of
Agriculture's Natural Resources Conservation Service, or a soil conservation plan of a
comparable state agency. Expenses for leveling, conditioning, grading, terracing, contour
furrowing, restoration of soil fertility, and related treatment or movement of land are eligible. In
addition, expenses for the construction, control, and protection of diversion channels, drainage
ditches, irrigation ditches, earthen dams, watercourses, outlets, and ponds are eligible. Expenses
for the planting of windbreaks and eradication of brush may also be deducted. To get the full
deduction to which they are entitled, taxpayers must maintain records that clearly distinguish
between their customary farm business expenses and their soil and water conservation expenses.
for Consult a tax practitioner.
Internal Revenue Service Website: http://www.irs.gov/publications/p225/ch05.html &
http__[/J_wwwlrs,go^ U.S. Department of
Agriculture Natural Resources Conservation Service Website: httEi/ZwajAj^mMJls^^
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Comparative risk ranking, also called comparative risk assessment and
comparative risk analysis, is a procedure for prioritizing problems based on their threat to public
health and the environment. The process of comparative risk ranking involves a high level of
citizen input. Comparative risk ranking helps communities and organizations to allocate limited
resources to the most serious environmental and public health problems first. For example, the
Lower Columbia River Estuary Partnership integrated a comparative risk assessment into its
management plan development to help assess potential actions. The Partnership's comparative
risk assessment asked citizens and technical experts to rank a list of problems based on their
threat to public health, ecological health, and quality of life. Another example of comparative
risk ranking is the Ohio Comparative Risk Project. This was a citizen-based planning project
that evaluated problems in Ohio based on scientific evidence and public values. The information
collected in the study was then used to develop an environmental priority list and strategies for
policymakers and citizens to use in reducing risk, made public in 2001.
for Lower Columbia River Estuary Partnership Website:
ocorecard Website: iittii//ww}^iiCiH^-MsL^isi£i^^
U.S. Environmental Protection Agency Website:hUp://\vww.epa.state.oli.us/oeer/ohio_comparative_risk_proiect.html
Franklin Pierce Law Center Website: http://www.piercelaw.edu/risk/vol6/fall/kadvany.htm.
Cost-effectiveness analysis (CEA) is a form of economic analysis that compares
the relative expenditures, called costs, to the outcomes, called effects, of two or more courses of
action. For example, CEA may be done to compare the costs and effects of two different
proposed regulations for improving air quality. CEA can also be used to measure the ratio of the
costs of a single intervention, such as improvements to drinking water quality, to a measure of
the intervention's effects, such as statistics on public health benefits in the community drinking
the water. Cost-effectiveness analysis is done by federal departments and agencies, including the
U.S. Environmental Protection Agency, when performing Regulatory Impact Analyses. Many
state agencies and private businesses also perform CEA.
for U.S. Environmental Protection Agency (EPA),
"Guidelines for Preparing Economic Analysis," 2000, EPA # 240-R-00-003, available at
hltt3://yoseinitelx-pa.gov/ce/epa/eemLnsf'vwSER/DEC917DAElJ820A25852569C400781051J?OpenDociiinciit.
AEI-Brookings Joint Center Website: httEi^ww.aeitaioMnosj^^
Environmental Damage Valuation and Cost Benefit Links:
hltp://www.coslbenefilanalysis.org/lenbesledvcbnlinks htm.
Environmental Valuation & Cost Benefit News: hup://\v\v\v.envirovaiuation.orft;.
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Financial capability analysis, also called financial capability assessment, is a
method used by public and private entities to determine whether they have the ability to pay for
capital investments and equipment, and to assess the economic impacts of proposed projects on
communities. The U.S. Environmental Protection Agency recommends that communities carry
out financial capability analysis, using indicators including bond ratings and unemployment
rates, to determine the affordability of infrastructure projects. Computer software, such as Boise
State University Environmental Finance Center's Plan2Fund and CAPFinance software
programs, is sometimes used for financial capability analysis.
for Financial Capability Guidebook, March, 1984, EPA
#832884104, available at htt^jVy^semite^epa^goy/w^ter/Qwiccatal^gjisfy, search the title index.
U.S. Environmental Protection Agency Website: http://www.epa.gov/npdes/pubs/csofc.pdf.
See "Boise State University Environmental Finance Center: Plan2Fund" and "Boise State
University Environmental Finance Center: CAP Finance" in Section 5 of this Guidebook.
Boise State University Environmental Finance Center Website:
&
http://sspa.boisestate.edu/efc/Tools Services/C APFinance.htm.
Cost-benefit analysis is a term for a conceptual framework encompassing a variety
of techniques for quantifying and comparing the incremental and total costs, risks, and benefits
of legislation, regulations, and other actions. The use of cost-benefit analysis is intended to help
produce the best decisions by comparing the economic efficiency of various proposed policies
and approaches. Cost-benefit analysis has been used for many years by federal, state, and local
governments, and by the private sector, as a tool to aid in important decision making on a wide
variety of topics, including environmental protection related matters. The United States
government has performed cost-benefit analysis as part of its economic analysis of regulatory
actions for many years, following a number of statutory and executive order requirements
including Executive Order 12866, titled Regulatory Planning and Review. Executive Order
12866 requires analysis of the benefits and costs of all significant regulatory actions carried out
by the U.S. government and its agencies and departments, including the Environmental
Protection Agency and other U.S. government entities working to protect the environment.
for U.S. Environmental Protection Agency Website:
See the January 1 1, 1996 Office of Management and Budget policy memorandum, Economic
Analysis of Federal Regulations Under Executive Order 12866, available at
http://www.whitehouse.gov/omb/inforeg/ri agui de.html .
Mind Tools Website: http://www.mindtools.com/pages/article/newTED 08.htm.
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• JKeP 3? 3*
Capital planning is a set of techniques for considering the long-term needs for
capital facilities and funding options for meeting those needs. The goal of capital planning is to
make the best use of available funds to achieve strategic goals and objectives. Capital budgeting,
which is done alongside capital planning, is the total process of generating, evaluating, selecting,
and following up on capital expenditures. Capital planning and budgeting are done in the public
and private sectors. The Commission to Study Capital Budgeting released a report in 1999 with
a series of recommendations to improve the federal budget process through prioritizing, making
timely decisions, reporting on those decisions, and evaluating the decisions to help with future
decision making. The commission's recommendations could help organizations in the public
and private sectors to carry out their capital planning and budgeting more effectively and use
their money wisely for environmental protection initiatives.
for The President's Commission to Study Capital Budgeting
Website: http://clinton3.nara.gov/pcscb/index.html.
University of Wisconsin System Website: htt|r//wwwjjwsa^^
U.S. Department of the Interior Website: hjtg7/w^^LdojJgQWQdWcp/inde2Lhtoll.
FEA DRM Registry Website:
http://colab.cim3.net/file/work/drm/schema/examples/IRM CO1 Demo/818.htm.
An employee stock ownership plan (ESOP) is a type of defined contribution
pension plan used in the United States that buys and holds company stock, investing primarily in
the stock of the employer firm. ESOPs are required to adhere to the standards of the Employee
Retirement Income Security Act of 1974 (ERISA), which is a U.S. federal law that sets
minimum standards for most voluntarily established pension and health plans in private industry.
ESOPs can be funded through tax deductible corporate contributions. Sellers to an ESOP in a
closely held company can defer taxation on the proceeds by reinvesting in other securities.
Employees do not pay taxes on the contributions to ESOPs until they receive a distribution from
the plan when they leave the company. There are over 11,500 ESOPs in the U.S. covering 11
million employees, almost all in closely held companies. Employee owned corporations, which
are defined as corporations owned in whole or in part by their employees, are often created
through ESOPs. Companies in the Environmental Goods and Services industry, such as wind
power generating companies and companies producing pollution abatement equipment, can use
ESOPs to increase their profits and save on taxes.
for The National Center for Employee Ownership Website:
http://www.nceo.org/. For tax rules, see the Internal Revenue Service Website:
www.irs.ostreas.gov/. About.com: http://retireplan.aboot.eom/cs/retirement/a/aa a6.htm.
U.S. Department of Labor Website: http://www.dol.gov/dol/topic/health-plans/erisa.htm.
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Life cycle assessment is defined by the U.S. Environmental Protection Agency as a
"cradle to grave" approach for assessing industrial systems and products. "Cradle-to-grave"
begins with the gathering of raw materials from the earth to create the system or product and
ends at the point when all materials are returned to the earth. Life cycle assessment evaluates all
stages of a product's life cycle from the perspective that they are interdependent, meaning that
one operation leads to the next. By examining the impacts of a product or system throughout its
life cycle, life cycle assessment provides a comprehensive view of the environmental impacts of
the product or system and a more accurate picture of the true environmental tradeoffs in product
and system selection. Life cycle assessments can help decision makers to select the products or
processes that have the least impacts on the environment. Through the use of information
collected in life cycle assessments, products and systems can be designed to reduce their
environmental impacts throughout their life cycles. For example, measures can be taken to
reduce the pollution created in the manufacture of products, the energy used through the
manufacture and use of products, and the waste generated when the products are disposed of.
for U.S. Environmental Protection Agency Website:
http://www.epa.gov/ORP/NRMRL/lcaccess/. Scientific Applications International Corporation
(SAIC), Life Cycle Assessment: Principles and Practice. EPA/600/R-06/060, May 2006,
available at Http://www.epa.gov/ORD/NRMRL/lcaccess/pdfs/600r06060.pdf.
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Public-private partnerships are receiving increasing attention in the United States and
internationally as an innovative way of financing a wide range of different environmental
protection initiatives. The use of public-private partnerships to finance environmental protection
programs and projects, and related infrastructure such as wastewater treatment plants, is
examined in this section of the Guidebook. This section is divided into two subsections: Section
4A, "Tools for Building Public-Private Partnerships," and Section 4B, "Public-Private
Partnership Case Studies." The tools describe how different types of public-private partnerships
work. The case studies are demonstrations of how public-private partnerships can be used for
various environmental protection purposes.
Some public-private partnerships presented in the tools and case studies fall into specific
categories; such as contract services, turnkey, and privatization; while others do not. However,
each public-private partnership has many unique characteristics that are closely examined. Many
of the partnerships discussed are contractual relationships between government entities and
private companies. Each public-private partnership covered in this section either helps to
provide environmental protection related services or could potentially be used to help provide
such services. Examples of environmental protection related services provided through public-
private partnerships covered in the tools and case studies include wastewater treatment, delivery
of clean drinking water, installation of solar electric systems, and purchases of land for
conservation purposes.
In some cases, it is possible to capitalize on specific private sector resources through the use of
public-private partnerships. The availability of those resources depends upon the nature of the
partnership arrangements, the resources available to the private partners, the circumstances in the
locations where they are set up, and other factors. Access to sophisticated technologies and
specialized expertise often allows the private sector to provide specific types of services that the
public sector may be unable to provide. In addition, private financing can reduce the burden on
public debt capacity. Private sector procurement and construction methods sometimes save time
and provide significant cost savings. Through public-private partnerships involving ownership
transfers from government entities to private companies, responsibilities for financial risk can be
transferred from the government entity to the private company.
There are some limitations involved with the use of public-private partnerships that must be
considered. Local governments may not always have the legal authority to enter into contracts
with private parties. A major concern of governments considering becoming part of public-
private partnerships is the potential loss of oversight opportunities. When government officials
cease to be involved with the day-to-day operations of a facility, they may have to give up
opportunities to monitor things such as compliance with environmental standards and permits.
In addition, public employees and unions may oppose the use of public-private partnerships due
to concerns about the loss of jobs. Finally, tax-exempt and/or other low-cost financing that is
4-1
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available for federal and state government run projects may not be available for public-private
partnerships.
The appropriateness of a particular type of public-private partnership for a given environmental
protection initiative and location depends upon many factors such as the type of environmental
media being protected, availability of public funding for the partnership, demographics, and the
tax code. The tools and case studies included in this section are geared towards readers seeking
to assess the benefits and limitations of different types of public-private partnerships. They
contain important information intended to help the reader make decisions about how to use, and
whether or not to use, public-private partnerships for specific environmental finance purposes.
When structured and used appropriately for specific locations and circumstances, public-private
partnerships make many important environmental protection initiatives financially possible.
4-2
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1. Privatization
2. Asset Sales Under Executive Order 12803
3. Long-Term Lease Under Executive Order 12803
4. Tax-Exempt Lease
5. Lease/Purchase
6. Sale/Leaseback
7. Lease/Develop/Operate or Build/Develop/Operate
8. Build-Operate-Transfer
9. Contract Services: Operations and Maintenance
10. Contract Services: Operations, Maintenance, and Management
11. Turnkey
12. Developer Financing
13. Merchant Facilities
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The simplest definition of privatization is the transfer of ownership of assets from a
public sector organization, usually a state or local government, to businesses in the private
sector. However, globally and within the United States, privatization has come to mean much
more. The National Council for Public-Private Partnerships Federal Privatization Task Force
defines privatization as a process of wide-ranging economic change that includes public-private
partnerships, joint ventures, and outsourcing. The Task Force maintains that the change in
ownership or control of the assets, or the prospect of it, is the catalyst for privatization, and that
internal federal agency reorganization, absent the transfer of ownership, control, or responsibility
to a private party, is not. Executive Order 12803, issued in 1992, defines privatization as "the
disposition or transfer of an infrastructure asset, such as by sale or by long-term lease, from a
state or local government to a private party." Many U.S. cities, such as the City of Hawthorne,
California, have privatized their public wastewater and drinking water systems.
for The National Council for Public-Private Partnerships
Website: h|t]3^/wwwjic|3]3^^
Executive Order 12803 as of April 30, 1992, available at
http://www.theantechamber.ne1/UsHistDoc/Exordl2803/Exordl2803Pagel.html.
See "Asset Sales Under Executive Order 12803" in this section of the Guidebook.
ITT Industries Website: ://www.itt.com/waterbook/where.asp.
1;
Executive Order 12803, issued in 1992, directs all United States federal
departments and agencies to approve state and local governments' requests to privatize
infrastructure assets financed in whole or part by the federal government to the extent permitted
by law and consistent with originally authorized purposes. Privatization is defined in the
Executive Order as "the disposition or transfer of an infrastructure asset, such as by sale or by
long-term lease, from a state or local government to a private party." Executive Order 12803
clarifies the terms under which the federal government must be repaid for its investment upon
the sale of a federally funded asset to the private sector. In effect, the Executive Order abolishes
the requirement to repay the federal investment in full, greatly reducing the potential sales price.
An example of a contract approved under Executive Order 12803 is Cranston, Rhode Island's
lease of its entire wastewater treatment, collection, and pumping system to a private contractor
for 25 years starting in 1997. This contract, the first in the United States where the contractor
has full financial responsibility for a wastewater system, is expected to save the city $74 million.
for Executive Order 12803 as of April 30, 1992, available at
http://www.theantechamber.net/UsHistPoc/Exordl2803/Exordl2803Pagel.html.
U.S. EPA Website: http://www.epa.gov/owm/cwfinance/privatization.htm.
ITT Industries Website: http://www.itt.com/waterbook/where.asp and
HDR Website: htt|)^/wj¥wj^
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Long-term leases are a form of privatization. Leases of ten years or more are
considered long-term by investors. Executive Order 12803, issued in 1992, directs all United
States federal departments and agencies to approve state and local governments' requests to
privatize infrastructure assets financed in whole or part by the federal government to the extent
permitted by law and consistent with originally authorized purposes. Privatization is defined in
the Executive Order as "the disposition or transfer of an infrastructure asset, such as by sale or by
long-term lease, from a state or local government to a private party." An example of a long-
term lease approved under the authority of Executive Order 12803 is the City of Hawthorne,
California's awarding of a 15 year lease to the California Water Service Company (Cal Water)
for the management of its municipal water system starting in 1996.
for See "Asset Sales Under Executive Order 12803" and
"Privatization" in this section of the Guidebook. Executive Order 12803 as of April 30, 1992,
available at http://www.theantechamber.net/UsHistPoc/Exordl2803/Exordl2803Pagel.html.
The United States Conference of Mayors Website:
ITT Industries Website: : //www. i tt . com/waterb ook/wh ere . asp .
Investorwords.com: http://www.investorwords.com/2891/long term lease.html.
A tax-exempt lease, also called a lease-purchase agreement, is an installment
purchase, conditional sale, or lease with an option to purchase for nominal value. In a tax-
exempt lease, a public partner finances capital assets or facilities by borrowing funds from a
private investor or financial institution. The private partner typically acquires title to the asset at
lease signing, but then transfers it to the public partner either at the beginning or the end of the
lease term. The lessee is tax-exempt, and thus the lessor is not required to pay federal income
taxes on the interest generated by the lease. The issuer of a tax-exempt lease must be a state or
possession of the United States, the District of Columbia, or a political subdivision thereof.
Nonprofit organizations do not qualify directly to be issuers of tax-exempt obligations, but may
be eligible with a sponsoring governmental unit. Personal property such as modular buildings
and computers, and real property such as offices and environmental facilities, may be acquired
through tax-exempt leases. Tax-exempt leasing is also used for capital expenditures such as
implementation of specific projects or expansion of existing facilities.
for The National Council for Public-Private Partnerships
Website: hjt^TAicppp^grj/h^wjart/BEBtypes^shtoil. Tax-Exempt Leasing Corporation Website
http://www.taxexemptleasing.com/overview.html. Association for Governmental Leasing and
Finance Online: ://www.aglf.org/faq.html.
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A lease/purchase, also called a tax exempt lease, is a type of installment-purchase
contract. Under the lease/purchase model, an organization in the private sector finances and
builds a facility which it then leases to a public agency. The facility may be operated by either
the public agency or the private organization during the term of the lease. The public agency
makes scheduled lease payments to the private organization and accrues equity in the facility
with each payment. At the end of the lease term, the public agency either owns the facility or
purchases it by paying any remaining unpaid balance in the lease. Lease/purchases enable public
agencies to obtain new facilities without relying on capital investment or debt. Lease/purchases
have been used for years by the General Services Administration for construction of federal
office buildings. The construction of facilities including wastewater and drinking water
treatment plants and recycling centers could also be financed through lease/purchases.
for See "Tax-Exempt Lease" in this section of the Guidebook.
The National Council for Public-Private Partnerships Website:
httj3^/nc]3|^ Kent, Cheryl, "U.S. Trying Lease-Purchases on its
New Buildings," The New York Times, May 6, 1990, available at
http://querv.nytimes.com/gst/fullpage.html?res=9COCE 1 PA 1530F935A35756COA966958260.
A sale/leaseback is a financial arrangement in which the owner of a facility sells it
to another entity and subsequently leases it back from the new owner. Public and private
entities, including federal, state, and local governments, and private companies, may enter into
sale/leaseback arrangements. A tax-exempt lease is a type of sale/leaseback arrangement in
which a public entity sells a facility to a private partner in order to finance construction or
upgrades, and repays the private partner's investment with lease payments. Another innovative
application of the sale/leaseback technique is the sale of a public facility to a public or private
holding company for the purposes of limiting governmental liability under environmental
statutes. Under that type of arrangement, the public sector partner that sold the facility leases it
back and continues to operate it. An example of a sale/leaseback arrangement is Farmer's
Insurance Group's sale of its Arizona regional headquarters to Way Commercial Realty in 2007
through a five year, $17.69 million sale/leaseback.
for See "Tax-Exempt Lease" in this section of the Guidebook.
The National Council for Public-Private Partnerships Website:
httj3^/nc]3|^ Sorter, Amy Wolff, "Farmer's Insurance Cuts $18
million Sale-Leaseback," GlobeSt.com, September 19, 2007, available at:
http://www.cityfeet.coni/News/NewsArti cle.aspx?PartnerPath=&Id=25963.
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:e or
Under a Lease/Develop/Operate (LDO) or Build/Develop/Operate (EDO)
partnership arrangement, a private party leases or buys a facility from a public agency, invests its
own capital to renovate, modernize and/or expand the facility, and then operates it under a
contract with the public agency. The private partner gets the right to operate the facility for a
predetermined length of time and recover its investment through carefully crafted user charges.
Roads and bridges, and perhaps municipal transit facilities as well, could be leased and
renovated, modernized, or expanded under LDO or EDO partnership arrangements. Virginia has
enacted one of the most accommodative public-private partnership laws of any state in the
United States, encouraging qualified private sector enterprises to propose to the state
transportation department (VDOT) partnership opportunities for investment in new road or
transit capacity, increasing the potential for LDO or EDO partnership opportunities in the State.
Other states could follow with similar laws. In addition, LDO and EDO arrangements could be
used to finance upgrades to environmental facilities, such as wastewater treatment plants and
recycling centers.
for The National Council for Public-Private Partnerships
Website: http://ncppp.org/howpart/ppptvpes.shtml.
The Heritage Foundation Website: http://wwwhcritagc.org/RcscarclT/SmartGrowth/tst060704a.cfm.
Under the build-operate-transfer (EOT) option, also called build-transfer-operate
(BTO) and design-build-operate-maintain (DBOM), a private sector partner builds a facility to
the specifications agreed to by a public agency (usually under a turnkey arrangement), operates
the facility for a specified time period under a contract or franchise agreement with the agency,
and then transfers the facility to the public agency at the end of a specified period of time.
Usually the private partner provides some, or all, of the financing for the facility. The build-
operate-transfer option is used by communities, municipalities, and other entities for
transportation and solid waste management related projects, and for building and upgrading
water and wastewater treatment facilities. For example, the Naval Facilities Engineering
Command (NAVFAC) Southwest in Camp Pendleton, California is using a DBOM pilot
program to enhance operability of its sewage treatment facilities. Through a partnership
between the NAVFAC Southwest, the U.S. Marine Corps, and a consulting firm called CDM,
this 10-year, $260 million program is delivering facilities that will help to protect the coastal
environment from pollution. The program's cornerstone is the 5-million-gallon-per-day
Southern Region tertiary treatment plant which applies best technologies for nutrient removal.
for The National Council for Public-Private Partnerships
Website: http://ncppp.org/howpart/ppptypes.shtml. CDM Website:
Mt|3://wrw.cdjs^
http://ncppp.org/howpart/ppptypes.shtml. U.S. Department of Transportation Website:
http://www.fliwa.dot.gov/PPP/bot.htm. See "Turnkey" in this section of the Guidebook.
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In contract services carried out for the purposes of operations and maintenance, a
public partner, such as a federal, state, or local government agency or authority, contracts with a
private partner to provide and/or maintain a specific environmental service or other service. The
public partner has the option of retaining ownership and overall management of the public
facility or system under this type of contracting arrangement. Under some contract service
agreements for operations and maintenance, the risk of operations is shared with the private
partner or even transferred to them entirely. Examples of the types of service provided through
this type of partnership include lab testing, auditing, the collection of fines and penalties, solid
waste collection and disposal, recycling services, asbestos encapsulation or removal operations,
the operation and maintenance of water and wastewater treatment facilities and systems, and
many other municipal services. For example, Operations Management International, Inc. (OMI)
is a water and wastewater service provider that operates and maintains the water and wastewater
facilities and equipment for the city of Live Oak, Florida under a contractual agreement.
for The National Council for Public-Private Partnerships
(NCPPP) Website: htt^Aicppp^or^iQwpart/BEB^Bes^shtml, also see the case study on Live
Oak, Florida's Wastewater Treatment Facility on the NCPPP's Website at
http://www.ncppp.org/cases/liveoak2.shtml.
In contract services carried out for the purposes of operations, maintenance, and
management, a public partner, such as a federal, state, or local government agency or authority,
contracts with a private partner to operate, maintain, and manage a facility or system providing a
public environmental service or other service. Under this contract option, the public partner
retains ownership and overall management of the public facility or system, but the private party
may invest its own capital in the facility or system. Generally, the longer the contract term, the
greater the opportunity for increased private investment because there is more time available for
the investor to recoup any investment and earn a reasonable return. Under many operations,
maintenance, and management contracts, the risk of operations is shared with the private partner
or transferred to them entirely. Local governments sometimes use this type of contract to
provide wastewater treatment, solid waste collection and disposal, and recycling services, and
other operations and services. For example, the Milwaukee Metropolitan Sewerage District
(MMSD) in Milwaukee, Wisconsin has a 10-year contract of this type with United Water for
operations, maintenance, and management of the city's municipal wastewater system. This
contract enabled the MMSD Commission to reduce user charges by an average of 16.5 percent
when it adopted the District's 1999 Operation and Maintenance budget.
for The National Council for Public-Private Partnerships
Website: hjtp^/ngnnn^rg/h^wpart/ppptypes1shtnil and http^Aicppaorg/cages/mnAvaujcee1shjml.
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Under developer financing, a private developer finances the construction and/or
expansion of public infrastructure in exchange for the right to build residential housing,
commercial stores, and/or industrial facilities served by that public infrastructure. Developer
financing arrangements are often called capacity credits, sewer access rights, impact fees, or
exactions. The developer financing option is typically under local control; so arrangements can
be negotiated on a project-specific basis or mandated through an ordinance. Developer financing
is often used for the construction of infrastructure such as sewer lines, biological nutrient
removal technology, or whole sewage treatment plants. The Upper Merion Municipal Utility
Authority in Pennsylvania uses developer financing through a program requiring customers to
pay Sewer Access Rights fees as part of their building, zoning, and mechanical division permit
fees. The Town of Dover, Pennsylvania has a similar program.
for The National Council for Public-Private Partnerships
Website: http://ncppp.org/howpart/ppptypes.shtml. See "Water and Sewer Capacity Credits,"
"Exactions," and "Impact Fees" in Section Ib of this Guidebook.
University of Maryland Environmental Finance Center Website:
http://www.efc.umd.edu/appendixB.html. Upper Merion Township, Pennsylvania Website:
http://www.umtownship.org/bc_safety.html. Dover Township, Pennsylvania Website:
http://www.dovertownship.org/.
Under a turnkey arrangement, a public agency contracts with a private investor or
vendor to design and build a complete facility in accordance with specified performance
standards and criteria agreed on between the agency and the vendor. The private developer
commits to build the facility for a fixed price and absorbs the construction risks associated with
meeting that price commitment. Generally, in a turnkey transaction, the private partner uses fast-
track construction techniques, such as design-build, and is not bound by traditional public sector
procurement regulations. This combination often enables the private partner to complete
facilities in significantly less time and at lower cost than could be accomplished under traditional
construction techniques. In a turnkey transaction, financing and ownership of the facility can
rest with either the public partner or the private partner. When the private partner provides the
financing, it is usually in exchange for a long-term contract to operate the facility. State and
local governments use turnkey arrangements to build, operate, and maintain wastewater
treatment plants and solid waste disposal facilities. For example, American Water provides the
City of Jefferson Parish, Louisiana with full turnkey operation, maintenance, and management of
the East Bank Wastewater Treatment Plant.
for The National Council for Public-Private Partnerships
Website: http://ncppp.org/howpart/ppptypes.shtml. Water Partnership Council Website:
^
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The term "Merchant Facility" refers to a facility run through a public-private
partnership where a private sector partner owns and operates the facility, as in privatization
deals, and provides services through the facility. Merchant Facilities can be very profitable; but
they operate at the whim of market forces. They do not rely on legislated or economic flow
control. Flow control is defined by the U.S. Department of Energy as the laws, regulations, and
economic incentives or disincentives used by waste managers to direct waste generated in a
specific geographic area to a designated landfill, recycling, or waste-to-energy facility.
Merchant facilities are often used to provide solid waste management services. They operate as
landfills, composting facilities, recycling plants, incinerators, waste-to-energy facilities, and
landfill gas power plants. Innovative Energy Systems operates three landfill gas power plants in
New York that function as merchant facilities and sell into the day-ahead wholesale energy
market.
for See "Privatization" in this section of the Guidebook.
U.S. Department of Energy, Energy Information Administration Website, see pp. 8-9:
Power Engineering Website:
http://pepei.pennnet.com/display_article/230683/6/ARTCL/none/none/Innovative-Energy-
Svstems'-Lanldfill-l-Gas-Plants/.
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1. Jefferson Parish, Louisiana: Turnkey Operation, Maintenance and Management
for a Water System
2. Milwaukee, Wisconsin: Operations, Maintenance, and Management
Contract for a Municipal Wastewater System
3. Buffalo, New York: Operations, Maintenance, and Management Contract for a
Water System
4. Camp Pendleton, California: Wastewater Treatment
5. Cranston, Rhode Island: Asset Sales Under Executive Order 12803
6. Cartagena, Colombia: Water and Wastewater Services
7. Maryland: Chesapeake Forest Project
8. Morocco: Solar Energy for Rural Households
9. Miami Intermodal Center
10. Lorton, Virginia: South County Secondary School
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for a
American Water provides full turnkey operation, maintenance and
management of the East Bank Wastewater Treatment Plant in Jefferson Parish, Louisiana. This
public-private partnership is established through a 15-year contract between American Water and
Jefferson Parish that began in 2000 and is priced at approximately $2.5 million annually. The
contract provides for five year renewals at the option of Jefferson Parish and it was last renewed
in 2005. Under the terms of the contract, American Water provides all dewatering services,
offsite sludge transportation, building security, and site landscaping for the treatment plant. In
addition, American Water provides odor abatement services at the two major pumping stations
using a liquid oxygen injection system.
The East Bank Wastewater Treatment Plant serves approximately 150,000 people in Jefferson
Parish. Jefferson Parish has a population of 455,466 and is the largest suburb of New Orleans.
The city was affected by Hurricane Katrina in 2005, but has rebounded at a more rapid pace than
the neighboring Orleans Parish. A population estimate conducted between June and October
2006 by the Louisiana Recovery Authority following Hurricane Katrina put Jefferson Parish at
440,000 residents or 98% of its 2000 total. Jefferson Parish is successfully rebuilding after
Hurricane Katrina.
Hurricane Katrina disrupted American Water's work on an odor control project for the East Bank
Plant, but the project is still underway. The company won a $1.4 million design-build-operate
proposal for this odor control project. The proposal covers three odor control units for the Belt
Press Building and one odor control unit to serve the sludge holding tanks. Phase I of the odor
control project was completed in 2001. Phase II of the project, which was postponed due to
Hurricane Katrina, is due to be completed between April and June 2008. At completion, the
Phase II odor control project will provide full replacement of the facility odor control system and
eliminate the overloaded and obsolete Calvert equipment, allowing for greatly improved odor
abatement.
The citizens of Jefferson Parish are enjoying high quality
wastewater treatment plant operations and an annual cost savings close to $1.56 million.
American Water made the following improvements to the treatment plant during the first five
years of the contract: 1.) Installation of a state-of-the art, plant-wide Supervisory Control Data
Acquisition (SCADA) system for full monitoring and control of the entire facility from a central
console, 2.) Installation of a new and fully configured Computerized Maintenance Management
System to document the plant's assets, 3.) Installation of a new effluent pumping control system
that saves energy in plant operations and guards against effluent overflows during the extreme
wet weather flows that are common in southeast Louisiana.
for Water Partnership Council Website:
httpj//www.]^
American Water Website: httjji/^wjvjimw^to American Water phone:
504-736-6299.
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Great savings have been realized through the ten year contract between the
Milwaukee Metropolitan Sewerage District (MMSD) in Milwaukee, Wisconsin and United
Water Services (UWS), which was set up to provide for the operations, maintenance, and
management of the MMSD's municipal water system. This contract is the largest wastewater
public-private partnership agreement in the United States, and it is a 1999 National Council for
Public-Private Partnerships project award winner. Milwaukee, with a population of 573,378 as
of the 2006 United States Census, is the largest city within the state of Wisconsin. The
partnership has already begun paying dividends for Milwaukee-area residents and has set a new
standard for municipalities across the country considering public-private partnerships. This
contract enabled the MMSD Commission to reduce user charges by an average of 16.5 percent
when it adopted the District's 1999 Operation and Maintenance budget.
The MMSD is a special purpose municipal corporation organized under the laws of the State of
Wisconsin; and its legal boundaries include all of Milwaukee County with the exclusion of the
City of South Milwaukee and small areas in the City of Franklin. The legal boundaries also
include the portions of the Village of Bayside and the City of Milwaukee that are in neighboring
counties. The MMSD provides sewage treatment services for the 18 cities and villages within its
legal boundaries. In addition, the MMSD is authorized under state statutes to provide sewage
treatment services for areas beyond its legal boundaries but within the portion of the multi-
county drainage basin delineated as part of the Water Quality Management Plan developed by
the Southeastern Wisconsin Regional Planning Commission, an area including all or parts of 10
municipalities outside Milwaukee County.
The contract between MMSD and UWS has some unique
features and notable achievements associated with it. First, it includes a no layoff guarantee
from UWS for the entire term of the contract, the first of its kind to be included in a competitive
contract. Second, it includes a pension agreement. The U.S. Internal Revenue Service and the
U.S. Department of Labor ruled in May 1999 that the MMSD, United Water Services and the
city of Milwaukee can remain in the City of Milwaukee's public employee pension fund without
compromising its status as a government plan.
for National Council for Public-Private Partnerships Website:
http://ncppp.org/cases/milwaokee.shtml. United Water Website:
http://www.unitedwater.com/municpal.htm, scroll down and click on "Milwaukee, Wisconsin."
Milwaukee Metropolitan Sewerage District Website: hltp;//wwwjim
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In September 1997, the Buffalo, New York Water Board entered into a
contract with American Water Services, Inc. to upgrade, operate, and maintain its water system.
This public-private partnership is a 2005 National Council for Public-Private Partnerships
Service Award winner. The original contract had a five-year term with a one year extension.
The contract has since been renewed for another five years beginning July 1, 2003. This
partnership between American Water and the City of Buffalo has made significant improvements
to the city's water system, including the complete automation of customer records and general
operations and the design and construction of a new state-of-the-art customer service center with
easy access to mass transit.
The services American Water provides to the City of Buffalo include repair and maintenance of
the water distribution system, water treatment and pump station operation, residuals
management, customer service, billing and collections, and the repair and installation of water
meters. These services are benefiting a substantial population- Buffalo is the State of New
York's second largest city after New York City, with a population of 292,648. Buffalo is the
economic and cultural center of the Buffalo-Niagara Falls metropolitan area which has a
population of 1.2 million. The Buffalo water system has 80,000 connections serving the city's
entire population and drawing its water from Lake Erie with an average flow of 78-91 million
gallons per day.
This public-private partnership provides the following
benefits to the City of Buffalo and its residents and utility customers:
• The City of Buffalo has saved $21 million through operational and financial management
improvements to its water system over six years of working with American Water.
• An initial water rate reduction of 8% was held for five years.
• The innovative labor contract utilizes city employees with no involuntary staff
reductions.
• Changes in work rules and improved deployment yield a 26% increase in productivity for
city employees working under this partnership.
• The collection rate for the water system increased from 80% range to 97% range,
resulting in significant positive revenue impact.
• The water system converted from flat rate to metered water, with installation of over
60,000 water meters.
• Improvements in water quality achieved through best practices reduced turbidity by
450%.
• Responsiveness and efficiency of water line repairs improved significantly with
implementation of the computerized maintenance and management system (CMMS).
• Vehicle reliability for the water system improved via a new replacement and repair
program. The average age for vehicles in the fleet was reduced from 14 years to 8 years.
for The National Council for Public-Private Partnerships
Website: hjtpT/wvy^^ncpp^orj/cases/bjjfialo^shtoil. Water Partnership Council Website:
: //waterpartnershi p. org/studi es/ Ameri canWater/B o. .
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The Naval Facilities Engineering Command (NAVFAC) Southwest, based
in San Diego, California, is using a design-build-operate-maintain (DBOM) pilot program to
enhance operability of its sewage treatment facilities in Camp Pendleton, California through
privatization. Camp Pendleton is the major west coast base of the United States Marine Corps,
serving as its prime amphibious training base. The base is located in Southern California
between the cities of Oceanside and San Clemente. Camp Pendleton has a daytime population
of 60,000 and maintains 7,300 family housing units.
Through a partnership between the NAVFAC Southwest, the U.S. Marine Corps, and a
consulting firm based in Carlsbad, California called CDM Constructors, Inc., this 10-year, $260
million program is delivering facilities that will help to protect the coastal environment from
pollution. CDM Constructors, Inc. has been awarded a firm-fixed price, indefinite-
delivery/indefinite-quantity DBOM contract for water conveyance/reclamation at Camp
Pendleton. The NAVFAC Southwest is responsible for the contracting activity.
The program's cornerstone is the new 5-million-gallon-per-day Southern Region Tertiary
Treatment Plant that consolidates five outdated sewage treatment facilities and applies best
technologies for nutrient removal. The work to be performed provides for the installation of a
conveyance/reclamation pipeline to connect four sewage treatment plants to the Southern Region
Tertiary Treatment Plant to ensure compliance with Clean Water Act requirements. This work is
expected to be completed by March 2008.
This partnership is delivering flexible, reliable, safe, and
easy-to-operate facilities that will help Camp Pendleton to meet rigorous water quality
compliance objectives under the Clean Water Act. The creative collaboration and
communication approaches integrate multidisciplinary stakeholder interests with CDM's
technical guidance. The program is also delivering advanced treatment processes that meet
significant physical and procedural site restrictions, balancing technical and scheduling priorities
with environmental compliance.
for CDM Website:
http://www.cdm.coni/knowlcdgc center/case studies/camp pcndlclon water and wastcwaicr improvements him.
U.S. Environmental Protection Agency Website: http://www.cpa.gov/fcdrgstr/EPA-
1MPACT/200l/April/Day-25/il0221 htm and http://www.epa.gov/fedrgstr/EPA-
14107.htm.
Defense Industry Daily Website: totjK//www.deft^
camp-pendleton-ca-prepares-for-privatization-019587.
See "Build-Operate-Transfer" in Section 4a of this Guidebook. Build-operate-transfer is another
name for design-build-operate-maintain.
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Executive Order 12803, issued in 1992, directs all United States federal
departments and agencies to approve state and local governments' requests to privatize
infrastructure assets financed in whole or part by the federal government to the extent permitted
by law and consistent with originally authorized purposes. An example of a contract approved
under Executive Order 12803 is Cranston, Rhode Island's lease of its entire wastewater
treatment, collection, and pumping system to Poseidon Resources Corporation of Stamford,
Connecticut for 25 years starting in 1997. This long-term lease arrangement is valued at $400
million, making it the second largest public-private partnership for municipal water or
wastewater treatment in the United States. Cranston is the third largest city in Rhode Island,
with a population of 79,269 as of the 2000 Census.
The City of Cranston issued an RFP in 1997 for the purchase of its 23 gallons per day (mgd)
wastewater treatment plant. The city was unable to select a firm based upon the bids received
and chose to enter into competitive negotiations with several firms instead. An employee-owned
architectural, engineering and consulting firm, HDR, was brought in to assist the city with the
competitive negotiation process. The city chose to lease the wastewater treatment plant for a 25-
year term to Poseidon rather than sell it. This contractual lease arrangement was approved by the
Cranston City Council and signed in March 1997. The lease contract is set up to provide an
innovative solution to meet all of Cranston's intermediate and future wastewater objectives.
In addition to Poseidon, there are a couple of other private organizations in this lease
arrangement. Professional Services Group, Inc. (PSG), of Houston, Texas, who has been
operating, maintaining, and managing Cranston's wastewater treatment plant since 1989, will
continue to provide those services for the whole system. Metcalf & Eddy, Inc., (M&E), of
Branchburg, New Jersey will provide a treatment facility upgrade in addition to design/build
services for capital improvements. This contract is the first in the United States where the
contractor has full financial responsibility for a wastewater system over the term of the service
agreement. Still, the lease arrangement allows Cranston to regain control of the treatment
facility asset at the end of the 25-year agreement.
As part of the contract, Cranston received a cash payment of $48 million from Poseidon. That
payment will be used by the city to retire general obligation debt and repay money borrowed
from the city's general fund. Those transactions will remove approximately one third of
Cranston's outstanding debt and enhance the city's credit rating. In addition, part of the $48
million payment will be used to provide funds for Cranston's wastewater system upgrade and
generate excess cash for the city's sewer enterprise fund. Out of the $48 million transaction, $24
million is dedicated towards initiatives to help the city to comply with environmental regulations.
The compliance made possible by that financing could lead to an improved agency rating that
would yield future financial benefits to the city.
The partnership created by this lease arrangement provides
great environmental protection benefits and financial benefits for the City of Cranston and is
beneficial for the consumers and the private contractors as well. The contract is expected to save
the City of Cranston $74 million. As far as the consumer is concerned, this arrangement means
that there will be no immediate increase in user rates and there will be an increased likelihood of
stable, predictable rates for the next 25 years. The lease is expected to provide the members of
Professional Services Group's operating and renovation team with opportunities to expand their
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businesses. Poseidon is earning equity through its leasing and financing. Metcalf & Eddy is
expanding its potential to take advantage of design/build opportunities through its participation
in the contract. This public-private partnership creates a win-win situation for all participants
and the consumer as well. This very successful partnership can serve as a model for other cities.
for Executive Order 12803 as of April 30, 1992, available at
http://www.theantechamber.net/UsHistDoc/Exordl2803/Exordl2803Pagel.html. See "Asset
Sales Under Executive Order 12803" in this section of the Guidebook.
Water & Wastes Digest Website: http://www.wwdmag.com/Long-Term-Lease-of-Treatment-
Systems-Becomes-an-Option-article882.
HDR Website: http://www.hdr-engineering.eom/l3/38/l/default.aspx?projectID=608.
ITT Industries Website: http;//wwgjtt^^^ and
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Cartagena is a large city seaport on the northern coast of Colombia with a
population of 895,400. Colombia is a leader in policies for improved conditions in water supply
and sewerage. Years of political pressure in Cartagena led to the municipal council's action
creating a public-private partnership to repair and operate the city's water and wastewater system
in 1994. The municipal council, under the leadership of the Mayor, approved the creation of an
"empresa mixta" (mixed enterprise) which combined the resources of the city's public works
department and a Spanish water firm. This public-private partnership operates under the name
Aguas de Cartagena (AGUACAR). Under the AGUACAR partnership, the shares of the
Spanish water company were split, with the municipality owning 50%, the Spanish water firm
owning 46%, and other private investors owning 4%. The Municipality of Cartagena granted
AGUACAR a 26-year concession contract to operate and maintain water supply and sanitation
services, collect water tariffs, and enforce payment.
The project AGUACAR has carried out is called the Cartagena Water Supply, Sewage, and
Environmental Management Project. The project investment, including grants, loans, and the
initial expenditures to organize AGUACAR, totaled US $117.2 million. The initial cash
investment in AGUACAR was US $4.6 million. The private sector contributed 50% of that
capital. After the initial investment, additional funding for the project was obtained from the
Colombia national government (US $20 million) and the municipality of Cartagena (US $7.6
million). In 1999, AGUACAR was given an US $85 million International Bank for
Reconstruction and Development (IBRD) loan through the World Bank to help finance
sewerage, wastewater treatment facilities, and water supply infrastructure. The World Bank has
provided a series of loans for water and sewer system improvements, totaling more than US $700
million to Colombia since 1988. Aguas de Cartagena's project was the first of these World Bank
funded projects that included a public-private partnership.
The AGUACAR partnership had several important objectives for this project. The primary
objective was to provide reliable water and wastewater services to all of Cartagena's residents,
especially lower income households. Before this partnership was created, the lower income
portions of the city were not connected to the municipal water system. Customers that were
connected to the system found that water pressure was generally low and often interrupted. A
related objective of AGUACAR was to decrease the amount of Non-Revenue Water (NRW)
caused by leaks in the existing pipes. The city was losing between 40% and 60% of its water
through leaks and its goal was to reduce this loss to no more than 25%. A third objective of
AGUACAR was to improve the economics of the water system, which was operating at a
substantial loss, and make it a financially self sustaining operation. This goal was to be achieved
through increased efficiency in the management of water supply and sewage services and an
increase in the tariff collection ratio.
Aguas de Cartagena has been very successful in achieving
its objectives. Through the achievement of these objectives, the financial health of Cartagena's
water system has been improved and access to water services for the city's residents has greatly
increased. Soon after the start of the partnership, AGUACAR began immediate service to those
not connected to the water system through a system of water truck deliveries. The financing for
those deliveries came in part from a restructuring of the tariff system to incorporate cross-
subsidies, under which more affluent customers helped subsidize the water rates for lower
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income families. Next, to expand service, about 35,000 new connections to the water system
were made, almost exclusively in poor neighborhoods. By 2005, through the work of the
AGUACAR partnership, water system connections in Cartagena increased to 99% of the
population and sewage coverage rose to 75%.
Another great accomplishment of AGUACAR was that the percentage of Non-Revenue Water
(NRW) caused by leaks in Cartagena's system was significantly reduced through the
partnership's work. As a result, customers began to receive more reliable water pressure.
Pipelines and water meters were evaluated and repairs were made to achieve this reduction in
leaks. These repairs meant that the quantity of the overall water supply and the amount of time
each day that water was available to customers was greatly increased. In addition, the long-term
financial situation of the water system was improved as compared to the many years when the
city lost a lot of money by treating and distributing water that was lost before reaching
consumers. Still, this improvement in the financial health of the city's water system was not
adequate by itself. The city had a low rate of water bill collection so AGUACAR worked to
make some improvements in that area as well.
The AGUACAR partnership made the goal of increasing the collection of fees ratio for
Cartagena's water provider from less than 50% to 95%. Many households lacked working water
meters before AGUACAR began its work. That made it very difficult for the water provider to
collect tariffs and contributed to negative cash flows. To fix this problem, AGUACAR installed
or replaced water meters at all new and existing water system connections. By 2005, over 99%
of connected households had water meters. Through improved billing and tariff collection, made
possible in part by the installation of the water meters, the water provider's collection of fees
ratio was greatly improved, reaching 90% in 2005. Increases in efficiency of water distribution
coupled with a better tariff collection record gave AGUACAR positive cash flows. Support for
AGUACAR is high, as Cartagena's utility customers benefit from improvements in water and
sewerage services that would not have been financially possible without the partnership.
for The National Council for Public-Private Partnerships
Website: : //www. . org/undp/cartagena. html.
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.e
The Chesapeake Bay is the largest estuary in the United States; and it is a
major area for both recreational and commercial fishing in the State of Maryland. It lies off the
Atlantic Ocean and is bordered by Maryland, Virginia, the District of Colombia, New York,
Pennsylvania, Delaware, and West Virginia. The environmental quality of the Bay has been
seriously degraded by wastewater discharges from growing population centers and agricultural
runoff in recent decades. In response to this environmental degradation, governments in the
Chesapeake Bay watershed have made restoration of the Bay an environmental priority, and have
shown an increased interest in land and wetlands management.
However, the state and local governments in the Bay's watershed lack the financial and
personnel capability to address many of these environmental problems adequately. It was these
types of financial shortfalls that inspired the creation of the Chesapeake Forest Project (CFP), a
public-private partnership in Chesapeake Forest, Maryland. The CFP was initiated in 1999 when
the State of Maryland entered into a public-private partnership to purchase 58,000 acres of land
owned by a private lumber company in the forested areas of the Eastern Shore of the Chesapeake
Bay.
The State of Maryland Department of Natural Resources (DNR) is the public agency with the
direct responsibility for oversight and management of all phases of the CFP. A major
philanthropic foundation aided in the initial acquisition of a portion of the property for the CFP.
A non-profit public interest group with its primary purpose being environmental protection is
another participant in the development and operation of the CFP. The third and final partner is a
for-profit consulting forestry firm that performs the forestry management under the implemented
CFP.
For the initial land acquisition that ultimately created the partnership, the State of Maryland
provided $16.5 million for the purchase of half of the 58,000 acres. The non-profit public
interest group, acting on behalf of the philanthropic foundation, purchased the remaining 29,000
acres for $16.5 million with plans to later gift the land to the State of Maryland. The gifting,
done in December 2000, carried with it a number of stipulations about terms that would later
become key parts of the Chesapeake Forest Project agreement.
Stipulations of the non-profit group's gifting of the land included commissioning of a detailed
and comprehensive Sustainable Forest Management Plan, to be implemented over a three-year
transition period. The for-profit consulting forestry firm was contracted to manage the
Chesapeake Forest lands in conformance with the State of Maryland's environmental standards
and regulations and based upon the Sustainable Forest Management Plan. The contract provided
the consulting forestry firm with the option of participating in the final partnership agreement,
when implemented.
Under this partnership, the for-profit consulting forestry firm is responsible for all land
management, based on an annual per-acre fee for basic management services, including
harvesting timber. The forestry firm pays all subcontractor bills and is responsible for
subcontracting all fieldwork, including tree cutting, transportation of wood products to the mill,
and replanting. Receipts from the sale of timber products are paid directly to the State of
Maryland and the state does the financial management of the accounts. Each year, the first 15%
of the revenues are dispersed to the local counties. The forestry firm assumes substantial risks in
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that only after the payment to local counties has been made may it be paid its management fee.
The broad vision for the Chesapeake Forest Project is the creation of an active, working, certified
sustainable forestry initiative on the Eastern Shore of the Chesapeake Bay that pays for itself and
supports local communities. The State of Maryland and its private partners in the CFP seek to
achieve the following objectives:
• Provide employment and a steady flow of economic activity to support local businesses and
communities;
• Prevent the conversion of forested lands to non-forested land uses;
• Contribute to water quality improvements as part of the larger Chesapeake Bay restoration
effort;
• Protect and improve habitat for threatened and endangered species,
• Help sustain soil and forest productivity and health; and,
• Protect sites of special ecological, cultural, and historical interest.
Possible political resistance to this project was reduced
through compliance with the State of Maryland's laws that required the financial management of
the project to be done by a state agency, thus ensuring transparency from initiation to final
implementation of the partnership. A unique aspect of this public-private partnership is that it is
self-funded. The Sustainable Forest Management Plan includes identification of the areas in the
forest where wood products can be harvested at an environmentally sustainable level without
negative environmental impacts. The revenues from the harvesting pay for the contract and
provide additional funds to state and local governments. In addition, the controlled continuation
of timber harvesting activities has addressed the economic concerns of local communities. This
partnership has successfully established a state-owned public forest, managed on a daily basis by
a private forestry firm, carrying out a conservation-oriented sustainable forestry plan.
for The National Council for Public-Private Partnerships
Website:
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for
Morocco's Office National de 1'Electricite (ONE), the state-run operator in
Morocco's electricity supply sector, entered into a public-private partnership in June 2002 with a
private company to electrify rural households by using solar energy to produce electricity in an
initiative called the rural electrification project. The private partner is the Renewable Energy
Service Company (RESCO), which is comprised of a French oil company, a French electricity
company, and one of their joint subsidiaries which provides design, production, installation and
operation of photovoltaic power systems. The solar customers become clients of ONE once they
sign the utility contract. However, RESCO is responsible for the installation and maintenance of
solar equipment as well as the collection of users' fees in 24 of Morocco's 62 prefectures and
provinces.
The primary objective of the rural electrification project is to provide photovoltaic kits to over
58,000 households in rural Morocco to enable them to meet their basic electricity needs. Based
on the 2004 census, the population of Morocco is 29.7 million, and 45% of that population lives
in rural areas. Many rural residents in Morocco are not connected with the electric grid. The
Moroccan government maintains that incorporating rural households in to the electric grid is too
costly a venture. Electricity demand is unevenly distributed throughout the country and the
distance between homes and from homes to the grid makes it difficult to incorporate them into
the grid. Fortunately, using solar power to provide rural homes with electricity outside the grid
is a viable option for Moroccans and the rural electrification project is proving to be a great
success in the areas of reliability, affordability, and financing.
The total investment budget of the rural electrification project is $35.5 million, with 66% of
those dollars being provided by an equipment grant from ONE. The equipment grant was largely
financed through a $6.5 million grant from the German Bank KfW, a $6.5 million soft loan from
the French Development Agency (AFD), and a $1.5 million grant from the French Fund for the
World Environment (FFEM). The start-up phase to provide technical assistance for the project
was financed with the equipment grant. An equipment subsidy is provided by ONE, enabling the
partnership to provide electrical services at affordable rates, by offsetting the high installation
and maintenance costs associated with solar home systems. This subsidy enables the partnership
to offer rural customers electric rates that are adapted to household budgets. It also offers rates
that are comparable to what Moroccan households, that are connected to the grid, pay for service.
The private partner (RESCO) delivered prompt and reliable
service while keeping costs low through the hiring and training of local technicians for the rural
electrification project. By July 2005, more than 14,000 households in 400 villages had received
solar home systems through the project, with an installation rate of 500-700 homes per month.
The 16,000 customers of the first phase of the project were connected before the end of 2005,
one year in advance of the contract schedule. The second phase started in the second quarter of
2005. The installation of solar home systems for the remaining 37,000 customers is scheduled to
take two years. The success of this project has helped to demonstrate that a public-private
partnership can provide affordable solar electricity and jobs to people living in rural areas of
Morocco.
The hiring and training of local technicians for the project provided jobs in areas where
unemployment is high and enabled RESCO to offer its customers rates that are similar to what
they previously paid for candles, gas, and batteries or battery recharging. In addition, RESCO
developed a reputation for accessibility and trustworthiness throughout the communities by
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having local offices and local representation at its weekly meetings. That attention to customer
support, combined with the affordable electric rates, has helped RESCO to maintain a low
payment default rate. This public-private partnership's success in providing solar electricity to
rural communities in Morocco is a great achievement in the areas of environmental protection
and rural development that could be looked at as a model by other countries with similar needs
and demographics.
for The National Council for Public-Private Partnerships
Website: http://www.ncppp.org/undp/niorocco.htnil.
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The Miami Intermodal Center (MIC), scheduled to be completed in May
2011, is a very large ground transportation hub including a train station that is being developed
through the MIC Program by the Florida Department of Transportation (FDOT) in Miami-Bade
County, Florida. The MIC Program was created in the summer of 1993 when FDOT entered into
a partnership with six federal agencies of the U.S. Department of Transportation. In May 1998,
Kaiser Engineers was awarded the consultant program manager contract for the MIC Program.
Kaiser and its subconsultants formed a consulting management team to assist the FDOT with the
planning, design, and implementation of the MIC Program. Recognizing the need for inter-
agency cooperation and coordination, FDOT entered into strategic partnerships in 2000 with
Miami-Dade County, Miami-Dade Expressway Authority, and what is now the South Florida
Regional Transportation Authority.
Another MIC partner is Earth Tech Inc., a business unit of Tyco International Ltd., and a global
provider of consulting, architectural, engineering and construction services. Earth Tech has been
working on the MIC starting with the initial MIC Program development in 1993. The company is
currently serving as MIC Program manager for the public side of the project, which has been
recognized by the U.S. Department of Transportation as a "Project of National Significance." In
2007, it was announced that Earth Tech will be on board for Phase One of Miami Central Station.
District Six of FDOT awarded Earth Tech a $3 million, 15-month contract to plan, design, and
prepare construction documents for the facility. Miami Central Station will consolidate Tri-Rail
and Amtrak passenger rail services under one roof. The station design accommodates a potential
Florida High Speed Rail Terminus.
The MIC is being constructed next to Miami International Airport. The origin of the MIC can be
found in reports dating back to the 1980s when county officials foresaw the need to create
connectivity for the region as Miami-Dade began to attract big businesses and experience more
substantial population growth. The county's population was 2,253,362 at the time of the 2000
Census. The U.S. Census Bureau estimates the 2006 population of Miami-Dade County at
2,402,208. When completed, the MIC will include the Miami Central Station rail station,
roadway improvements, and a Rental Car Center to serve this growing population. It will ease
traffic congestion by providing connections where none previously existed between all forms of
ground transportation in the Palm Beaches, Fort Lauderdale, Miami, and the Florida Keys.
Much work has been done to coordinate the financing that makes this project possible.
The cost of the MIC is $1.349 billion. The MIC Program is the largest ever surface transportation
investment by the federal government. The Transportation Infrastructure Finance and Innovation
Act (TIFIA) was passed on June 9, 1998 as a federal credit program backed by leveraging federal
funds to attract private investment in transportation infrastructure. Federal support for intermodal
projects such as the MIC Program was authorized under TIFIA. In 1999, the MIC Program was
selected to receive up to $439 million in two separate authorizations through TIFIA. The first
loan of $269 million was closed on June 9, 2000, but only $15 million of it was withdrawn
because FDOT replaced it with a more competitive internal loan through the State Transportation
Trust Fund. The second loan of up to $170 million was closed on April 29, 2005, and an
additional $100 million has been requested to augment the second loan.
Continuation of MIC funding was made possible by legislation passed in 2005. In August 2005,
the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users
(SAFETEA-LU), a 6-year federal transportation bill, was passed to continue funding of federal
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surface transportation programs that were funded under TEA-21. This legislation gives state and
local transportation decision makers more flexibility for solving transportation problems in their
communities. The MIC Program is included in SAFETEA-LU. This continuation of funding
means that there is great promise for the MIC to be completed successfully. The MIC will
provide convenience and environmental protection benefits by expanding access to energy
efficient train travel and making the use of train travel more convenient in Miami-Bade County
and the South Florida region.
Substantial progress is being made on the construction
projects of the MIC program. All of the MIC roadway improvement projects have either been
completed or are under construction. Construction of the Rental Car Center began in the spring of
2007. Design work on the Miami Central Station is nearing completion. A site has been chosen
for it north of the existing Tri-Rail station. The MIC Rail Station Phase One, a component of
Miami Central Station, received an award in the "Unbuilt" category from the Miami Chapter of
the American Institute of Architects (AIA). The honors were presented to the MIC design team at
the 50th Annual AIA Design Awards Gala in November 2004.
This AIA award acknowledges the MIC design team's commitment to make the MIC a landmark
entrance to Miami, thus fulfilling the promise of State Secretary Jose Abreu to deliver structures
that are as efficient as they are appealing. In comments made in 1998 to the Miami -Dade County
Metropolitan Planning Organization, Secretary Abreu said the MIC would be Miami's gateway
because 95% of Miami-Dade county's visitors arrive through Miami International Airport and
either rent cars or take other modes of transportation to destinations within South Florida. The
MIC is expected to accommodate South Florida's expansion, trigger economic development, and
enhance the quality of life in the state.
for Miami Intermodal Center Website:
httjj^ywwwjTiicdotcorti.
Earth Tech Website:
U.S. Census Bureau Website: http://www.census.gov/, search on Miami, Florida.
InnovativeFinance.org: http://www.innovativefinance.org/proiects/intermodal/miami.asp.
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It became clear in 2001, years before the budgeted funding would be
available, that a new secondary school was needed in southern Fairfax County, Virginia. The
lengthy commutes faced by students were a serious hardship. An innovative finance solution
was clearly necessary for the new school because the Public-Private Educational Facilities and
Infrastructure Act of 2002 had not yet been passed. Fairfax County Public Schools solicited
proposals in 2001 for public-private partnerships for the construction of a new school, to be
called South County Secondary School. A partnership between Clark Education, a private entity,
and Fairfax County Public Schools, a government entity, was established for the development,
design, financing and construction of the school on a portion of the former prison site in Lorton,
Virginia. Fairfax County Public Schools was the first K-12 public school system in Virginia to
try this alternative, turnkey approach to procuring a school.
Clark Education provided financing solutions including monetization of land and value
engineering that allowed the school to be built three years ahead of schedule. Value engineering
is a specialized cost-control technique that uses a systematic and creative approach to identify
and reduce unjustifiably high costs in a project without sacrificing the reliability or efficiency of
the project. Clark worked successfully with the school's architect to reduce unjustifiably high
construction costs. In addition, Clark's monetization of specific parcels of unused Fairfax
County land assets lowered the overall net cost of the school project to the county. The school
was completed as scheduled in August 2005, years before financing would have been made
available if the public-private partnership had not been established. In September 2005, South
County Secondary School opened and hosted the first group of students to attend the school.
This partnership is a 2006 National Council for Public-
Private Partnerships Innovation Award winner. Clark delivered the school at a savings of just
over $25 million against the $88.7 million project budget without diverting resources away from
other Fairfax County school projects. These savings freed up funds that could potentially be
used for the construction and maintenance of other public and private infrastructure in Fairfax
County, such as water and wastewater treatment plants. This state-of the-art school is greatly
appreciated by the community. Although South County was built based on designs of a
neighboring high school, it has more natural light in the classrooms and partitions that were
designed to control noise above and below the ceilings. The school's technology, including over
800 computers and a two-story media center, exceeds that of any previously constructed school
in Northern Virginia.
for The National Council for Public-Private Partnerships
Website: http://www.ncppp.org/cases/southcounty.shtml. See "Value Engineering" in Section 3
of this Guidebook and "Turnkey" in Section 4 of this Guidebook. See the "turnkey" definition
on The National Council for Public-Private Partnerships Website:
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Financial outreach has proven to be very important for community environmental programs and
small businesses because of the multiplicity and complexity of ever increasing environmental
regulations, both at the federal and state level, and the need to finance, operate, improve, or
construct facilities to comply with these regulations. Financial outreach is a critical link between
environmental mandates and implementation of these mandates by local managers.
Two types of financial outreach tools are presented in this section: institutional arrangements
and electronic services. The institutional arrangements presented include organizations,
initiatives, and mechanisms that support the financing of environmental programs, systems, and
projects. The electronic services presented include Websites that provide information on funding
mechanisms and software programs that are tools for financial planning.
The institutional arrangements in this section tend to be independent, innovative, and non-
bureaucratic. They typically involve face-to-face, hands-on training, and are project specific.
They often encourage significant client involvement ranging from detailed feedback and
cooperation to direct project participation and funding. As a result, the quality of the outreach
and technical assistance they provide is enhanced and their services are financially leveraged.
Using electronic services, people can interact and access information in ways that are often very
cost effective and save time as well. Properly implemented, electronic services can help control
resource consumption and pollution by reducing paper use, cutting transportation and fuel costs,
and thus preventing related air, water and land pollution. In addition to the electronic services
described in this section, some electronic services for businesses are discussed in Section 10 of
the Guidebook.
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1. U.S. Environmental Protection Agency: Environmental Finance Program
2. Environmental Finance Center (EFC) Network
3. Region 1 Environmental Finance Center at the University of Maine
4. Region 2 Environmental Finance Center at the Maxwell School, Syracuse University
5. Region 3 Environmental Finance Center at the University of Maryland
6. Region 4 Environmental Finance Center at the University of North Carolina
7. Region 4 Environmental Finance Center at the University of Louisville
8. Region 5 Environmental Finance Center at Cleveland State University
9. Region 6 Environmental Finance Center at the University of New Mexico
10. Region 9 Environmental Finance Center at Dominican University
11. Region 10 Environmental Finance Center at Boise State University
12. Boise State University Environmental Finance Center: Plan2Fund
13. Boise State University Environmental Finance Center: CAP Finance
14. Finance Charrettes
15. Border Environmental Cooperation Commission
16. Rural Community Assistance Corporation
17. Self-Help
18. Circuit Riders
19. Cooperatives
20. Drinking Water State Revolving Fund Capacity Development
21. U.S. Environmental Protection Agency: Water and Wastewater Pricing Website
22. U.S. Environmental Protection Agency: Enforcement Economic Models
23. U.S. Environmental Protection Agency: Green Power Locator
24. U.S. Department of Energy: Financial Opportunities Website
25. U.S. Department of Energy Alternative Fuels Data Center: State and Federal Incentives
and Laws Website
26. National Technical Assistance Programs
27. National Rural Water Association
28. Rocky Mountain Institute
29. U.S. Environmental Protection Agency: Water Efficiency Market Enhancement Program
30. Environmental Council of the States
31. Pollution Prevention Resource Exchange
32. Energy Efficiency Organizations
33. U.S. Department of Energy: Industrial Assessment Centers
34. Catalogue of Federal Domestic Assistance
35. Database of State Incentives for Renewable Energy (DSIRE)
36. U.S. Environmental Protection Agency: Catalog of Federal Funding Sources for
Watershed Protection
37. Boise State University Environmental Finance Center: Directory of Watershed Resources
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The U.S. Environmental Protection Agency (EPA) Environmental Finance
Program works in partnership with state and local governments, tribes, and the private sector to
help fund environmental protection initiatives. The Program provides leveraged financial
outreach services to these partners through three distinct, but related components: the
Environmental Financial Advisory Board (EFAB), the Environmental Finance Center Network
(EFCN), and the Environmental Financing Information Network (EFIN).
EFAB, a federally chartered advisory committee, provides innovative ideas and
recommendations to the EPA on ways to lower the costs of, increase investments in, and
promote public-private partnerships with regard to environmental and public health protection.
The EFC Network, consisting of nine university -based programs that serves eight of the ten EPA
regions, delivers targeted technical assistance to address the "how to pay" issues of meeting
environmental standards. EFIN catalogues the work and accomplishments of EFAB and the
EFCN, and provides abstracts of valuable EjiyjjxgTmentaQ^ and
some EPA publications, through its highly popular Website, telephone Infoline, and contact
referral service.
for Environmental Finance Program Website:
EFIN Infoline: 202-564-4994. The EFC Network is described in
this section of the Guidebook.
The Environmental Finance Center Network (EFCN) is a system of nine
university-based Regional Environmental Finance Centers that provide state and local
governments and the private sector with training and educational, technical, and analytic
assistance on environmental finance (see the individual descriptions of the nine Environmental
Finance Centers on the following pages). These services are designed around the "how to pay"
issues of environmental compliance. The EFCN has become a significant force in assisting local
governments and small businesses in meeting environmental standards. A central goal of the
Network is to help create sustainable environmental systems in the public and private sectors.
Coordination of the EFC Network is provided by the U.S. Environmental Protection Agency
(EPA) Environmental Finance Program. In addition to the nine mature Centers, in 2008 EPA's
Region 7 office created a satellite EFC with the intention of moving it into the Network within a
year.
for Contact: Vera Hannigan, E-mail hannigan.vera@.epa.gov,
Phone # 202-564-5001. EFC Network information and a Website for each EFC can be accessed
via the Environmental Finance Program's Website at http://www.epa.gov/efinpage. The
Environmental Finance Program is described in this section of the Guidebook.
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1 at the of
Founded in 2001, the University of Southern Maine EFC - or the New England
EFC (NE/EFC) - is housed within Region 1 in the Edmund S. Muskie School of Public Service.
The NE/EFC addresses the "how-to-pay" questions associated with creative approaches to
environmental protection and management, especially by developing and applying "smart
growth" and other land-use techniques that go beyond compliance with government regulations.
In developing its programs, the NE/EFC identifies the research, education, and technical
assistance needs of an array of clients from land trusts, developers, and municipalities, to state
governments and agencies of the federal government. The NE/EFC offers Collaborative
Environmental Services tailored to the needs of individual organizations or local governments.
These include assistance in facilitating local dialogues and exploration of creative ways to make
needed conservation and development decisions feasible financially and otherwise. The EFC has
also developed a program called the Next Communities Initiative, to train community leaders
how to bring about constructive changes in local land use decision-making.
for NE/EFC Website: httni//gfLinuskjgjjsmjnmne^edu.
The Syracuse University Environmental Finance Center (EFC) is located in Region
2 within the Center of Excellence in Environmental and Energy Systems. This EFC provides
training, technical assistance, and outreach services to State and local officials related to
financing environmental initiatives. Its areas of focus include the promotion of full-cost pricing
of environmental services, the exploration of environmental service management options such as
privatization, and the facilitation of public input processes in local communities.
The EFC's projects and accomplishments are in areas including asset management, technical
assistance, and partnerships. In 2005, it worked with EPA to co-host an asset management
workshop in Syracuse. Ongoing initiatives of the EFC include a Public Management and Finance
Program designed to offer a more comprehensive and holistic way for communities to benefit
from technical assistance, and a partnership with the New York (NY) Department of
Environmental Conservation, NY Rural Water Association and NY Water Environment
Association to provide a series of wastewater informational sessions for local government
representatives.
for Syracuse Environmental Finance Center Website:
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3 at the of
The University of Maryland's Environmental Finance Center (EFC) is located in
Region 3 and is hosted by the University of Maryland's Institute for Governmental Service. The
mission of the EFC is to provide communities with the tools and information needed to manage
change for a cleaner environment and an enhanced quality of life. This EFC is community-
based, with a goal of developing livable communities within the Chesapeake Bay region that
promote clean, safe neighborhoods and foster a sense of place for all citizens.
Through strengthening the capacity of local decision-makers to analyze environmental problems
and develop innovative and effective ways of financing environmental efforts, the EFC strives to
be a leader in community development and watershed protection. This EFC does significant
work in the following areas: training for water utility systems managers, working with
communities on storm water management, and community financing for local land and water
protection.
for University of Maryland Environmental Finance Center
Website:
4 at trie of
One of two EFCs located in Region 4, the University of Louisville's
Environmental Finance Center (EFC) is part of the University's Center for Environmental Policy
and Management. The EFC's primary service area is the Southeastern United States. The EFC
has two broad mandates stemming from U.S. Environmental Protection Agency goals: 1.) to
develop more environmentally and economically sustainable alternatives to uncontrolled and
unfocused spatial expansion of human settlements, 2.) to improve the efficiency of
environmental infrastructure service delivery.
The services offered by the EFC are divided into four main areas: 1.) Practice Guides, 2.)
Research Result Notices, 3.) Financial Planning Support for Water Utilities, and 4.) Brownfields
Redevelopment Support. The Practice Guide series is designed for government officials who
make or implement policies that influence land use. The Research Result Notices make research
results available to public officials via the internet. Through its Financial Planning Support for
Water Utilities, the EFC provides training and technical support to operators of water utilities.
The EFC's Brownfields Redevelopment Support initiatives are geared towards providing
services to facilitate investment in the cleanup and reuse of properties that are perceived to be
contaminated.
for University of Louisville Environmental Finance Center
Website: http://cepm.louisville.edii/org/SEEFC/seefc.htm.
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Also located in Region 4, the University of North Carolina Chapel Hill
Environmental Finance Center (UNC EFC) is contained within the School of Government. Its
primary service area is the southeastern United States and it focuses on service to states and
communities. Specifically, the UNC EFC assists communities, provides training and policy
analysis services, and disseminates tools and resources on topics such as environmental cost
accounting, rate setting, and the development of sustainable cost recovery and institutional
management systems.
The UNC EFC reaches local communities through the delivery of interactive applied training
programs and technical assistance. The UNC EFC sees one of its major roles as increasing the
capacity of other organizations to address the financial aspects of environmental protection. In
addition to direct community outreach, the UNC EFC works with decision makers to assess the
effectiveness of environmental finance policies at a regional or state level, and to improve those
policies as a way of supporting local efforts.
for University of North Carolina Environmental Finance
Center Website: www.efc.uiic.edu/index.html.
5 at
The Great Lakes Environmental Finance Center (GLEFC) is located in Region 5 at
the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. The Great
Lakes EFC primarily serves a six-state area, encompassing Ohio, Indiana, Illinois, Michigan,
Wisconsin, and Minnesota. The GLEFC acts as a technical assistance, training, and research
resource for state and local government, private sector, and non-profit organizations, helping to
solve financial problems related to environmental facilities and resources.
One of the Great Lakes EFC's ongoing initiatives is providing Brownfields community site visit
advisory services. Brownfields are properties whose financial potential is undermined by real or
perceived contamination. The EFC provides professional training to state and local government
officials, business executives, and others on environmental finance issues, strategies, and
resources, helping clients make more effective use of financial resources for Brownfields
redevelopment. The Great Lakes EFC's other projects include financial and economic analyses
and market studies to support environmental project planning, development, and implementation,
and the publication of research papers and documents.
for Region 5 Great Lakes EFC Website:
: //www. gl efc. org/.
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8 at
Located in Region 6, the New Mexico Institute of Mining and Technology
Environmental Finance Center (NM EFC) is a program of the Institute for Engineering Research
and Applications. The primary purpose of the center is to assist state, local, and tribal
governments in meeting environmental infrastructure needs and achieving regulatory compliance
through state and local capacity building and technical information transfer. Capacity building
includes enhancing technical, managerial, and financial capabilities to achieve consistent and
sustainable regulatory compliance and to promote and develop sustainable infrastructure.
In particular, the center works to examine alternatives or innovative approaches to meet
regulatory compliance and achieve sustainable infrastructure; empower communities to act as the
"drivers" and decision-makers for their own projects; present funding alternatives for various
types of projects; act as a bridge between federal, state, local, and tribal governments, analyze
issues or projects as a neutral entity; gather stakeholder input; and to encourage examination of
state or federal programs that inhibit sustainable infrastructure, and offer suggestions of possible
approaches that have been used elsewhere. Recently, the NM EFC has been focusing much of its
efforts on promoting the concept of asset management to water and wastewater utilities. This
program can improve the efficiency and sustainability of utility operations.
for New Mexico EFC Website:.
9 at
The Dominican University Environmental Finance Center (EFC9) is located
within Region 9 and serves Arizona, California, Hawaii, Nevada, Guam, and the Marshall
Islands. The mission of EFC9 is three-pronged: 1.) to encourage business to adopt source
reduction, pollution prevention and energy efficiency; 2.) to encourage consumers to choose
green products and services; and 3.) to help communities promote cleaner business. The EFC
carries out many different types of initiatives including organization of conferences and
workshops, local economic development, providing hands-on assistance to small businesses, and
producing numerous publications.
Specific projects of EFC9 include production of a publication titled Wet Cleaning Guide
Booklet and working with television shows to educate viewers about ways to reduce their
impact on the environment. EFC9 also acts as the Region 9 San Francisco Bay Area Green
Business Program (GBP) Coordinator. The Bay Area GBP is a partnership of environmental
agencies and utilities that assists, recognizes and promotes businesses and government agencies
for conserving resources, preventing pollution and minimizing waste. In partnership with the Bay
Area GBP, other GBPs located outside the Bay Area, the California Environmental Protection
Agency, and the U.S. EPA, EFC9 helps to launch, coordinate, and promote GBPs.
for Region 9 EFC Website htt^//www.efc91org/.
San Francisco Bay Area Green Business Program (GBP) Website:
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The Boise State Environmental Finance Center in Region 10 was created in 1995
and is contained within the Department of Public Policy and Administration of the College of
Social Sciences and Public Affairs. The Boise State EFC serves the Pacific Northwest and
Intermountain states of Alaska, Idaho, Oregon and Washington. The EFC seeks to assist these
states and their communities with environmental financing issues, and is committed to helping
the regulated community build and improve upon the technical, managerial, and financial
capabilities needed to comply with federal and state environmental laws.
The Boise State EFC is an important partner to state and local governments in addressing
financing issues related to drinking water and wastewater treatment needs in small communities,
helping those communities to meet requirements under the Safe Drinking Water Act of 1996. In
addition, the EFC developed a financial planning software program for watersheds called
Plan2Fund, and an integrated capital asset inventory and reinvestment analysis software program
for water supply systems called CAPFinance. Both of these programs can be downloaded from
the EFC's Website and are described on page 5-9 of this section of the Guidebook.
for The Environmental Finance Center at Boise State
University Website: http://efc.boisestate.edu/efc/.
Plan2Fund is a Watershed Planning Tool developed and maintained by the U.S.
Environmental Protection Agency's Environmental Finance Center (EFC) at Boise State
University. The tool walks users through estimating the costs of their Watershed Program Plan's
Goals and Objective, assessing any local matching funds, and determining funding needs to meet
their Goals and Objectives. Plan2Fund prompts users to enter specific information on their
programs and then generates a series of reports based on that information. The results from
Plan2Fund can be used to search for funding sources utilizing the Environmental Finance
Center's internet-based The Directory of Watershed
Resources is described in this section of the Guidebook.
for See
http://efc.boisestate.edu/efc/Tools/Plan2Fund/tabid/104/Default.aspx For information or
assistance, or to request a Plan2Fund CD, call the Boise State EFC toll free at 866-627-9847.
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CAPFinance is an easy-to-use, icon-driven software program that helps public and
private water systems with their financial decision-making. It was developed by the U.S.
Environmental Protection Agency's Environmental Finance Center (EFC) at Boise State
University. The program was developed because small water systems often have trouble
estimating and budgeting for future replacement costs. The program helps local officials to
understand the impacts of funding capital replacement, and it provides a simple method of
analyzing funding options for renewal and replacement of assets. System management in
CAPFinance can set the reserve accumulation goal for every component and subcomponent of
the water system.
CAPFinance forecasts capital financing needs for 25 years or more. The program helps water
utilities inventory capital infrastructure facilities and discover financing requirements, offering
unlimited "pay now" or "pay later" scenarios. It produces a report with a detailed view of the
future replacement costs and goals for each and every system component. The output from the
program can be integrated into financial decision making such as rate setting and capital
planning. This planning can help the water supply system to meet customer demands, maintain
quality of service, maintain compliance with provisions of Safe Drinking Water Act, and secure
the financial resources necessary to fund these efforts.
for For information on CAPFinance, or to download a
CAPFinance Demo, see the Boise State University EFC's web site at
http://efc.boisestate.edu/efc/Tools/AssetManagementwithCapFinance/tabid/90/Default.aspx.
A "finance charrette" is a forum where a regulated entity meets with a panel of
finance experts from the public and private sectors, and those experts offer advice and
recommendations on finance issues faced by that entity. Adapted by the University of Maryland
Environmental Finance Center (and subsequently employed by many of the EFCs) for
environmental finance problem solving, the charrette process employs an advisory panel of
finance, planning and engineering experts, as well as federal and state officials, who help
communities create solutions to their environmental management problems. Environmental
Finance Charrettes provide a direct mechanism for ensuring meaningful, constructive two-way
communication between higher levels of government and local communities. Typically a
charrette lasts a full day beginning with a description of the problems by, for example, officials
from a local government. This is followed by question and answer sessions with the panel, and
report out by panel members on the actions they recommend as individuals and as a group. The
proceedings are taped and the results summarized.
for University of Maryland Environmental Finance Center
Website: w^w.efcjjnid_.edjj/ch^n^ttejvtml. E-mail: efc@umd.edu. Also see the description of
the University of Maryland Environmental Finance Center in this section of the Guidebook.
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The Border Environmental Cooperation Commission (BECC) was created within
the context of the North American Free Trade Agreement process and is a sister agency to the
North American Development Bank (NADBank). The BECC reviews proposals for
environmental projects in the region along the US-Mexico border and certifies them for loan
funding by the NADBank (see Section 2.B. of the Guidebook, North American Development
Bank). Environmental areas emphasized by the BECC include municipal solid waste
management and wastewater treatment. The purpose of the BECC is to help preserve, protect,
and enhance the environment of the border region and to achieve sustainable development.
The BECC's operating budget is funded by contributions from Mexico, through the Secretariat
of the Environment and Natural Resources, and from the United States, through the Department
of State and the Environmental Protection Agency. In addition to its operating budget, the
BECC manages the Project Development Assistance Program (PDAP), which receives funding
from the United States Environmental Protection Agency. This program allows the BECC to
provide border communities with grant funds for water and wastewater projects.
for Border Environmental Cooperation Commission (BECC)
Website: http://www.cocef.org, E-Mail: becc@cocef.interjuarez.com.
NADBank Website: http^/wwwjiadjxgrg/.
The Rural Community Assistance Corporation (RCAC) is a nonprofit organization
dedicated to helping rural communities achieve their goals and visions by providing training,
technical assistance, and access to resources. Most RCAC services are provided to low income
people and communities with populations fewer than 50,000. Working with governments and
community organizations in rural areas, RCAC provides a wide range of development assistance
involving housing, environmental services, financial assistance, and information and outreach.
RCAC has a loan fund that provides loans to water and wastewater treatment facilities. The five
major categories of assistance that RCAC provides to small municipal and nonprofit water
systems, wastewater systems and solid waste management programs are: Technical Assistance,
Managerial Assistance, Financial Assistance, Networks and Advocacy, Publications, and
Training. RCAC's publications are available on its Website.
for Rural Community Assistance Corporation Website:
Mtp;//wwwjcac,oig/, E-mail: rcacmml@rcaoorg, Phone: 916-447-2854.
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Self-help is an "in the field" strategy supported by many State government and
nongovernmental organizations that helps small communities help themselves in solving their
environmental problems. Self-help has proven a highly effective, low-cost approach to
providing environmental services and achieving compliance in small communities. It depends
heavily on local residents to contribute their time, labor and, on occasion, material and
equipment in getting the job done. A local project coordinator or "sparkplug" is essential to
success. In the self-help paradigm, State and federal agencies are called upon to move to
supporting roles by providing outreach and technical services. The approach offers a proven,
viable local alternative to addressing local environmental problems that reduces costs, fits
technology to actual needs, builds local capacity, and supports community independence. In
many cases, self-help projects can be implemented in a very timely manner due to a decrease in
the amount of governmental involvement.
for The Self-Help Handbook for Small Town Water and
Wastewater Projects, Schautz, Jane W.; and Conway, Christopher M., Rensselaerville Institute,
1995, available through the Rensselaerville Institute, Rensselaerville, NY, Website:
http://www.rinstitute.org/shopping/index.php?productID=l23, Phone # 518-797-3783.
A circuit rider is a dedicated expert who travels on some established regular basis
to a number of participating individuals and organizations to provide hands-on technical
assistance, professional services, and education. The circuit rider can be either an independent
entrepreneur contracting with the participants individually or as a group, or an employee of the
participant group acting cooperatively. Furthermore, the circuit rider can work either full or part-
time depending on the number of systems participating and the assistance and services provided.
For example, several publicly or privately owned water or other environmental systems may
agree to jointly obtain administrative, management, technical, or other services from a common
source to meet their common needs. The common source, the circuit rider, addresses the
common need such as the collection of samples from each system and delivery of the batch to a
lab for testing.
for For information on the Ohio T2 Center Circuit Rider
Program, see http://www.dot.state.oh.us/LTAP/ltapfaqs.htm, or call them at 614-387-7359, or
toll free from locations in Ohio at 877-800-0031. For information on the Massachusetts
Department of Environmental Protection Circuit Rider Program, see
http://www.mass.gov/dep/water/conipliance/cridr.htm, phone # 617-292-5500. To find Circuit
Rider Programs in other States, see the Environmental Council of the States (ECOS) Website at
http://www.ecos.org/section/states. The Websites of the environmental offices of all U.S. States
can be accessed through the ECOS Website.
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A cooperative is an independent association of people and/or groups voluntarily
united to meet common needs through a jointly owned and democratically operated venture. For
example, several publicly and/or privately owned environmental systems could agree to jointly
share administrative, management and technical resources in providing common environmental
services. The resulting cost savings are either passed along to users, reinvested in the cooperative
venture, or returned to the member systems.
Cooperatives are set up to provide/receive just about any good or service including: business
services; financial services; employment service; equipment and farm supplies; insurance; legal
and professional services; the marketing of agricultural and other products; and utilities. They
are organized in one of three ways: producer-owned, consumer-owned, or worker owned.
Cooperatives allow systems to pool not just their resources, but also their technical expertise and
knowledge regarding outside sources of assistance.
for See the U.S. Department of Agriculture, Rural
Development, Business and Cooperative Programs Website at
http://www.mrdev.usda.gov/rbs/index.html. Information is also available on the National
Cooperatives Business Association Website at http://www.cooperative.org.
The 1996 Amendments to the Safe Drinking Water Act (SDWA) authorize the
Drinking Water State Revolving Fund (DWSRF) and spell out requirements for states to prepare
capacity development strategies for public drinking water systems. The term "capacity
development" refers to a drinking water system's technical, managerial, and financial
capabilities to operate now and for the foreseeable future in compliance with all requirements of
the SDWA. Systems must demonstrate they have adequate "capacity" or capabilities or that the
loan will help them achieve adequate capacity in order to qualify for DWSRF funds.
Each state is required under the SDWA to develop and administer its own capacity development
program. The SDWA capacity development provisions are a flexible framework that allows
states to design programs that meet the unique needs of their water systems. The programs have
components that address newly established water systems, water systems seeking DWSRF loans
(as described above) and existing water systems. The range of services available varies from
state to state. Interested parties can contact the drinking water regulatory agency in their state to
find out about available resources.
for The federal capacity development strategy is outlined in
Section 1420 of the 1996 SDWA Amendments. Section-by-section summaries, as well as the
full text, of the 1996 SDWA Amendments can be found on the U.S. Environmental Protection
Agency Website at http://www.epa.gov/safewater/sdwa/laws statutes.html. For additional
information on the SDWA, see http://www.epa.gov/safewater/sdwa/index.html. The full text of
the 1996 SDWA Amendments is also available on GPO Access. Go to
g^^ and search on "Public Law 104-182."
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The U.S. Environmental Protection Agency Water and Wastewater Pricing
Website is a valuable source of technical and training information geared towards water systems
operators, local utilities, and state and local regulators. It focuses on the "four pillars" of efficient
water use and distribution, which are: enhancing utility management, saving water through
efficiency measures, cooperative ventures via the watershed approach, and full cost pricing. Full
cost pricing plays an important role in providing the public with clean and safe water.
EPA defines full cost pricing as "factoring all costs - past and future, operations, maintenance,
and capital costs - into prices." This approach is important to meeting the infrastructure needs of
America. The site describes six different types of full cost pricing, and a type of pricing called
"lifeline pricing" designed to make water more affordable for low income households. The four
types of pricing described on the site as being most effective in encouraging conservation are
increasing block rates, time of day pricing, water surcharges, and seasonal rates. The two types
described as being less effective in encouraging water conservation are uniform rate structures
and flat fee rates.
for Water and Wastewater Pricing Website:
The U.S. Environmental Protection Agency (EPA)'s Office of Enforcement and
Compliance Assurance develops and maintains enforcement economic models to analyze the
financial aspects of environmental enforcement actions. The five models currently available
include: ABEL, INDIPAY, MUNIPAY, BEN, and PROJECT. These models evaluate and
calculate factors such as costs, economic savings, or ability to afford costs for a variety of
regulated entities. ABEL evaluates a corporation's or partnership's ability to afford compliance
costs, cleanup costs, and/or civil penalties. INDIPAY and MUNIPAY evaluate the ability of
individuals and local governments (or regional utilities), respectively, to afford compliance costs,
cleanup costs, and/or civil penalties. ABEL, INDIPAY, and UNIPAY are useful tools to generate
information for negotiations. BEN calculates a violator's economic savings from delaying and/or
avoiding pollution control expenditures. PROJECT calculates the real cost to a defendant of a
proposed supplemental environmental project.
for To view information on the models, or to download the
models, see the EPA Office of Enforcement and Compliance Assurance Website at
http://www.epa.gov/compliance/dvil/econmodels/index.html. For installation help, assistance in
using the models, or advice in understanding their outputs, call the EPA Enforcement Economic
Models Helpline, staffed by an Agency contractor, at 888-ECONSPT or 888-326-6778, or e-mail
the Helpline at benabjd(@indg^^
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The U.S. Environmental Protection Agency (EPA) Green Power Locator is an
online database of information on sources of green power in the United States. The database was
created and administered by, the EPA Office of Air and Radiation's Green Power Partnership.
EPA defines green power as "electricity that is partially or entirely generated from
environmentally preferable renewable energy sources such as solar, wind, geothermal, biomass,
biogas, and low impact hydro."
The Green Power Locator is a useful tool for advancing the use of green power. The ways of
purchasing green power covered in the database include utility green pricing programs
(described in Guidebook Section 8) and renewable energy certificates. As its use becomes more
widespread through the use of the types of programs advertised in the database, green power is
becoming an increasingly cost effective alternative to electricity generated from fossil fuels.
for Green Power Locator Website:
http://www.epa.gOv/greenpower/l ocator/i ndex. htm.
The U.S. Department of Energy's Office of Energy Efficiency and Renewable
Energy (EERE) offers federal financial assistance to businesses, industries, universities, states,
tribes, and others for the development and demonstration of renewable energy and energy
efficient technologies. EERE's Financial Opportunities Website helps eligible parties to find and
apply for the financial assistance that EERE offers. The Website also provides direct links to
current and past solicitations of specific financial awards for businesses, industries, and
universities.
The specific types of financial assistance opportunities described on the Website include grants,
cooperative agreements, continuation and renewal awards, unsolicited proposals, cooperative
research and development agreements, laboratory subcontracts and sub awards. The Website also
provides information on several financing measures to help federal energy managers pay for
energy related projects, including performance contracts, services contracts, and state and local
energy efficiency incentive programs.
for See the Financial Opportunities Website at
http://www.eere.energy.gov/finacing/. Funding and award process questions can be directed to
the Office of Program Execution Support, EERE, ee-3A/Forrestal Building, DOE, Washington,
DC 20585, (202) 586-9957 or (202) 586-8180. Also see additional information about specific
financial awards at www._gra.nts.goy.
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U.S. of
The U.S. Department of Energy, Office of Energy Efficiency and Renewable
Energy, Alternative Fuels Data Center is a large online collection of information on alternative
fuels and the vehicles that use them. The alternative fuels described in the Data Center are those
defined by the Imei^yJIMicyji^^ The fuels include biodiesel, electricity (when used to
power vehicles), ethanol, hydrogen, methanol, natural gas, and propane.
The "State and Federal Incentives and Laws" Website gives access to the incentives that
governments provide to encourage people to reduce oil consumption through the use of
alternative fuels and vehicles. It also allows access to the laws and regulations that governments
use to ensure that transportation fuels are used in safe and efficient ways. Finally, the Website
provides access to points of contact in Federal departments/agencies, the States, the District of
Columbia, the Virgin Islands, and Puerto Rico. Contributors to the Website include the U.S.
Department of Energy, U.S. Department of Transportation, U.S. Environmental Protection
Agency, trade associations, professional societies, auto manufacturers, fuel providers, and
universities.
for See the Alternative Fuels Data Center's State and Federal
Incentives and Laws Website at: http://www.eere.energy .gov/afdc/laws/incen laws.html.
There are a growing number of national nonprofit technical assistance programs
that facilitate the financing and implementation of environmental projects and programs. Such
programs can include non-profit organizations ranging from environmental media-based
associations to community-focused groups. They can also include university-based groups,
professional associations and organizations, and cooperative networks.
Some examples of this type of organization include the American Waterworks Association, the
Environmental Protection Agency (EPA) network of nine university-based Environmental
Finance Centers (EFCs), the National Rural Water Association, the Rural Community Assistance
Programs, and the National Environmental Services Center. Many national technical assistance
programs have accumulated considerable experience and developed significant technical
expertise in dealing with communities and their environmental and financing problems.
for American Water Works Association (AWWA) Website:
Mtp;//wwwAwwa,or.g/, Phone: 303-794-7711. U.S. EPA Environmental Finance Center (EFC)
Network Website: www.epa.gov/efinpage, Phone: 202-564-5001. National Rural Water
Association (NRWA) Website: http://www.nrwa.org/. Phone: 580-252-0629. Rural Community
Assistance Programs (RCAP) Website: http://www.rcap.org/. Phone: 202-408-1273 and 888-
321-7227. National Environmental Services Center (NESC) Website: htt^/www.nesc.wyu1eduA
Phone: (800) 624-8301 and (304) 293-4191. Also see the descriptions of the EFC Network, the
NRWA, and the NESC in this section of the Guidebook.
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The National Rural Water Association (NRWA) is a nonprofit organization made
up of State Rural Water Associations. The NRWA provides support services to its State
Associations, who have more than 24,550 water and wastewater systems as members. The
utilities that are members of NRWA serve populations of 10,000 or less, which represents 94%
of all water systems in America.
NRWA's State Rural Water Associations offer a variety of state specific programs, services, and
member benefits. Additionally, each State Association provides training programs and on-site
assistance in the areas of operation, maintenance, finance, and governance to water and
wastewater system personnel. Also, the NRWA operates the International Rural Water
Association (IRWA). The IRWA's mission is to help improve water quality and, in turn, public
health, in developing countries. The IRWA's primary goal is to make available the economic
distribution of water treatment, training, and technical assistance to people in rural communities.
for National Rural Water Association Website:
http://www.nrwa.org/, E-mail: info@nrwa.org, Phone: 580-252-0629.
The Rocky Mountain Institute (RMI) is an entrepreneurial nonprofit organization
that fosters the efficient and restorative use of resources. RMI works with businesses, civil
society, and governments to design integrative solutions that help create long-term prosperity. It
shows businesses, communities, individuals, and governments ways to create wealth and
employment, protect and enhance natural and human capital, increase profit and competitive
advantage, and enjoy many other benefits, largely by increasing the efficiency of their processes.
RMI's work is independent and non-adversarial, with a strong emphasis on market-based
solutions.
Since 1982, RMI has worked with corporations, governments, communities, and citizens to
increase their resource efficiency, in turn increasing productivity and profits. Some of the
environmental areas in which RMI has applied its efficiency expertise include household and
commercial/industrial energy utilization; clean energy and climate protection; green
development; public and private water use; water infrastructure and system planning, benefits,
and costs; and stream restoration. RMI has provided a range of consulting and research advisory
services in these and other areas. Senior RMI staff has addressed audiences at events and
institutions such as the World Economic Forum, the World Bank, and the National Academy of
Sciences. Senior staff has also provided private briefings or expert testimony to heads of state,
corporate boards, utility commissions, top military leaders and staff colleges, elite business and
law schools, and governmental advisory boards.
for Rocky Mountain Institute Website: htt|x//wg£g^
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The U.S. Environmental Protection Agency (EPA) Water Efficiency Market
Enhancement Program works to promote the use of more water-efficient products and practices
in businesses and homes across the country. The Market Enhancement Program does this by
reaching out to various organizations and fostering public-private partnerships. The Program
seeks to help consumers and commercial/institutional buyers differentiate among products in the
marketplace, helping them to buy the most water efficient products. In doing this, it strives to
reduce water demand and realize major environmental, public health, and economic benefits by
helping to improve water quality, maintaining aquatic ecosystems, and protecting drinking water
resources. While this is a new EPA program, the Agency hopes to make water-efficient products
and systems the preferred choice among consumers and buyers. The Market Enhancement
Program has a list of products being evaluated for inclusion in the Program on its Website.
for Water Efficiency Market Enhancement Program Website
http://www.epa.gov/owm/water-efficiency/products program.htm, Phone 202-564-0637, Fax
202-501-2396, E-mail address water efficiency@epa.gov.
of the
The Environmental Council of the States (ECOS) is a national nonprofit,
nonpartisan association of state and territorial environmental organization leaders. The objective
of ECOS is to improve the capability of state environmental organizations and their leaders to
protect and improve human health and the environment. The Council defines its role as: 1)
articulate, advocate, preserve, and champion the role of the states in environmental management;
2) provide for the exchange of ideas, views, and experiences among states and with others; 3)
foster cooperation and coordination in environmental management, and 4) articulate state
positions to Congress, federal agencies, and the public on environmental issues.
Other than the general membership, ECOS is run by a 28 member executive committee led by
four officers: a president, vice president, secretary/treasurer, and past president. ECOS has
several finance related work groups: the ECOS-DOD Sustainability Work Group, the Energy
Efficiency Subcommittee, the Funding Gap Work Group, and the Long Term Stewardship Work
Group. ECOS's Website provides an information portal into every state environmental
department/organization and thus into their financing operations. The Website is an information
source on "financial tools" such as grants, loans, and environmental programs offered and
administered on the state level.
for Environmental Council of the States Website:
www.ecos.org. The Website has a "contact us" form. ECOS phone #: 202-624-3660.
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The Pollution Prevention Resource Exchange (P2Rx) is a national consortium of
eight regional centers that provide states, local governments, and technical service providers with
pollution prevention (P2) information, services, and networking opportunities. P2Rx is funded in
part through grants from the U.S. Environmental Protection Agency. For P2Rx purposes, P2
means "source reduction," as defined under the Pollution Prevention Act of 1990. Source
reduction includes practices that reduce or eliminate pollution via improved efficiency in the use
of raw materials, energy, water, or other resources. P2Rx disseminates information on topics
including technologies, publications, green home design and construction, and tribal pollution
prevention. Services P2Rx provides also include research assistance, and the maintenance of
clearinghouse of P2 related requests for funding proposals available on its Website. The P2Rx
Website also has a database of mercury reduction programs, a directory of P2 programs, and
links to the eight regional centers.
for Pollution Prevention Resource Exchange Website:
httg^/www1B2rx1org/. Phone: 402-552-6259. The full text of the Pollution Prevention Act of
1990 is available via the U.S. Environmental Protection Agency Website at
http://www.epa.gov/opptintr/p2honie/p2policv/actl990.htm.
Energy Efficiency Organizations (EEOs) are non-governmental, non-profit
organizations that provide energy efficiency-related information, education, outreach, and
technical assistance. In some cases, they actively promote improved energy efficiency and the
use of energy efficient practices, products and services. EEOs may be international, national,
regional, or state-based in scope. There are many different types of organizations that can be
classified as an EEO ranging from consortiums or alliances comprised of utilities, research
organizations, and state energy offices to national housing coalitions, environmental
organizations, and regional energy programs.
A significant amount of the work of EEOs directly impacts the environmental arena especially
with regards to air pollution, climate change issues, and sustainable development. Some of the
many possible examples of EEOs include the World Energy Efficiency Association, Alliance to
Save Energy, American Council for an Energy Efficient Economy, Consortium for Energy
Efficiency, Green Building Council, Sierra Club (energy), Northwest Energy Coalition, Colorado
Energy, Sustainable Minnesota, and New Buildings Institute, Inc.
for Websites with links to lists of EEOs include
http://www.naima.org/pages/resources/links2.htnil, http://eetd.lbl.gov/eXroads/ngo.html,
http://www.ecoiq.com/onlineresources/center/energy/efficiency/nonprofit.htnil. and
www.eere.gov/EE/buildings-trade.html. A list of EEOs can also be acquired by going to
www.enyiroiink.org and searching on "energy efficiency organizations."
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of
The Industrial Assessment Centers are a part of the U.S. Department of Energy
Office of Energy Efficiency and Renewable Energy's Industrial Technologies Program (ITP), a
program that leads national efforts to improve industrial energy efficiency, productivity, and
environmental performance. The Centers provide eligible small and medium-sized manufacturers
with comprehensive energy, waste, and productivity assessments free of charge. They then
provide detailed recommendations to the manufacturers, helping them to identify opportunities to
improve productivity, reduce waste, and save energy. Manufacturers have benefited from cost
savings in excess of tens of thousands of dollars through implementing these recommendations.
The Centers are located at 26 universities throughout the Unites States. Teams of engineering
faculty work with upper class undergraduate and graduate engineering students to perform the
assessments. An advantage in using students to do this work is that they receive unique hands-on
assessment training and an increased knowledge of industrial process systems, plant systems, and
energy systems, making them effective energy professionals who are highly attractive to
employers. With over 2,300 graduates, the Industrial Assessment Centers constitute a resource
for corporate recruiters seeking experienced energy engineers.
for See the Industrial Assessment Centers Website at
htt|i^/wj¥^^ and the student/alumni Website at
www. i acforum. ore.
The Catalog of Federal Domestic Assistance (CFDA) is an online database listing
all federal programs, projects, services, and other initiatives providing financial benefits and
other forms of assistance to the public. The CFDA contains detailed information on financial and
non-financial assistance programs administered by departments, agencies, commissions, and
other federal government establishments. The CFDA includes grants and loans that can provide
financial assistance. The document also includes forms of non-financial assistance, such as loans
of equipment and provision of specialized services. The types of information provided for each
assistance service includes program objectives, types of assistance, use and restrictions,
eligibility requirements, application and award processes, and post assistance requirements. In
addition, financial information such as range and average of financial assistance is provided,
followed by program accomplishments; regulations, guidelines, and literature; information
contacts, and examples of funded projects.
for Catalog of Federal Domestic Assistance Website:
http://12.46.245.173/cfda/cfda.html. A printed copy of the Catalog may be purchased from the
Government Printing Office (GPO) by calling toll free 1-866-512-1800 or by logging on to the
GPO's website at
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The Database of State Incentives for Renewable Energy (DSIRE), established in
1995, is a comprehensive electronic source of information on state, territorial, local, utility, and
selected federal incentives that promote the use of renewable energy technologies. The
renewable energy technologies it promotes include solar (active and passive); wind power;
biomass; cogeneration, or combined heat & power (CHP); fuel cells; geothermal; hydroelectric;
ocean thermal; and photovoltaics.
DSIRE is an ongoing project of the Interstate Renewable Energy Council (IREC), funded by the
U.S. Department of Energy and managed by the North Carolina Solar Center. The Interstate
Renewable Energy Council is a non-profit organization whose mission is to accelerate the use of
renewable energy sources and technologies. The North Carolina Solar Center is a program of
North Carolina State University's College of Engineering's Industrial Extension Service. It
works to advance the use of renewable energy resources to ensure a sustainable economy.
for Database of State Incentives for Renewable Energy
Website: http://www.dsi org/. Contact information for the Interstate Renewable Energy
Council, the U.S. Department of Energy, and North Carolina State University's Solar Center can
be found on the DSIRE Website.
of Federal
The Catalog of Federal Funding Sources for Watershed Protection is a searchable
online database of funding sources available for a range of different watershed protection
activities. The Catalog contains information on more than 80 federal funding sources covering a
wide variety of grant, loan and cost-sharing assistance programs. The Catalog's Website also
has a link to "other funding sources" that provides users with an extensive listing of public and
private sector sources, including publications and funding-related web sites, that could help
secure additional sources of funding. The Catalog was created, and is administered, by the U.S.
Environmental Protection Agency (EPA) Office of Wetlands, Oceans, and Watersheds.
On the Website, the user has a choice of two different types of searches. One type of search is
based on subject matter criteria, and the other is based on words in the title of the funding
program. Criteria searches consist of the type of organization, type of assistance sought, and
keywords. The information provided for each program in the Catalog includes contact
information, funding history, typical past awards, eligibility requirements, application deadlines,
and matching funds/criteria requirements.
for See the Catalog's Website at:
^ or alternatively, at
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The Directory of Watershed Resources is a searchable online database for sources
of watershed restoration funding. It produced and maintained by the U.S. Environmental
Protection Agency (EPA) Environmental Finance Center (EFC) at Boise State University. The
Directory includes information on funding programs from Federal, State (Oregon, Washington,
Idaho, Alaska, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and
Vermont), private, and other sources. Users can query the information in a variety of ways,
including agency source or keyword, or they can opt to do a more detailed search.
The Boise State EFC points out on its Website that this Directory is a work-in-progress.
Information is added to it and updated regularly. The EFC strives to maintain the most current
information, but it still recommends that users visit the funding program Websites or contact the
funding program administrators for the most up-to-date information. The Environmental Finance
Center at the University of North Carolina has also developed a similar database that includes
funding information for Alabama, Florida, Georgia, Mississippi, North Carolina and South
Carolina.
for See http://sspa.boisestate.edu/efc/ and click on "Directory
of Watershed Resources: Search online for Funding Sources" under "What's New," or go
directly to the Directory of Watershed Resources at: hJt]37M(LbQisestate1edu/. Contact: Crystal
Morehead at the Boise State EFC, Phone: (208)426-1567, E-mail: cmorehea@boisestate.edu.
There is a description of the Boise State EFC in this section of the Guidebook.
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Although federal government programs and other national efforts are extremely important
funding sources, they can not possibly address all of the current need. Furthermore, these
funding sources are decreasing over time. With the decrease in these funding sources,
communities have to seek other methods of meeting their critical environmental needs, such as:
seeking state funding or leveraging their limited resources through innovative local efforts,
including new volunteer programs. There are a wide variety of state programs available to local
communities, nonprofits, and other groups to assist them in reaching their environmental goals.
These programs are becoming increasingly more responsive to the needs of local communities
and the states are using a wide variety of innovative measures to assist in attaining environmental
finance goals.
This section of the Guidebook provides communities with information regarding the financial
resources that are available to them at the state level. In an effort to achieve a balanced
geographical representation, the Guidebook includes at least one state financial tool from each of
the U.S. Environmental Protection Agency's 10 regions. Often, these tools are representative of
the tools available in other states. Specific information on the tools in other states can be found
by contacting the environmental regulatory agency in your state or by looking at the agency's
web page. The website for every U.S. State environmental office can be accessed through the
Environmental Council of the States website at hjt^/wjvw.ecos1org/section/states. Additional
information on state financial tools can be accessed through the Database of State Incentives for
Renewable Energy at http://www.dsi org/.
The state programs showcased in this section provide a representation of what is available at the
state level. Every effort was made to capture creative and innovative programs, but there was no
intent to indicate that these are the states' "best" programs. By highlighting some of the more
creative programs, we hope this section of the Guidebook can not only serve local communities
seeking help, but also assist state governments in researching potential new solutions or
approaches to solving environmental problems. Additionally, there are many creative ideas and
programs portrayed that could potentially be incorporated at the federal level.
The growing pressure created by reduced federal funding has stimulated creativity and
innovation on the part of states. State governments are very close to the environmental
problems they are required to address and are exceptionally aware of what does and does not
work. State and local governments are increasingly using their own funds, or a combination of
their own funds in union with other funding sources, to get their projects initiated.
The programs presented in this section are primarily funded through state resources - not federal
funds. However, in some cases, state programs are presented that are funded and implemented
through a myriad of sources - state funds, foundations, federal funds, tax incentives, volunteer
action, etc. Many states are providing effective "integrated" programs that offer communities
several forms of assistance through one single state office - loans, grants, circuit-riders,
assistance from professionals, publications, etc. If one form of assistance does not help the
community, another probably will.
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Many state offices work with applicants from the beginning of their projects to the end, helping
them to find financial assistance even if they do not qualify for the programs offered through the
state. Some states have chosen to work in partnership with their communities in a partnership
until the environmental problem is solved or the project is off the ground, completed, and self-
sustainable.
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1. Co-Funding
2. S ol ar 4R S chool s Program
3. Renewable Energy Credits
4. State Conservation Tax Credits
5. State Energy Efficiency Tax Incentives
6. Unit-Based Pricing for Solid Waste Collection
7. Utility Rebate Programs
8. State of California: Electronic Waste Recycling Fee
9. State of Colorado: Easement Program
10. State of Maryland: Bay Restoration Fund
11. State of Minnesota: Capital Assistance Program
12. State of Montana: Renewable Resource Grant and Loan Program
13. State of Nebraska: Illegal Dumpsite Cleanup Program
14. State of Nevada: Financial Assistance for Drinking Water Systems Program
15. State of New Mexico: Clean Energy Grants Program
16. State of New York: Green Building Tax Credit
17. State of North Carolina: Clean Water Management Trust Fund
18. State of Ohio: Water Pollution Control Loan Fund
19. State of Oregon: Truck Engine Tax Credit
20. State of Pennsylvania: Growing Greener Program
21. State of Rhode Island: Aqua Fund
22. Net Metering
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State and local governments often use co-funding, which is the combining of many
different forms of funding, to finance environmental protection initiatives. An example of co-
funding is the combining of federal and state loans, and perhaps grants as well, to fund the same
project. Co-funding opportunities are particularly applicable and advantageous to small
communities for funding wastewater and drinking water treatment, nonpoint source pollution
prevention, and other environmental protection initiatives. The potential use of co-funding for
environmental projects is great, especially if an agency is willing to take the lead in coordinating
different funding sources, cycles and procedures. The New York State Water and Sewer
Infrastructure Co-Funding Initiative is an example of one of the many state programs helping
communities to find sources of government funding for water and sewer projects.
for Contact state and local government offices with inquiries-
the Website for the environmental office of every state in the U.S. can be accesses through the
Environmental Council of the States Website at tot|3j//wwwjxoj^^ New York
State Water and Sewer Infrastructure Co-Funding Initiative Website:
http://www.nycofunding.org/newcofund/.
Net metering creates a financial incentive for utility customers to invest in power
generation utilizing renewable resources. Net metering allows homeowners to receive the full
retail value of the electricity that their renewable energy systems generate. Using net metering,
homeowners with renewable energy systems, such as windmills and solar photovoltaics, can
offset their electric bills with any excess electricity they produce. However, net metering is only
available in states with net metering laws. In states without net metering laws, utilities are still
required under federal law (18 CFR Part 292) to purchase excess electricity generated by their
customers, however the purchase would be at the wholesale price, which is significantly lower
than the retail price.
for American Wind Energy Association Website:
http://www.awea. org/faq/netbdef.html. U.S. Department of Energy Website:
http://www. eere. energy. gov/sol ar/net metering. html and
http://www.eere.energy.gov/greenpower/markets/netmetering. shtm 1. Database of State
Incentives for Renewable Energy (DSIRE) Website: http_:/Jwww.dmema.QTgL
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4R
The Solar 4R Schools Program is an initiative of the Bonneville Environmental
Foundation, providing grants for the installation of 1.1 kW demonstration solar and data
acquisition systems in middle and high schools in the Pacific Northwest. The Program is
intended specifically for schools interested in increasing the visibility of renewable energy
sources. Successful projects pursuant to the Program's goals offer aggressive education and
outreach plans in an attempt to overcome barriers to widespread adoption of photovoltaics.
Grants are awarded year-round in accordance with project needs and schedules. Any middle or
high school located in Oregon, Washington, Idaho, or Montana may submit a Letter of Enquiry
to the Bonneville Environmental Foundation describing a proposed renewable energy project and
requesting funding for it.
for Bonneville Environmental Foundation Website:
http://www.b-e-f.org/grants/solar.shtm. The Proposal Guidelines and Letter of Enquiry form are
available for downloading on the Website. Letters of Enquiry should be e-mailed to info@b-e-
f.org. All other correspondence should be mailed to: Renewable Energy Programs, Bonneville
Environmental Foundation, 133 SW 2nd Ave., Suite 410; Portland, OR; 97204.
Renewable Energy Credits, or "Credits," are tradable certificates of proof, in which
each Credit is a verification that one kilowatt-hour (kWh) of electricity has been generated by a
renewable energy source. Credits are a separate commodity from the power itself. The Credits
are used to fulfill requirements under state Renewables Portfolio Standards (RPS's). Each state
with an RPS has a requirement that a minimum percentage of renewable energy be included in
the portfolio of electricity sources distributed to customers within state boundaries. That
percentage is often increased each year. For the purposes of RPS's, what qualifies as renewable
energy varies from state to state, but generally includes solar thermal electric, photovoltaics,
wind, biomass, hydroelectric, geothermal electric, tidal energy, wave energy, ocean thermal, and
fuel cells. The renewable energy markets created by the use of Renewables Portfolio Standards
and Credits make possible long-term contracts and financing for industries generating power
from renewable energy sources.
for Wind Energy and Energy Policy Website:
http://www.awea.org/policy/rpsbrief.html. For information on the RPS's of specific states, see
http://www.dsireusa.org/ and look for "Renewables Portfolio Standard" under "Rules,
Regulations, and Policy."
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Through state conservation tax credits, landowners are allowed a deduction on
their income taxes if they donate land to public or nonprofit entities for conservation. A growing
number of states throughout the U.S. offer these tax credits. These credits are frequently used
for individual and/or corporate income taxes. The types of donations eligible for state
conservation tax credits include easements, fee interests, and water rights transfers. These land
donations are a very effective way of protecting open space, particularly if the land becomes
state conservation land, which is often protected from eminent domain purchases. The extent of
the conservation benefits from each land donation is, however, limited by how well the new
landowner acts as a steward for it. For this reason, the person donating the land will often
establish a written agreement with the new landowner preventing the land from being sold again
and specifying how it can and cannot be used.
for State Environmental Resource Center Website:
http://www.serconline.org/conservationTaxIncentives/stateactivity.html, Phone: 608-252-9800,
E-mail: info@serconline.org. For definitions of easements and fee interests see
click on "financial terms," and use the search feature.
Many U.S. states offer tax incentives to encourage the use of energy efficient
appliances, or to promote energy efficiency improvements and renewable energy use in homes
and businesses. These tax incentives include income tax deductions and subtractions, sales tax
exemptions, and property tax exemptions. Many states offering tax incentives for the purchase
of energy efficient appliances require that the appliances be certified under the U.S.
Environmental Protection Agency Energy Star Program.
To obtain tax credits for energy efficiency improvements in homes and commercial buildings,
states' often require ratings to be obtained from third party agencies such as: Home Energy
Rating Systems (HERS), which is used for homes, or Leadership in Energy and Environmental
Design (LEED), which is used for commercial buildings. A HERS rating is an assessment of the
energy efficiency of a home as compared to a computer-simulated reference house. LEED
provides a complete framework for assessing building performance and meeting sustainability
goals including energy efficiency and water savings.
for State Environmental Resource Center Website:
htt|3^/w¥Wj|mii^^ Database of State Incentives for
Renewable Energy Website: httpj//wwmd§ireMa,org/. Energy Star Program Website:
http://www.energystar.gov/, information about HERS ratings under "New Homes." The U.S.
Green Building Council Website, http://www.usgbc.org/, has information about LEED ratings.
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Unit-based pricing is a system in which residents pay for municipal solid waste
management services per unit of waste collected rather than through a fixed fee or property
taxes. It is also known as variable rate pricing, user pay, or pay-as-you-throw. Communities
with unit-based pricing programs report great increases in recycling and reductions in waste, due
primarily to the waste reduction incentive created by the pricing structure. Examples of different
types of unit-based pricing for solid waste collection include:
1.) Pre-paid bag: Households purchase official, standard-sized trash bags. Only garbage in these
official marked bags is collected.
2.) Pre-paid tag/sticker: Households purchase official tags or stickers. The charge covers a
specific size, or sizes of, containers. Only garbage containers marked with the tags or stickers
are collected.
3.) Weight-based system: Each household pays a set fee per pound of garbage collected.
for See the U.S. Environmental Protection Agency (EPA)
Office of Solid Waste and Emergency Response (OSWER) Website at:
httji^/w¥Wji]3a^^ Also see the "contact us" section of
OSWER's Website at:
In many locations throughout the United States, local electric utilities offer rebate
programs for the purchase and installation of products that reduce the energy consumption of
commercial, industrial, and residential users. One commonly used method of funding these
types of rebates is to apply an "energy conservation charge" to the bills of utility customers.
These energy conservation charges are generally non-taxable. One common usage of these
utility rebates is for the purchase of solar photovoltaic systems, although utilities often offer
rebates for the purchase of solar water heaters, energy efficient appliances or air conditioners,
wind energy systems, various retrofits to improve the energy efficiency of buildings, and solar
thermal and geothermal heat pump systems.
for See the Database of State Incentives for Renewable
Energy (DSIRE) Website at http://www.dsireusa.org/ and click on individual states for more
information on utility rebate programs offered throughout the U.S. and in the U.S. territories.
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The California Electronic Waste Recycling Fee law requires retailers to collect a
fee when they sell certain video display devices to consumers. It is authorized under California's
Electronic Waste Recycling Act of 2003, which was signed into law on September 24, 2003, and
amended by SB 50 on September 29, 2004. The fee was established to fund a program for
consumers and the public to return, recycle, and ensure the safe and environmentally sound
disposal of video display devices, reducing the amount of hazardous waste going into landfills.
The fee must be collected by the retailer for each Covered Electronic Device (CED) sold. The
fee can be collected at the store, by mail order, or over the Internet. CEDs include computer
monitors and televisions and the fee ranges from $6.00 to $10.00 per CED. Retailers are
permitted to retain three percent of the fees they collect.
for See the State of California Website at
http://www.boe.ca.gov/sptaxprog/ewfaqsgen.htm. Contact: The California Board of
Equalization at 800-400-7115, or via an online form at http://www.boe.ca.gov/info/contact.htm.
California's Electronic Waste Recycling Act of 2003 is in Stats. 2003, chapter 526 - SB 20, and
it is amended by SB 50 (Stats. 2004, chapter 863).
Established in 2001, the Colorado Conservation Easement Tax Credit Program
allows landowners who donate conservation easements on their land to receive credits on their
Colorado state income taxes. Any landowner who cannot use the credit (i.e., does not have a
high enough taxable income) can sell the credit, at a reduced rate, to someone else who can use
it. The Colorado Conservation Trust (CCT) recruits buyers of the credits, generates positive
press coverage for the program, maintains quality control, and works with credit buyers to direct
their tax savings towards conservation projects.
To receive the tax credit, a landowner must place a conservation easement on his/her property
which permanently restricts development on the land. By placing an easement on the property,
the landowner receives a state tax credit of up to $260,000. The first $100,000 is a dollar-for-
dollar value; and the rest of the credit is a 40 cents on the dollar value. Typically the seller
receives 80% of the value of the credit and the buyer pays 85-90% of the value, with the
remainder going to the broker and to conservation organizations.
for Colorado Conservation Trust (CCT) Website:
Phone: 720-565-8289, E-mail: co_ctinfb@coctgrg. To access land conservation finance related
articles including "Changes to Colorado's Conservation Income Tax credit Law" by Jay, Jessica
E., see: http://www.privatelandownernetwork.org/library/ and look under "Related Resources."
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On May 26, 2004, the State of Maryland Bill 320
Fund) was signed into law. The bill created a dedicated fund, which is financed through a $2.50
monthly fee that is levied upon all users of centralized wastewater treatment facilities., The fund
is being used to upgrade Maryland's centralized wastewater treatment plants to include
nutrigilxeiBoygl (ENR) technology to achieve a wastewater effluent quality of 3 mg/1 total
nitrogen and 0.3 mg/1 total phosphorus. A similar fee levied upon septic system users is being
used to upgrade onsite septic systems and plant cover crops to reduce the nitrogen loading to the
Chesapeake Bay. This Fund is administered by the Maryland Department of the Environment
and includes the establishment of an advisory committee. Fees from users of centralized
wastewater treatment facilities generate an estimated $65 million per year, while an additional
$12.6 million is collected from homes using septic systems.
for Bay Restoration Fund Website:
http://www.mde.state.md.us/Water/CBWRF/index.asp.
of
Through the Capital Assistance Program (CAP), the Minnesota Office of
Environmental Assistance (OEA) provides grants to fund the capital costs of building solid waste
processing and resource recovery facilities. Many other related projects are also funded. The
CAP is open to local government agencies, and solid waste management and sanitary districts.
The OEA encourages projects that involve public-private cooperation.
Eligible projects for CAP grants include solid waste processing facilities, waste-to-energy
facilities, compost facilities for yard waste and organics, recycling and resource recovery
facilities, and household hazardous waste collection and disposal facilities. More than 90 CAP
grants have been awarded since 1985. During the 2005 Legislative Session, $4 million in bond
funds were appropriated for CAP funding.
for Capital Assistance Program (CAP) Website:
http://www.moea.state.mn.us/grants/cap.cfmhttp://www.fs.fed.us/spf/coop. For application
forms and CAP Procedures Manuals call Mary James at 651-215-0194. The Office of
Environmental Assistance can also be reached at 1-800-657-3843.
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The State of Montana's Renewable Resource Grant and Loan Program provides
funding for the conservation, management, development and preservation of Montana's natural
resources. Administered by the Montana Department of Natural Resources and Conservation
(DNRC), the program provides funding to government entities, individuals, and groups for a
variety of projects including groundwater studies, irrigation rehabilitation, water and soil
conservation, municipal drinking water improvements, wastewater treatment, forest
enhancement, and renewable energy projects.
Financial awards issued through this program include: Renewable Resource Grants, Emergency
Grants, Project Planning Grants, loans, and private grants and loans. Renewable Resource
Grants awarded to state and local governments are capped at $100,000. Project Planning Grants
are limited to $10,000. Emergency grants are awarded to government entities and capped at
$30,000. Private grants and loans are awarded to individuals and groups and are capped at
$5,000. Loans are limited by the applicant's ability to repay within 20 years. Grant applications
are due May 15 of even numbered years. Loan applications are accepted year-round.
for Montana DNRC Website:
http://www.dnrc.mt.gov/cardd/ResDevBureau/renewablejgrantjrogram.asp.
Renewable Resource Grant and Loan Program contact information: Phone: 406-444-6839,
E-mail: Bob Fischer at rfischer@mt.gov, o r Pam Smith at pamsmith@mt.gov.
of
Nebraska's Illegal Dumpsite Cleanup Program was established in 1997 to fund the
cleanup of illegal non-hazardous waste sites. It is administered by the Nebraska Department of
Environmental Quality (DEQ). The program reimburses political subdivisions for the cleanup of
solid waste that is dumped along public roadways or ditches. It also provides funding for the
cleanup of waste that spills from these illegal roadside dumps to contiguous private property.
Through the program, items such as household waste, white goods, construction and demolition
waste, and furniture are removed from the illegal sites and disposed of in permitted facilities or
recycled. To finance this program, the Nebraska DEQ allocates five percent of the revenue from
the tipping fee that is collected for waste disposal at licensed landfills statewide. The fund
generates approximately $125,000 per year.
for For more information on Nebraska's Illegal Dumpsite
Cleanup Program and a similar program in Kansas, see the U.S. Environmental Protection
Agency Website at httpj//wwwjgpa,^^
For additional information on the Nebraska program, see http://www.deq.state.ne.us/, and go to
Ch. 5, p. 40 of the 2005 Annual Report to the Legislature. Nebraska DEQ Phone: 402-471-2186,
E-mail: MoreInfo@NDEQ.state.NE.US. For additional information on the Kansas program, see:
dump cleanup/IUegal dump lettgrodf.
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The Nevada Financial Assistance for Drinking Water Systems Program, also called
the "Assembly Bill (AB) 198 Grant Program," provides grants to purveyors of water systems.
The AB 198 Grant Program is offered through the Bureau of Water Pollution Control, which is
part of the State of Nevada Division of Environmental Protection. The Program is designed to
help communities bring their water systems into compliance with Nevada State Health Board
and Safe Drinking Water Act regulations.
Grants are made to water districts, counties, and incorporated towns. Grant funds are used to pay
for capital improvements to publicly-owned community water systems and publicly-owned
nontransient water systems. These grants are leveraged; grant awards are required to cover no
less than 57% and no more than 87% of the eligible costs for the project. The remaining project
expenses are the responsibility of the grantee.
for Nevada Division of Environmental Protection Website:
http://www.ndep.nv.gov/bffwp/grants01.htm. There is a staff directory on the Website.
of
New Mexico's Clean Energy Grants Program, established in 2004, supports the
development of renewable energy, energy efficiency, and alternative transportation fuel
technologies. It is administered by the Energy Conservation and Management Division of the
New Mexico Energy, Minerals and Natural Resources Department (ECMD-EMNRD). Grants are
awarded to municipalities, county governments, state agencies, public schools (K-12), post-
secondary educational institutions, and tribal entities throughout the State of New Mexico.
Capital projects funded by these grants are required to meet performance measures established for
the program, including a 5% reduction in energy consumption in building projects or a 15%
increase in alternative fuel usage. Educational and non-capital projects must provide one of the
following benefits: a) increasing the demand for clean energy, or b) advancing commercialization
and widespread application of clean energy technologies. The maximum amount of any grant
awarded under this program is $200,000.
for New Mexico ECMD-EMNRD Website:
http://www.emnrd.state.nm.us/emnrd/ecmd/CleanEnergvBills2005/CleanEnergvGrantsProgram2
005.htm. Contact: Louise Martinez at the ECMD-EMNRD at 505-476-3310. Information on this
grant program is also available on the Database of State Incentives for Renewable Energy
(DSIRE) Website at http;//wwwidiirmia,oig/. There are also many renewable energy and energy
conservation grant programs offered in different U.S. states listed on the DSIRE Website.
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The New York Green Building Tax Credit program was signed into law in 2000 to
provide an incentive encouraging the construction of new buildings designed in a way that
conserves energy and minimizes environmental impact. Green Building tax credits are offered to
building owners and tenants who invest in technologies and construction practices that meet
requirements spelled out in the Green Buildings Tax Credit program regulations (6NYCRR Part
638). These "green building" practices include water efficient landscaping, indoor pollutant
source control measures, and the use of recycled building materials and energy efficient
technologies. Owners and tenants of buildings such as hotels, office buildings, and residential
multi-family buildings are eligible to apply for these tax credits.
for New York State Dept. of Environmental Conservation
Green Building Initiative Website: httpj//wwwjde^^
Natural Resources Defense Council Website: http://www.nrdc.org/cities/building/nnytax.asp.
Information on Green Building Tax Credits in other states is available on the State
Environmental Resource Center Website: http://www.serconline.org/grBldg/stateactivity.html.
of
In 1996, the North Carolina General Assembly established the Clean Water
Management Trust Fund (CWMTF) to help finance projects that specifically address three
principal objectives: 1) the restoration of degraded waters, 2) the protection of unpolluted waters,
and 3) the establishment of riparian buffers. The CWMTF is a voluntary, incentive-based water
quality program. Eligible applicants for CWMTF grants are: 1) state agencies, 2) local
governments or other political subdivisions of the state, or a combination of such entities; and 3)
conservation nonprofits. Priority for grants is given to economically distressed units of local
governments. The CWMTF funds about one third of the requests it receives, with a total of
$535.4 million in grant funds awarded between 1996 and 2005. No matching share is required,
although the fund encourages partnerships with other programs working to protect waterways or
adjoining lands. Through partnerships, the CWMTF funds have leveraged over $810.3 million in
additional funds.
for The CWMTF is authorized under Article 18, Chapter
113 A of the North Carolina General Statutes. For details and application information see the
CWMTF Website at http://www.cwmtf.net/. Contact: Beth McGee, CWMTF Water Quality
Advisor, Phone: 919-542-5261, E-Mail: beth.mcgee@ncmail.net.
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The Ohio Water Pollution Control Loan Fund (WPCLF), a program of the Ohio
Environmental Protection Agency (EPA), provides financial and technical assistance for public
wastewater treatment works and nonpoint source water pollution control projects. It awards
below market interest rate loans to public and private borrowers. Direct loans are made to most
borrowers. Smaller borrowers usually receive indirect loans through a linked deposit program.
The projects that are funded through the WPCLF include the planning, design, and construction
of wastewater treatment plants; wastewater treatment plant improvements and expansion;
agriculture/silviculture improvements; and stream corridor restoration. The WPCLF staff
includes engineers, environmental planners and project coordinators who assist communities in
every phase of project development and execution.
for WPCLF Website:
http://www.epa.state.oh.us/defa/wpclf2.html, Phone: (614) 644-2832. For technical assistance,
ask for Pejmaan Fallah, or e-mail Pejmaan at pejmaan.fallah@epa.state.oMo.us.
The State of Oregon Department of Environmental Quality (DEQ) offers its Truck
Engine Tax Credit to anyone owning a truck in Oregon who purchases a qualifying "cleaner
diesel engine" for that truck between 2004 and 2007. The truck must be registered in Oregon.
The diesel engine must be purchased in Oregon and have a model year between 2003 and 2007.
Additionally, the engine is required to be certified by the U.S. Environmental Protection Agency
as emitting oxides of nitrogen at the rate of 2.5 grams per brake horsepower-hour or less. Tax
payers may use this credit to reduce their Oregon taxes for any tax year beginning on or after
January 1, 2005. The application for the tax credit is a simple one-page form.
for For Truck Engine Tax Credit applications and additional
information see: htt;//wwwji
Contact: Oregon DEQ Management Services Division, Tax Credit Program at 503-229-6878.
For information about incentives for reducing diesel emissions offered in other U.S. States, and
about federal programs, see the Diesel Technology Forum Website at
http://www.dieselfomm.org/retrofit-tool-kit-homepage/fiinding-a-program/step-l-identifv-
possible-funding-sources/.
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of
In 1999, the Pennsylvania Growing Greener Program was signed into law,
providing nearly $650 million to address the state's most pressing environmental challenges. In
2002, the Growing Greener Program's funding was more than doubled. More recently, in 2005,
Growing Greener II was signed into law, investing $625 million to extend the Growing Greener
Program six years. Funding is provided under the Program for many different types of
environmental protection initiatives, including abandoned oil and gas well plugging projects,
cleanup and restoration of watersheds, and the construction of new and upgraded water and
sewer systems. Counties, local governments, authorities, conservation districts, watershed
associations and other nonprofit groups may apply for Growing Greener grants. The Growing
Greener Program is the largest single investment to protect the environment in Pennsylvania's
history, amounting to $1.2 billion dollars.
for To get a list of coordinators, other contacts, applications
and other information on Growing Greener and Growing Greener II, visit the Pennsylvania
DEP's Website at http://www.depweb.state.pa.us/growinggreener/site/default.asp, or contact
Growing Greener at: Phone 717-705-5400, E-mail GjjJwingGregn^^
The Rhode Island Aqua Fund provides grants and loans to fund projects aimed at
improving the water quality of Narragansett Bay. The Rhode Island Department of
Environmental Management (RIDEM) manages the Aqua Fund. Aqua Fund monies are used to
issue grants and loans to cities, towns, universities, nonprofits, governmental agencies, and
private agencies. The goal of the Aqua Fund is to remedy existing pollution of Narragansett Bay
and to prevent future pollution of the Bay. Funds are issued for projects designed to help prevent
pollution to the Bay and its tributaries, such as wastewater treatment projects and urban runoff
abatement. Grants are given for up to 90% of the costs of projects under $500,000. Projects
with costs exceeding $500,000 may receive grants of up to 50% of total project costs. Projects
must be in a location identified as a priority area (see Website). Since the Fund's inception, the
Council and RIDEM have awarded over $8.8 million in grants.
for Rhode Island DEM, Office of Water Resources Website:
://www. .ri.us/dem/programs/benviron/water/finance/aqua. Contact: Lisa McGreavy at
the Office of Water Resources at lmcgreav(5),dem. state, ri. us.
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When the U.S. Environmental Protection Agency (EPA) was created in the early 1970's its focus
was on clean up and control of the most immediate environmental problems. Over the next
thirty years, the nation has made huge investments in these pollution control efforts and has
realized major reductions in air, water, and land pollution. However, it became increasingly
apparent over time that the traditional "end-of-the-pipe" approaches are expensive (increasingly
so), not fully effective, and often result in the transfer of pollution between environmental media.
To achieve needed additional improvements to environmental quality, the focus of pollution
control efforts must move upstream to prevent pollution before it occurs, and waste must be
recycled wherever possible. The Pollution Prevention Act of 1990 recognized that pollution
should be prevented or reduced at the source whenever feasible. Consistent with this Act, the
U.S. EPA defines pollution prevention as "source reduction." EPA also emphasizes protecting
natural resources through conservation and increased efficiency.
The U.S. EPA's environmental management hierarchy for pollution control includes:
1) source reduction
2) recycling,
3) treatment, and
4) disposal or release.
Preventing pollution offers important economic benefits, as pollution never created does not
need to be managed or cleaned up. Recycling means that wastes do not have to be disposed of
and raw materials can be conserved. Pollution prevention and recycling have the potential to
protect the environment and improve manufacturing efficiency by reducing the use of raw
materials.
This section evaluates financing tools which states, communities, and the private sector can use
to encourage pollution prevention and recycling. A number of different ways of raising
revenues, lowering costs, and influencing behavior are discussed. The tools range from
traditional state and federal assistance programs to bold new financial management and
investment strategies, programs, and techniques.
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1. Assurance and Performance Bonding
2. Demand-Side Management Pricing
3. Deposit-Refund Systems
4. Conservation Pricing for Water Utilities
5. Development Rights Purchases
6. Environmental Self Auditing
7. Full Cost Environmental Accounting
8. Green Investments
9. Liability Assignment
10. Pollution Charges
11. Forest Banks
12. Transit Pass Subsidy Programs
13. Ecotourism
14. Energy Star Program
15. Home Energy Efficiency Mortgages
16. Financial Incentives for Purchasing Hybrid and Alternative Fuel Vehicles
17. Green Suppliers Network
18. U.S. Environmental Protection Agency: Pollution Prevention (P2) Website
19. U.S. Environmental Protection Agency: Natural Gas Star Program
20. U.S. Environmental Protection Agency: Climate Leaders Partnership
21. U.S. Environmental Protection Agency: Green Power Partnership
22. U.S. Environmental Protection Agency: Waste Wise Program
23. U.S. Environmental Protection Agency: Pollution Prevention Grant Program
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Mine owners and/or other developers are frequently required under state and
federal laws to purchase assurance or performance bonds that cover potential environmental
reclamation, restoration, or remediation expenses resulting from their projects. These bonds are
repaid to the developers at the time of maturity if the potential damage has not occurred. The
bonds are repaid in part if a level of damage below a specified baseline has occurred. The bonds
are forfeited if worst-case damages are incurred. In the case that damages occur, these bonds are
used to remedy the environmental damages or to compensate injured parties. Assurance and/or
performance bonding is required in many states to assure that surface mined areas will be
reclaimed and remediated. Also, bonds for site reclamation for coal mines are required under the
Surface Coal Mining and Reclamation Act of 1977.
for Boyd, James, "Financial Responsibility for Environmental
Obligations: Are Bonding and Assurance Rules Fulfilling their Promise?" Research in Law and
Economics, issue 20, pp. 417-486: 2002.
Boyd, James, "Bonding Requirements for Coal and Hardrock Mines in the U.S." International
and Comparative Mineral Law and Policy: Trends and Prospects, Bastida, E.; Walde, T.; and
Warden, J; editors; New York, Kluwer: 2005. For citations of more of James Boyd's
publications, see the Resources for the Future Website at ://www.rff.org/Boyd.cfm#j .
SM» -SKjff
Demand-Side Management Pricing, also called Peak Load Pricing, Demand-
Responsive Pricing, and Critical Peak Pricing, is a unit pricing structure that is sensitive to the
timing of usage (demand) during a utility system's peak hours or peak days. Usage that occurs
during these peak periods is charged at a higher rate. Utilities must incur additional capital and
operating costs to develop the capacity to meet peak demands. Through demand-side
management pricing, these additional costs can be shifted to customers. Such pricing also tends
to reduce peak demand by causing system users to reduce their use of the system or at least shift
some portion of their usage to non-peak periods. As a result, the utility can "shave" operating
costs and stretch existing investment, or reduce future investment in facilities necessary to meet
peak period demands. The demand-side management pricing structure is most commonly used
by electrical, gas, and communications utilities, and less frequently by water or sewer utilities.
for Electric Utility Consultants, Inc. Website:
httj3^/w¥Wjjucj^ See "Variable Electric
Pricing on Tap?: PUC to Consider System that Charges Users More During Peak Midday
Hours," by Tribble, Sarah Jane, San Jose Mercury News (CA), p. 1C at:
http://www.siliconvalley.com/mld/siliconvalley/14665066.htm.
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Deposit-refund systems combine a deposit on a substance or product, paid at the
time of purchase, with a refund payable to the consumer when product packaging, or the
substance or product itself, is turned in for recycling or proper disposal. Historically, deposit-
refund systems have been applied at the state level to glass and aluminum bottles and cans.
Deposit-refund systems are now being expanded to include other types of products. For
example, in some areas they are being applied to office products, such as photocopy machine
toner cartridges and printer inks. The states of California, Maine, and Arkansas are among many
states that have established deposit-refund systems to ensure the recycling of lead-
acid/automobile batteries.
for The Battery Council International outlines state lead-acid
battery laws at: http://www.batterycouncil.org/states.html. Publications: Stavins, Robert N.;
Harvard University, John F. Kennedy School of Government Research Working Papers Series
No. RWPOO-004, Experience with Market-Based Environmental Policy Instruments, 2001.
U.S. Environmental Protection Agency, EPA-240-R-01-001, The United States Experience with
Economic Incentives for Protecting the Environment, 2001, available at:
http://yosemite.epa.gov/ee/epa/eed.nsf/Webpages/SelectReports.html.
There are a number of different types of full cost pricing used by utilities to
encourage water conservation. Six of these pricing structures are described on the U.S.
Environmental Protection Agency (EPA) Water and Wastewater Pricing Website. The U.S. EPA
defines full cost pricing as "factoring all costs- past and future, operations, maintenance, and
capital costs- into prices." The four types of pricing described on the EPA's Website as being
most effective in encouraging conservation are increasing block rates, time of day pricing, water
surcharges, and seasonal rates.
With increasing block rates, or tiered pricing, charges per unit of water are increased as the
amount used increases. The first block is charged at one rate, the next at a higher rate, etc. Time
of day pricing is a structure where higher prices are charged during a utility's peak demand
periods. Water surcharges are increased rates imposed on water consumption that is considered
higher than average. With seasonal rates, prices rise and fall according to water demands and
weather conditions, with higher prices generally charged in the summer. Each of these types of
pricing qualifies as full cost pricing as long as all costs are recovered through prices.
Many utilities are also assessing surcharges for elevation to cover the increased costs of pumping
as power rates increase.
for See the U.S. EPA Water and Wastewater Pricing Website
at http://wj^wjg^
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The term "Development Rights Purchases" means the purchase of the legal "right"
of the owner to develop land for residential or commercial uses. When development rights are
purchased for environmental protection purposes, existing land uses are generally maintained.
Development rights are often purchased by state and local governments and/or nonprofit groups
such as land conservancies. The U.S. Department of Agriculture New York Farm and Ranch
Lands Protection Program provides matching funds for the purchase of development rights to
keep productive farm and ranch land in agricultural uses.
Development Rights Purchases are like conservation easements, since both entail partial
ownership via deed restrictions, contracts or covenants, as opposed to fee-simple transfer of
ownership. However, development rights purchases often entail payments to land owners,
contrasted to the preferential tax treatment of conservation easements. Buying development
rights restricts development whereas conservation easements may require more land
management such as soil conservation and plant maintenance to protect water quality and natural
habitats. Partial ownership of land through deed restrictions, contracts and covenants is much
less costly than outright ownership.
for U.S. Department of Agriculture Website:
Environmental Financial Advisory Board, "Protecting America's Land Legacy: Stewardship
Policies, Tools, and Incentives to Protect and Restore America's Land Legacy," February 2003,
available at http ://epa. gov/efinpage/efabpub .htm.
The term "environmental self auditing" refers to voluntary efforts by facilities to
comply with environmental regulations and improve their environmental performance.
Environmental self auditing is carried out through detailed tracking and reporting on a wide
range of environmental performance measures. These performance measures include number of
Notices of Violations, total emissions, percent of energy usage per unit of output, number of self-
identified environmental audit issues compared to the total number of such issues, percentage of
issues resolved within established time frames, and percentage of personnel receiving
environmental training. The U.S. Environmental Protection Agency's Audit Policy eliminates or
reduces civil penalties for violations that facilities disclose as the result of a documented self-
audit procedure and correct within 60 days.
for U.S. EPA Website:
http://www.epa.gov/re.gi on5/orc/audits/audit_apil.htm.
Stafford, Sarah, "Does Self-Policing Help the Environment? EPA's Audit Policy and Hazardous
Waste Compliance." Vermont Journal of Environmental Law, volume 6: 2004-2005, available at:
http__[/J_www.vjel.o^ Also see that article's references
section for additional sources and internet links.
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Full cost environmental accounting is a management accounting method that takes
into account all direct and indirect costs, including embedded environmental costs, of a product,
process, or activity over its lifetime. The method uses three important concepts: full cost
accounting, environmental cost accounting, and life cycle costing. Full cost accounting takes
into account historical costs and current costs of the product, process, or activity. Full cost
accounting can include potential liabilities due to the handling of hazardous substances or
wastes. Environmental cost accounting brings in environmental costs, such as environmental
pollution and habitat degradation, and ties them to the product, process, or activity. Finally, life
cycle costing identifies the effects of the product, process, or activity at each life cycle stage (raw
materials acquisition, manufacturing, use/reuse/maintenance, and recycling/waste management)
and assigns those effects monetary values. This accounting method helps incorporate into
decisions external costs that are not measured in more traditional accounting methods.
Considering these costs is an important step in the pursuit of efficient management and
environmental protection.
for Association of Chartered Certified Accountants Website:
http://www.accaglobal.com/publications/accountingandbusiness/281399. Carnegie Mellon
University Pdf files: http://www.ce.cmu.edu/GreenDesign/gd/education/FCA_Module_98.pdf,
http://www.ce.cmu.edu/GreenDesign/gd/Research/fca.pdf.
U.S Securities and Exchange Commission Website, SEC disclosure requirements:
Green investments are portfolios screened by fund managers to ensure that all
capital is invested in companies, financial institutions, monetary funds, and/or other financial
entities that have taken clear steps to minimize their environmental impact. The practices of
these "environmentally responsible" financial entities may include, for example, use of
renewable energy, energy conservation, reduction of solid waste through re-use and recycling,
and/or providing products or services designed to help correct an environmental problem. Many
managers of green investments require that all companies and institutions they invest in are in
compliance with federal, state, and local environmental regulations. These investment portfolios
are managed with profit in mind, but are tempered by environmental concerns. Green
investments fall under the broader category of socially responsible investments.
for Social Investment Forum Website:
Mip;//wwwjo,ciMillYg§tor.g/. A directory of mutual funds categorized as "socially responsible"
is available on Co-op America's National Green Pages Online at http://www.greenpages.org/,
choose search category "Financial-Mutual Fund Companies" on the drop down menu. For a
hard copy of the National Green Pages, call Co-op America at 800-584-7336.
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Assignment of liability pertains to insurance markets where premiums reflect the
relative degree of risk that activities pose to the environment. Premiums send price signals to
insurance subscribers creating incentive (i.e., the possibility of lower insurance costs) to prevent
pollution, thus reducing their liability. Liability is assigned through common law (negligence) or
environmental statutes. The Resource Conservation and Recovery Act (RCRA) program
includes a financial responsibility requirement under which treatment, storage, and disposers
(TSD's) of hazardous substances must show they can handle the costs of corrective action. This
encourages companies to buy insurance to cover the costs of potential damages and provides
incentives to avoid releases of hazardous wastes into the environment. Liability standards are
also a way to fund remediation activities, i.e., responsible parties are liable for cleanup costs
under the Superfund program.
for See the U.S. Environmental Protection Agency Website at
and
Pollution charges are fees or taxes imposed on polluters based on the amount
and/or toxicity of pollution generated. These charges reduce market inefficiencies by
discouraging pollution and accounting for the costs of pollution. While the U.S. does not use
pollution charges extensively, these charges could be implemented by all levels of government
throughout the U.S. Under the Colorado Pollution Prevention Act of 1992, the state levies
chemical inventory fees on certain hazardous and extremely hazardous waste generators that
exceed the threshold planning quantities under the Superfund Amendments and Reauthorization
Act. Russia and Ukraine, and a number of nations in the European Union, including Germany
and Great Britain, have considerable experience with pollution charges.
for The following reports are available at:
/e^
U.S. Environmental Protection Agency (EPA) National Center for Environmental Economics,
The United States Experience with Economic Incentives for Protecting the Environment, EPA-
240-R-0 1-001, January 2001.
U.S. Environmental Protection Agency (EPA) National Center for Environmental Economics,
International Experiences with Economic Incentives for Protecting the Environment, EPA-236-
R-04-001, November 2004.
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Landowners transfer to the Forest Bank the rights to grow, manage and harvest
trees on their land. In exchange, the landowners receive guaranteed annual payments of interest-
only on the "principal" (i.e., the assessed market value of the timber at time of deposit in the
Bank), a right to withdraw principal revenue on demand, and a guarantee that the timber will
remain as forest and will not be developed or clear cut. If the timber on Forest Bank land is
harvested, it is done so carefully by the Bank's forester in accordance with a stewardship plan
formulated with the landowner. The Forest Bank concept is aimed primarily at non-industrial
private landowners.
for Dedrick, J.P.; Hall, T.E.; Hull, R.B.; and Johnson, I.E.;
"The Forest Bank: An Experiment in Managing Fragmented Forests," Journal of Forestry, issue
98, volume 3, pp. 22-25: 2000. Also see the Nature Conservancy Website at
http://www.nature.org/ and search on "forest bank" on the Website.
The 1994 Federal Employees Clean Air Incentives Act (Public Law 103-172)
provides for the establishment of federal programs to encourage employees to commute by
means other than single-occupancy motor vehicles. The purpose of the law is to improve air
quality and reduce traffic congestion. Under the Clean Air Incentives Act, the U.S.
Environmental Protection Agency (EPA), the U.S. Department of Agriculture (USDA), and
other federal government entities implement transit subsidy programs. At the U.S. EPA
Headquarters in Washington, D.C., the transit subsidy is provided through a fare card voucher
system in partnership with the Washington Area Mass Transit Authority (WAMTA). The fare
card vouchers are issued in amounts up to $105 per month for use by participating Agency
employees. These vouchers are good for subway fares, bus fares, and any other type of approved
public transportation that serves the Washington, D.C. metropolitan area.
for Library of Congress Thomas Website:
^ search on Public Law 103-172 (103rd Congress).
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The International Ecotourism Society defines ecotourism as "responsible travel to
natural areas that conserves the environment and improves the well-being of local people." It
suggests that people implementing and participating in ecotourism follow these principles:
minimizing environmental impact, building environmental and cultural awareness and respect,
and providing direct financial benefits for conservation and for local people. In addition,
ecotourism activities can advance the three goals of the Convention on Biological Diversity,
which are: 1.) conserve biological and cultural diversity by strengthening protected area
management systems, 2.) promote the sustainable use of biodiversity, by generating jobs and
business opportunities in ecotourism and related business networks, and 3.) share the benefits of
ecotourism developments equitably with local communities and indigenous peoples. If carefully
targeted and properly implemented, ecotourism offers the real hope of protecting valuable
ecosystems while producing a source of revenue for local communities.
for International Ecotourism Society Website:
http://www.ecotourism.org/. United Nations Environment Programme Website:
http://www.uneptie.org/pc/tourism/. Green Globe Sustainable Travel and Tourism Website:
: //www. greengl ob e. org/.
Conservation International Website: http7/wjvw.eco_touj\orgA{p/ecotour/.
Energy Star is a joint program of the U.S. Environmental Protection Agency (EPA)
and the U.S. Department of Energy (DOE). The program helps businesses and individuals
protect the environment and save money through improved energy efficiency. Energy Star offers
tools and resources, such as energy efficiency labeling, to help individuals and households to
voluntarily plan and undertake projects that reduce their energy bills and improve home comfort.
The program offers a proven energy management strategy for businesses that helps them to
measure current energy efficiency, set goals for energy efficiency improvements, and track
financial savings resulting from those improvements. In addition, the U.S. EPA recognizes
appliances, computers, light bulbs, and entire buildings that meet high standards of energy
efficiency with the Energy Star seal. The U.S. EPA has plans to continue to expand the Energy
Star program, so that by 2012 it will prevent about 50 million metric tons of carbon equivalent
(MMTCE) of greenhouse gases from being emitted each year, equivalent to the emissions of
over 30 million vehicles, and will reduce energy bills by about $15 billion annually across the
U.S.
for Energy Star Website: http://www.energystar.gov/.
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Home energy efficiency mortgages are a loan category including any mortgage on
a new or existing home for which the underwriting guidelines take into account the home's
energy efficiency features. Energy efficiency mortgages provide potential and existing
homeowners with better than average interest rates and reduced down payments. To qualify for
a home energy efficiency mortgage, the homeowner is often required to have his or her home
rated by a professional energy rater certified under a national or state accredited home energy
rated system (HERS). Both government insured (e.g. FHA, Veteran's Administration) and
conventional (e.g. Fannie Mae, Freddie Mac) home energy efficiency mortgages are available.
Home energy efficiency mortgages are used to finance technologies such as photovoltaics, solar
water and space heating, and energy efficient appliances and systems. The U.S. Department of
Energy estimates that an "energy efficient home" can lower home owners' utility bills by 10% to
50%.
for Residential Energy Services Network Website:
Energy Star Program Website:
http://www.energystar.gov/, information about HERS ratings under "New Homes." Database of
State Incentives for Renewable Energy Website: http://www.dsireusa.org/, click on the "Federal
Incentives" icon, then go to the "Federal Loan Program" category.
for
There are many financial incentives available in the U.S. to assist people with
purchasing alternative fuel, fuel cell, and hybrid electric vehicles. Some financial incentives
offered by states include tax credits, tax deductions, and exemptions from parking fees and the
right to use HOV lanes. On the federal level, the Energy Policy Act of 2005 (EPACT) offers
consumers and businesses tax credits beginning in January 2006 for the purchase of hybrid
electric, alternative fuel, and fuel cell vehicles. The dollar amount of the federal tax credit for
the purchase of hybrid electric vehicles varies, and is based on estimates of fuel economy. The
federal tax credit for the purchase of fuel cell vehicles is $8,000 until 2009, after which it will be
$4,000. The dollar amount of the federal tax credit for the purchase of alternative fuel vehicles is
based upon the incremental cost of the vehicle.
for See http://www.hvbridcars.com/incentives.html and
http://www.eere.energy.gov/afdc/laws/incen laws.html for listings of financial incentives for the
purchase of hybrid electric, alternative fuel, and fuel cell vehicles. For information on fuel cell
& alternative fuel vehicles, see:
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The Green Suppliers Network is a collaborative venture among the U.S.
Environmental Protection Agency, the U.S. Department of Commerce's Manufacturing
Extension Partnership, and industries participating voluntarily. The Green Suppliers Network
works with large manufacturers to engage their small and medium sized suppliers in inexpensive
technical reviews focusing on process improvement and waste minimization. These reviews are
coordinated through 360vu, a U.S. Department of Commerce program which is the national
accounts arm of the Manufacturing Extension Partnership. Through the Green Suppliers
Network, participating industries learn manufacturing techniques that help them to increase
energy efficiency and optimize resource utilization. Thus, industries participating in the network
often increase their profits and reduce their environmental impacts.
for Green Suppliers Network Website:
Website for 360vu:
serWmdexJitml.
The U.S. Environmental Protection Agency (EPA) Pollution Prevention (P2)
Website has information about state, federal, and private resources and initiatives for pollution
prevention, pollution prevention publications, and various approaches to achieving pollution
prevention. Under Section 6602(b) of the Pollution Prevention Act of 1990 (Public Law 101-
508), Congress established a national policy that pollution should be prevented or reduced at the
source whenever feasible. The full text of the Act, and summarized information about it, can be
found on the Website.
The federal pollution prevention initiatives described on the Website include programs of the
U.S. EPA and other government entities, such as the EPA Pollution Prevention Grant Program,
programs funded with government grants, and federal government partnerships with industry.
The Website also has a directory, listed under "P2 Resources," of pollution prevention programs
in all fifty U.S. States, the District of Columbia, Puerto Rico, and the Virgin Islands. In addition,
there are many pollution prevention tips for small businesses, schools, and citizens described on
the Website.
for U.S. EPA Pollution Prevention Website:
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Natural Gas STAR is a U.S. Environmental Protection Agency (EPA) program
consisting of voluntary partnerships that encourage companies across the natural gas and oil
industries to adopt cost effective technologies and practices that improve operational efficiency
and reduce emissions of methane. This program has many partners who develop a customized
implementation plan summarizing how they intend to incorporate the Gas STAR Program into
their operations. The U.S. EPA assists Natural Gas Star partners in drawing upon the wealth of
partner-provided information, and presents its partners with many opportunities to learn about
methane emissions reductions technologies and techniques.
Since the Program began in 1993, Natural Gas STAR partners have eliminated 338 billion cubic
feet (Bcf) of methane emissions through the implementation of the Program's core Best
Management Practices (BMPs), as well other activities identified by partner companies (referred
to as Partner Reported Opportunities). This is the equivalent of removing more than 30 million
cars from the road for one year. At the same time, these companies have saved over a $1 billion
by keeping more gas in their systems for sale in the market. As of 2004, the companies
participating in Natural Gas STAR represent nearly 70% of the natural gas industry in the U.S.
for Natural Gas Star Website: http://www.epa.gov/gasstar/.
Climate Leaders is a voluntary industry-government partnership administered by
the U.S. Environmental Protection Agency (EPA). The program works with participating
companies, called Climate Leaders Partners, to develop long-term comprehensive strategies for
reducing their emissions of greenhouse gases which contribute to global climate change. The
Partners use an accounting program that helps them to track their progress in reducing
greenhouse gas emissions. Each Partner sets a corporate-wide greenhouse gas reduction goal
and inventories their emissions to measure progress. By reporting inventory data to EPA,
Partners create lasting records of their accomplishments. Through their participation, Partners
identify themselves as corporate environmental leaders and strategically position themselves to
stay competitive. The Partners also benefit by receiving technical assistance in the development
of their greenhouse gas emissions inventories, and improving their understanding of their
greenhouse gas emissions.
for U.S. EPA Climate Leaders Program Website:
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The Green Power Partnership is a voluntary Partnership between the U.S.
Environmental Protection Agency (EPA) and organizations interested in buying green power.
Through this partnership, EPA supports organizations that buy or plan to buy_greenj3ower.
Green power is a marketing term for electricity that is partially or entirely generated from
environmentally preferable renewable energy sources, such as solar, wind, geothermal, biomass,
biogas, and low-impact hydro. As a Green Power Partner, an organization pledges to replace a
portion of its electricity consumption with green power within a year of joining the partnership.
EPA offers credible benchmarks for green power purchases, market information, and
opportunities for recognition and promotion of leading purchasers. The goal of the Green Power
Partnership is to facilitate the growth of the green power market by decreasing the cost and
increasing the value of green power. Due to economies of scale, increased green power
generation capacity could lead to substantial cost savings across the board for people purchasing
green power. A strong green power market will support new, clean technologies that will reduce
the environmental impact of electricity generation.
for U.S. EPA Green Power Partnership Website:
http://www.epa.gov/greenpower/aboutus.htm.
Description: WasteWise is a U.S. Environmental Protection Agency (EPA) program through
which organizations save money by reducing the solid waste and industrial waste that they
generate. The program provides free technical assistance to participating organizations, helping
them to develop, implement, and measure their waste reduction activities, including recycling
and waste prevention. WasteWise is flexible and voluntary, encouraging partners to design
waste reduction programs tailored to their individual needs. Through their participation in the
program, organizations benefit their bottom line by reducing their purchasing and waste disposal
costs. Participating organizations are also assisted in expanding their waste reduction programs
through the WasteWise Challenge, an initiative that helps partners to adopt the strategies proven
most successful by other partners. In addition, WasteWise provides publicity for participating
organizations that are successful in reducing waste, via EPA publications, case studies, and
national and regional events.
Reference for Further Information: U.S. EPA WasteWise Website:
http://www.epa.gov/wastewise.
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•SH* J» sEP
The Environmental Protection Agency (EPA) Pollution Prevention (P2) Grant
Program awards grants to support the establishment and expansion of state pollution prevention
programs pursuant to the Pollution Prevention Act of 1990 (Public Law 101-508). The purpose
of the P2 Grant Program is to give state programs the capability to assist businesses and
industries with identifying better environmental strategies for complying with state and federal
environmental regulations. The P2 Grant Program is focused on demonstrating the value of
making multimedia pollution prevention an environmental management priority. Eligible
recipients include all U.S. states, the District of Columbia, all territories and possessions of the
U.S., any agency or instrumentality of a U.S. state, including state universities, and all federally
recognized tribes. The majority of P2 grants fund state-based projects. In most cases, grant
recipients must contribute fifty percent of the total cost of their project in dollars or in-kind
goods and services, but tribal matches can be as low as five percent, if the tribe has a
Performance Partnership Grant in place.
for U.S. EPA Pollution Prevention Grant Program Website:
http://www.epa.gov/oppt/p2home/grants/ppis/ppis.htm. Information on these grants is also
available in the Catalog of Federal Domestic Assistance at http://12.46.245.173/cfda/cfda.html,
search on program number 66.708.
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Community-Based Environmental Protection (CBEP) refers to the tailoring of environmental
programs and revenue devices to the unique problems and goals of a particular place, such as a
watershed, ecosystem, or a community. The CBEP approach is designed to involve localities
more intimately in the selection and use of financial mechanisms, maximize the use of scarce
resources, enhance the popularity of environmental issues, and more readily involve the private
sector in public improvements. CBEP seeks to reflect regional and local conditions,
environmental priorities, and economic goals.
CBEP funding approaches are among the most innovative and fastest growing type of financing
in this country today. The hallmark of CBEP tools is that most are voluntary and based on the
acceptance and active participation of individuals; and they involve both the private and
nonprofit sectors in non-traditional roles. Any of the financial tools in this Guidebook can be
tailored to local uses and priorities. The unique and highly innovative tools described in this
section employ traditional forms of financing as the take-off point. They are designed to reward
and encourage environmental protection, unite the public and private sectors in interdependent
ways, and bend the forces of the economic marketplace toward these ends. In a sense, CBEP
views the public and private sectors as interchangeable, with the government sector supporting
the private sector and the latter assuming quasi-government roles.
Parks and recreation, open space conservation, and natural habitat protection are the most
popular focal points of community-based environmental protection funding, and they represent
the area of greatest volunteerism with the nonprofit sector often taking the lead. Here,
communities have adapted some structured funding approaches to meet their needs, such as the
formation of special districts, tax increment financing and special tax bonds, and even
earmarking a portion of state lottery revenues. Dedicated trust funds, land trusts and
conservation easements have been the target of both of public and private financing, including
matching funds, special bonds, and corporate and individual donations.
A chief advantage of the majority of community-based environmental financing mechanisms is
that they can generate a great deal of enthusiastic and voluntary support without causing much
opposition. CBEP financing mechanisms depend upon the enlightened self-interest of
individuals, private firms, and governments; and they often result in considerable financial
leveraging. They finance long-term protection measures which are not necessarily the target or
result of government regulation. The tools in this section capture the spirit, enthusiasm and love
that Americans hold for specific regions, valuable natural resources, and the places where they
live.
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1. Adopt-an-Animal Programs
2. Fundraising Merchandise
3. U.S. Department of Agriculture Farm Service Agency: Conservation Reserve
Program
4. U.S. Department of Agriculture Natural Resources Conservation Service:
Wetlands Reserve Program
5. Candidate Conservation Agreements with Assurances
6. Capital Improvements Programs
7. Certified Green Buildings
8. Community Foundations
9. Community Supported Agriculture Agreements
10. Conservation Easements
11. Conservation Partnerships
12. U.S. Department of Agriculture Farm Service Agency: Conservation Reserve
Enhancement Program
13. Land Trusts
14. Cost-Share Programs for Nonpoint Source Pollution Control
15. Dedicated Government Trust Funds
16. Emissions Trading
17. Lotteries
18. Green Credit Cards
19. Green Energy Partnerships
20. Green Pricing
21. Individual and Corporate Donations
22. Land Reclamation Banks
23. Location Efficient Mortgage
24. Mitigation Banking
25. National Compliance Assistance Centers
26. Nonprofit Organizations
27. Point Source/Nonpoint Source Trading
28. Special Districts
29. Tax Increment Financing
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Adopt-an-animal programs are used to raise money for zoos, environmental
organizations, and environmental programs. Through Adopt-an-animal programs, individuals
and corporations pay a fee to adopt particular animals or species. These species are usually
officially designated as threatened or endangered under the Endangered Species Act. The
individual or corporation is given educational materials on the animal or species they adopt. The
Caribbean Conservation Corporation and Sea Turtle Survival League's Adopt-a-Turtle program
offers people the option of adopting individual satellite tagged turtles and tracking their
movements through their Website. Adopt-an-animal programs can also include publicity and
outreach campaigns where experts visit local schools, community centers, and parks to speak
about an animal or species and how to help protect it. Additional examples of adopt-an-animal
programs include the World Wildlife Fund's program for adopting endangered animals, and the
National Zoo's Adopt a Species program.
for Caribbean Conservation Corporation and Sea Turtle
Survival League Website: hjtg^/w^^^cctuitle^orjAnemberhtm. World Wildlife Fund Website:
http://www.worldwildlife.org/, click on "Adoption Center." National Zoo Website:
http://nationalzoo.si.edu/Support/AdoptSpecies/.
States and localities, as well as the federal government, sell various items and
dedicate the revenues to environmental programs. Sometimes revenues are earmarked to site-
specific environmental projects. The merchandise sold frequently for this purpose includes auto
license plates and stamps. Many states sell special edition license plates to fund environmental
conservation activities. The plates are decorated with environmental slogans and designs to
show the car owner's support of a particular environmental cause. For example, Maryland and
Virginia sell a special "Save the Bay" license plate for $20-$25 each, generating millions of
dollars for the Chesapeake Bay Trust and the Chesapeake Bay Restoration Fund. New
Hampshire's Moose Plate program supports several grant programs for environmental and
cultural conservation. The federal government and most states have duck stamp programs to
raise money for waterfowl and wetlands protection projects. These stamps are collector's items.
for Chesapeake Bay Trust Website:
http://www.chesapeakebaytmst.org/bayplate.html.
Virginia Chesapeake Bay Restoration Fund Website: httj3^/w¥Wj[tafe
New Hampshire Moose Plate Program Website:
The Federal Duck Stamp Program Website: ://www.fws. gov/duckstamps/.
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The Conservation Reserve Program (CRP) is a voluntary program for agricultural
landowners administered by the Commodity Credit Corporation through the U.S. Department of
Agriculture Farm Service Agency. The CRP provides direct assistance payments to eligible
applicants to place environmentally sensitive and highly erodible cropland into a 10-15 year
contract, i.e., taking it out of crop production. The participant, in return for annual payments,
implements a locally approved conservation plan for converting cropland to a less intensive use
by planting grasses, legumes, fobs, shrubs, or trees. The CRP seeks to protect the nation's long-
term capability to produce food and fiber, reduce soil erosion and sedimentation, create better
habitat for fish and wildlife, provide needed income support to farmers, and reduce nonpoint
source pollution. The program is leveraged in that it will pay up to 50% of the costs of
implementing approved conservation plans.
for U.S. Department of Agriculture Farm Service Agency
Website:
The Wetlands Reserve Program (WRP), managed by the U.S. Department of
Agriculture Natural Resources Conservation Service, provides technical and financial assistance
to eligible landowners to address wetland, wildlife habitat, soil, water, and related natural
resource concerns on private lands. The WRP is a voluntary program. The majority of lands
enrolled in the WRP are high-risk agricultural lands located in flood prone areas that are restored
to wetlands through the program. The goal of the WRP is to achieve the greatest wetland
functions and values, along with optimum wildlife habitat, on every acre enrolled in the program.
At least 70% of each project area is expected to be restored to natural conditions, and the
remaining 30% can be restored to other than natural conditions. There are three options for
WRP participants: ten year restoration cost-share agreements, thirty year conservation
easements, and permanent easements. There is also a Wetlands Reserve Enhancement Program
(WREP) that is administered under the authority of the WRP to enhance delivery of the WRP.
The WREP is described in this section of the Guidebook.
for U.S. Department of Agriculture, Natural Resources
Conservation Service Website: http://wwwyTresj^^
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Through Candidate Conservation Agreements with Assurances, non-federal
property owners commit to implementing conservation measures that protect a specific species
considered likely to be listed as threatened or endangered under the Endangered Species Act of
1973 (ESA) in the near future. In exchange for making this commitment, the property owners
receive assurances from the Fish and Wildlife Service and the National Marine Fisheries Service
that additional conservation measures will not be required and additional land, water, or resource
use restrictions will not be imposed on them should the species become listed under the ESA in
the future. The assurances are provided in the property owner's Candidate Conservation
Agreement, and in an associated enhancement of survival permit issued under section
10(a)(l)(A) of the ESA. Candidate Conservation Agreements with Assurances can create an
incentive for landowners to implement conservation measures by providing them with the
financial security of protections preventing future restrictions on the use of their land.
for Federal Register Notice:
Environmental Defense Website:
http://www.environmentaldefense.org/home.cfm, search on "Candidate Conservation
Agreements with Assurances" within the Website.
A Capital Improvements Program (CIP) is a planning and financial management
process used by public sector agencies for identifying, prioritizing and scheduling planned
capital improvements such as construction projects, watershed restoration initiatives, and storm
water management projects. CIP's are usually updated and revised on an annual or semi-annual
basis. At their most basic, they involve an internal and public review process which results in a
prioritized listing and schedule for future capital investments. More sophisticated CIP's also
contain a financing element which may consider sources of financing, impacts of facilities on
operating costs, and effect on tax rates, debt loads and borrowing limitations. CIPs are used by
most medium and large governmental units and public service providers throughout the nation to
plan their capital investments, environmental and otherwise. Kansas City; Baltimore County,
Maryland; and Florida are examples of jurisdictions with CIP programs.
for Kansas City Capital Improvements Management Office
Website: www.kcmo.org/dmo.nsf/web/hoiTie7opendocument. Baltimore County, Maryland
Website: httQ'JJw_ww,co,b&m
Northwest Florida Water Management District Website:
http://www.nwfwmd.state.fl.us/rmd/swim/fla forever grants/fla forever grants.htm.
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Green Buildings are certified by a number of different systems that share the
common goals of clean indoor air, resource conservation, and reduced environmental impacts.
In the process of Green Building certification, the entire life-cycle of the buildings and their
components is usually considered. Certified Green Buildings are typically designed to utilize
renewable energy sources and conserve energy. They are often located near public transit and
within easy walking distance of stores, schools, and other necessities. In addition, they
frequently have water conservation features incorporated into building design and landscaping.
Most Certified Green Buildings are also designed to have clean indoor air. That is very
important, considering that the air quality in many buildings can be more of a health hazard than
the outdoor air in even the most industrialized cities. Certified Green Buildings tend to have low
operation and maintenance costs, so they can be a very good investment. Green Building
certification can help potential and current home owners to qualify for better mortgage terms.
Smart Communities Network Website:
http;//w¥wjmartcQ^ U.S. Green Building Council
Website: http://www.usgbc.org/. Build It Green Website: http://www.builditgreen.org/. U.S.
Environmental Protection Agency Website: http://www.epa.gov/opptintr/greenbuilding/.
A community foundation is a federally tax-exempt, non-profit organization that
makes grants for charitable purposes in a specific community or region. The funds available to a
community foundation are usually derived from many donors and held in an endowment that is
independently administered. Income earned by the endowment is used to make discretionary
grants meant to build, strengthen and improve the community through environmental protection
initiatives and other measures. Although a community foundation may be classified by the
Internal Revenue Service as a private foundation under Section 501(c)(3) of the tax code, most
are classified as public charities and are thus eligible for maximum tax-deductible contributions
from the general public under Section 170 of the code. Community associations' basic appeal to
donors is their flexibility. Donors can choose between many different ways of giving tax
deductible charitable gifts. The donor can also specify how these donations will be used. This
flexibility allows many individuals, through gifts and bequests, to establish permanent
endowment funds within one community foundation.
for Foundation Center Website: wwwjjcincejTte^^
Community Foundations of America Website: www^famerica^org.
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Community Supported Agriculture agreements (CSAs) connect farmers and
consumers in mutually beneficial arrangements where consumers buy seasonal "shares" of the
harvest at participating farms before the growing season begins. CSAs provide economic
benefits to small farms that utilize sustainable agriculture practices, such as the grazing of
livestock on large, well vegetated pastures, and reduced pesticide use through Integrated Pest
Management. They do this by providing the farmers with a predictable source of income at the
beginning of the growing season. They also provide consumers with farm fresh foods that may
not be available to them otherwise. CSAs help consumers to have a personal connection with the
land on which their food is grown, and they create opportunities for them to communicate with
farmers about their environmental practices.
for The Weston A. Price Foundation has many U.S. and
international chapters that provide information about CSAs; for chapter contact information see
http://www.westonaprice.Org/localchapters/1 ocallist.html. The following Websites have CSA
directories: Robin Van En Center for CSA Resources: h|t]3^/www_j:sac^^ Local Harvest:
hjtg^/wwwjocalharyestorg/csa/, and Future Harvest-CASA:
A conservation easement is a voluntary agreement that allows a private landowner
to limit the type or amount of development on his or her property while maintaining partial
ownership of the property. The easement is signed by the landowner, who is the easement
donor, and by the organization receiving the easement. The receiving organization gains partial
ownership of the land. In donating an easement to an organization, the landowner is entrusting
that organization with protecting his or her land from future development. Sometimes the
organizations receiving the easements pay for them, but in any case acquiring conservation
easements is much less expensive than fee-simple purchases. The private landowner gains
federal tax benefits if the easement is permanent and is donated "exclusively for conservation
purposes." The donor may receive estate and property tax relief as well. Laws in each state vary
as to the use and tax implications of private land donations to easements. Easements help to
protect agricultural lands and wildlife habitats including forests and water resources.
for Byers, Michelle; and Ponte, Karin Marchetti; The
Conservation Easement Handbook, 2nd Ed: The Land Trust Alliance and the Trust for Public
Land, 2005. This and other publications on easements are available through the Land Trust
Alliance Website at htt|r//wwwJta,jMg^^ The Nature Conservancy
Website: wwwjiature^org. The Trust for Public Land Website: htt^jVwwwJpLorg/. Little
Traverse Conservancy Website: www.landtmst.org.
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Any arrangement where two or more parties work together to achieve
environmental protection objectives, or to help fund environmental initiatives, can qualify as a
conservation partnership. There are many different examples of conservation partnerships.
Within the U.S. National Park Service, working partnerships are an increasing presence. The
National Park Service manages natural heritage areas through collaboration with many diverse
organizations. The World Wildlife Fund (WWF) maintains partnerships with organizations that
provide funding for WWF and take steps agreed upon with WWF to improve their environmental
performance. The Nature Conservancy makes extensive use of conservation partnerships in
working with government and the private sector to help protect valuable ecosystems.
Conservation partnerships are useful for leveraging funds and pooling resources. In some cases,
conservation partnerships may be used for resolving conflicts over land use while protecting
ecosystems.
for U.S. National Park Service Website:
^ Conservation Study Institute Website:
World Wildlife Fund Website:
http ://www.panda. t_wwf/, search within the Website on "conservation partnerships."
The Nature Conservancy Website: http://www.nature.org/partners/.
The Conservation Reserve Enhancement Program (CREP) is a voluntary land
retirement program that helps agricultural producers protect environmentally sensitive land,
decrease erosion, restore wildlife habitat, and safeguard ground and surface water. The CREP is
an offshoot of the Conservation Reserve Program (CRP), which is the largest environmental
improvement program for private lands in the U.S. Both the CREP and the CRP are run by the
U.S. Department of Agriculture (USD A) Farm Service Agency. Through combining CRP
resources with state, tribal, and private programs, the CREP provides farmers and ranchers with
sound financial packages for conserving and enhancing natural resources on farmlands. A
specific CREP project begins when a state, tribe, local government, or nongovernmental entity
identifies an agriculture-related environmental issue of state or national significance, and works
with the Farm Service Agency to develop a project proposal to address that issue.
for See the USDA Farm Service Agency Website at
Also see the description of the Conservation
Reserve Program in this section of the Guidebook. For additional information about the CREP,
contact any county Department of Agriculture Service Center.
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Land trusts acquire and manage ecologically valuable lands on behalf of state and
local governments. They are similar to dedicated government trust funds and are funded by a
variety of sources, including real estate transfer and property taxes. Land trusts combine
management, financing, and planning functions in a single entity. Land management under
trusts is often a joint endeavor. Land trusts are highly leveraged, linking public and private
funding. Nonprofit land trusts are supported by government monies and private donations. State
land trusts are funded by a combination of state (sometimes multi-state), local, and private
donations. Revenues from timber harvests, farming, recreation, and other land uses may be
rededicated to land trusts. Land purchased for mitigation purposes is often put into trusts. Land
acquisition is frequently brokered by nonprofits such as The Trust for Public Land, the Land
Trust Alliance, the American Farmland Trust, and The Nature Conservancy. An example of a
land trust is the 16,000 acre Sterling Forest acquisition in New York and New Jersey.
for Trust for Public Land Website: http://www.tpl.org/. Land
Trust Alliance Website: wyw.lta.org. The Nature Conservancy Website:
Mtp;//www,nature,org/. American Farmland Trust Website: httgjVw^vwiannlmidorg/. See
press release on Sterling Forest at http://www.ny.gov/governor/press/02/may6_02.htm.
Under cost-share programs, landowners are provided with financial assistance to
help them implement Best Management Practices (BMPs) for reducing nonpoint source
pollution, which is pollution that is not traced to a specific source. Agricultural Best
Management Practices (BMPs), which are conservation measures that prevent water pollution by
reducing soil erosion and sedimentation, are frequently implemented with assistance from cost-
share programs. Agricultural BMPs include conservation tillage, crop nutrient management, pest
management, and conservation buffers. Cost-share programs for nonpoint source pollution
control are generally administered and funded at the state level, sometimes leveraging federal,
dollars. Delaware, Minnesota, and West Virginia utilize loan money from the federal Clean
Water State Revolving Fund to fund their cost-share programs (see the links to the
Environmental Protection Agency reports below).
for U.S. Environmental Protection Agency Reports:
http://www.epa.gov/owmitnet/cwfmance/cwsrf/agfact.pdfand
http://www.epa.gov/owm/cwfinance/cwsrf/final.pdf. Virginia Department of Conservation and
Recreation Website: htt|r//www^sta^^ Minnesota Cost-Share
Program Fact Sheet: httpj//wwwj)wir^^^
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A dedicated government trust fund is an account set up to receive and disburse
revenues for a specific program or activity. The most commonly used methods of raising
revenue for dedicated government trust funds include earmarked portions of taxes and fees,
referendum bond act dollars, environmental fines and penalties, lotteries, budget surpluses, and
private donations. Deposits accrue automatically and usually are available only for the purpose
named in the dedication. States and localities throughout the U.S. have dedicated environmental
trust funds. Common uses for dedicated environmental trust funds include open space
acquisition, habitat restoration, and the operation and maintenance of pollution control facilities.
Some examples of state and local dedicated environmental trust funds include: The Nebraska
Environmental Trust, South Carolina's Heritage Trust Program, and the Natural Lands Trust
Fund in Ocean County, New Jersey. The Superfund Trust Fund and the Nuclear Waste Fund are
examples of federal dedicated trust funds.
of The Nebraska Environmental Trust Website:
U.S. Department of Energy, Energy Information Administration
Website: httpj//wwwjaaxte The Trust for Public Land
Website: http://www.tpl . org, search within the site on "land trust fund" to get information about
trust funds for land conservation in New Jersey, South Carolina, and other states.
if
Emissions trading programs allow sources of air pollutants to trade pollutants in
some fashion, either geographically, over time, or among other sources. Many emissions trading
programs incorporate a "bubble" structure. A bubble program treats multiple emission sources
as if they were included within an imaginary bubble, allowing existing sources to adjust
emissions levels within the bubble as long as an aggregate limit on emissions is not exceeded.
"Offset" programs allow new sources to obtain emissions credits from existing sources to offset
new emissions. "Banking" programs allow sources to store emission reduction credits for future
use or sale. "Netting" programs allow sources undergoing modification to avoid new source
review if plant-wide emissions are reduced. In its Clean Air Market Programs, The U.S.
Environmental Protection Agency (EPA) employs a flexible emissions trading approach with
emissions allowances and caps. This approach is called "allowance trading" or "cap and trade."
for U.S. Environmental Protection Agency Website:
http://www.epa.gov/airmarkets/trading/basics/index.htiTil. International Emissions Trading
Association Website: htt|r//wwwjj;ta^^ Michigan Department of
Environmental Quality Website: htt^T/w^^vynichigmLgoy/deg/, click on "Programs" first, then
"Emissions Trading."
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When operated for the benefit of state or local governments, lotteries generally
retain a portion of the revenue from ticket sales, ranging from 10 to 50 percent depending on the
game, for dedicated uses such as environmental protection. There are many examples of lotteries
being used to raise money for state environmental protection initiatives. The Minnesota
Environment & Natural Resources Trust Fund, a permanent source of revenue for environmental
and natural resource protection and restoration activities, receives 40% of net Minnesota state
lottery proceeds. Colorado has a lottery-funded conservation program called Great Outdoors
Colorado. Many other states, including Arizona and Nebraska, use a portion of lottery proceeds
to raise money for environmental protection initiatives.
for North American Association of State and Provincial
Lotteries Website: www.naspl.org. State Environmental Resource Center Website:
http://www.serconline.org/conservationfonding/stateactivity.html.
Minnesota Environment & Natural Resources Trust Fund Website:
Great Outdoors Colorado Website: http;//www\gQco,,or.g/. Arizona Heritage Fund Website:
http://www.azgfd.gOv/w c/heritage program. shtml. Nebraska Environmental Trust Website:
www.environmentaltnist.org.
To issue a "green credit card," a private or nonprofit environmental organization
works with a bank or other financial institution. For each green credit card issued, a fixed
amount per card and a small percentage of the spending is donated to the organization. Green
credit cards are effective fundraising mechanisms for many environmental organizations. Still, it
is important to consider that the companies issuing green credit cards may be financing
environmentally destructive practices. However, a green credit card is a more "environmentally
friendly" alternative to a standard credit card offered by the same company, assuming that the
organization supported by the card is using its funds effectively for environmental protection.
Many environmental organizations including the National Wildlife Federation, Defenders of
Wildlife, and the Nature Conservancy utilize green credit cards for raising revenue.
for White, Stephanie, "Buy now, pay later: greening credit
cards," E: The Environmental Magazine, July-August 2005, available at:
http://findarticles.com/p/articles/mi_ml594/is_4_16/ai_n 14789145. List of "environment &
cause related" credit cards on MBNA America Website:
causesjitoil.
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Green Energy Partnerships are groups of businesses and organizations working
together to increase their use of "green energy," which includes electricity and heat from
renewable energy resources such as wind, solar, and geothermal. Some partnerships also include
in their definitions of green power electricity and heat from fuel cells, direct use of landfill gas,
and hydroelectric sources they consider to be "low impact." The members of these partnerships
provide each other with many forms of assistance including financial savings, networking
opportunities, information sources, legislative advocacy, and marketing and promotion. They
also may share strategies and lessons learned, and work with power suppliers on marketing
initiatives including the design of attractive green electricity products. Based on the theory of
economies of scale, as more people purchase green energy with the assistance of these
partnerships, it can be expected to become less expensive.
for Clean Energy Partnership Website:
Green Power Market Development Group Website:
Mip;//wwwJtegreMpowergroup,org. U.S. Environmental Protection Agency Green Power
Partnership Website: http ://www. gov/greenpower/aboutus.htm, also see the "EPA Green
Power Partnership" tool in Section 7 of the Guidebook.
Green Pricing is an option offered by some utilities allowing customers to pay a
small premium in exchange for electricity generated from renewable, or "green," energy sources.
While there is no universal definition for "green" power, targeted energy sources include solar,
wind, geothermal, biomass, ocean power, biodiesel, fuel cells, and some hydroelectric sources
considered to be "low impact." The premium charged by utilities covers the additional costs
incurred by the electric utility in adding this renewable energy to its power generation mix.
Some green pricing programs are accredited through the Center for Resource Solutions' Green
Pricing Accreditation Program. Green pricing helps to fund the establishment of new wind
farms and other renewable power generation sources. Due to economies of scale, as renewable
power sources become more prevalent and more people purchase green power, the cost of these
renewable energy sources can be expected to go down.
for Center for Resource Solutions Website:
http://www.resource-solutions.org/greenpricing.htm. Sterling Planet Website:
U.S. Department of Energy Website:
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Individual and corporate donations, particularly those which are tax deductible, are
a popular means for supporting many nonprofit environmental organizations and some
government programs. In addition to financial donations, corporate and individual donations
may take the form of in-kind payments or special services. Financial donations to governments
are often made through line item check-offs on income tax returns allowing taxpayers to earmark
a portion of tax refunds for environmental programs. Many nonprofit organizations' operating
budgets come largely from individual donations, and to a lesser extent, corporate donations.
Private sector corporations and/or foundations frequently match individual financial donations.
Donations are frequently used to finance environmental programs that attract significant public
interest, such as programs for the conservation of scenic natural habitats, or programs protecting
animals that people like to observe on outdoor expeditions, such as whales or sea turtles.
for Foundation Center Website: http://fdncenter.org/.
Environmental Data Resources, Inc., Environmental Grant Making Foundations, 11th ed.,
to order see www,CTyironmentalgiMti..cgm, or E-mail Qideii@CTyironmentalgiMts,CQm.
Land reclamation banks are publicly funded or capitalized trust funds that buy
contaminated sites and remediate them on behalf of a state or local government. The banks may
take title to the land through a number of different means, including purchase, tax foreclosure,
and eminent domain. Once the properties are remediated and developed, the bank sells or leases
them to generate income for future remediation and development projects. Several cities have
used land reclamation banks to clean up and redevelop brownfields. Land reclamation banks
combine planning, financing, management, remediation, and redevelopment functions into a
single organization. The trust funds for the banks may be financed in several different ways,
including tax-increment financing, land transfer taxes, land registration fees, and property sales
and leases. Land reclamation banks allow the public or nonprofit sector to assume
environmental and financial liability risks that private businesses may be unwilling to assume.
for EnviroTools Website:
http://www.envirotools.org/financing/privateresources.shtml.
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The Location Efficient Mortgage (LEM) combines a three percent down payment,
competitive interest rates, and flexible criteria for financial qualification to assist people in
buying homes in "Location Efficient Communities." Location Efficient Communities are
neighborhoods in which residents can walk from their homes to important amenities such as
stores, schools, offices, and public transportation. Location efficiency is a measure of the
transportation dollars people can expect to save by living in Location Efficient Communities,
based on levels of population and public transit services in their communities. Location Efficient
Mortgages are currently available in four metropolitan areas: Seattle, WA; San Francisco, CA;
Los Angeles, CA; and Chicago, IL. Location Efficient Communities help to reduce urban sprawl
by creating an alternative to communities that depend upon the use of cars. This helps to prevent
the need for roads and parking lots that contribute to loss of open space, wildlife habitat
degradation, air and water pollution, and stormwater runoff problems.
for Location Efficient Mortgage Website:
Natural Resources Defense Council (NRDC) Website:
http://www.nrdc.org/cities/smartGrowth/qlem.asp. Also see: Natural Resources Defense
Council, Solving Sprawl: Models of Smart Growth in Communities Across America: Island
Press, 2003, order through Island Press at http://www.islandpress.org/books/detail.html/SKU/l-
55963-432-4.
Mitigation banking is the restoration, creation, enhancement, and, in exceptional
circumstances, preservation of wetlands and/or other aquatic resources expressly for the purpose
of providing compensatory mitigation in advance of adverse environmental impacts to similar
resources. Wetlands Mitigation is required by Clean Water Act (CWA) Section 404 wetlands
permits, and by state programs such as Oregon's Removal-Fill Permit Program, to compensate
for wetlands removal or fill activities. The purpose of a mitigation bank is to provide for the
replacement of the chemical, physical, and biological functions of wetlands and other aquatic
resources. The newly established wetland functions are quantified as mitigation credits which
are available for use by the mitigation bank sponsor or by other parties to compensate for adverse
environmental impacts affecting wetlands.
for U.S. Environmental Protection Agency (EPA) Website:
U. S. EPA Wetlands Hotline: 1-800-832-7828. Oregon Department of State Lands Website:
http://www.oregon.gov/DSL/PERMITS/wetland mit.shtml.
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The U.S. Environmental Protection Agency (EPA) operates the National
Compliance Assistance Centers in partnership with other government agencies, as well as
industries, academic institutions, and environmental groups. The Centers help businesses, local
governments, and federal facilities to understand federal environmental laws and regulations and
save money via pollution prevention techniques. They achieve this by providing information to
those requesting it using means such as Websites, telephone assistance lines, fax-back systems,
and e-mail discussion groups. The Centers provide compliance assistance developed primarily
for the regulated entities in the following sectors: automotive service and repair, automotive
recycling, chemical manufacturing, construction, agriculture, healthcare, metal finishing, paints
and coatings, printed wiring board manufacturers, printing, transportation, local governments,
federal facilities, and U.S./Mexico border issues. The Centers survey users annually and
respondents consistently express a high degree of satisfaction with Center services.
for National Compliance Assistance Centers Website:
http://www.assistancecenters.net/. U.S. Environmental Protection Agency Website:
http://www.epa.gov/compliance/assistance/centers/index.html.
Nonprofit organizations, such as foundations and trusts, are defined as non-
governmental organizations (NGOs) that accrue no profit to individual members, but spend their
resources pursuing specific goals. Nonprofits can be formed for many purposes, including
natural lands acquisition, land management, environmental monitoring compliance, research,
education, and other activities. They include independent private foundations, operating
foundations which make grants to pre-selected organizations, and public foundations funded by
government. Many individuals and organizations receive tax deductions for donations to
nonprofits; and many governments match private donations to nonprofits. Nonprofits are often
able to leverage more monetary donations, volunteer work, resources, and in-kind services than
most public agencies. This is due to their tax-exempt status, but also because they provide a
focal point that draws attention to the resources they protect and the environmental issues they
address.
for U.S. Environmental Protection Agency (EPA) Resources
for Non-Profit Organizations Website: hrtix/Zw^w^eg^^ Information
for nonprofits on the Internal Revenue Service Website:
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In Point Source/Nonpoint Source Trading, a point source of pollution arranges for
reduction of nonpoint source pollution discharges in the same watershed in lieu of making more
expensive upgrades to its own treatment beyond the minimum technology-based treatment
requirements. A number of conditions are necessary for a point source/nonpoint source trading
program to achieve ambient water quality objectives. There must be a combination of point
sources and nonpoint sources each contributing a significant portion of the total pollutant load in
the watershed, and accurate and significant data to establish targets and measure pollution
reductions. There must be significant pollutant load reductions for which the marginal cost (cost
per pound reduced) for nonpoint source controls are lower than the costs for upgrading point
source controls. Under ideal conditions, a trading program will both save money for point
source dischargers and improve water quality.
for U.S. Environmental Protection Agency Website:
httj3^/w¥Wji]3a^^ Horan, Richard, D, Abler, David G., et.
al., "Cost-effective point-nonpoint trading: An application to the Susquehanna River Basin,"
Journal of the American Water Resources Association, April 2002, available at
http://www.fmdarticles.eom/p/articles/mi qa4038/is 200204/ai n9020966.
A special district is an independent government entity formed to provide and
finance governmental services for a specific geographic area, generally at the local level.
Residents of special districts pay taxes to finance the improvements from which they will
benefit. For example, a sewage special district might tax residents to finance improvements to
wastewater treatment services. Special districts issue revenue bonds in a number of states.
Examples of special districts include sewer and water districts, storm water management
districts, regional solid waste and water resource authorities, regional port authorities, and
regional air quality management districts. Local governments use special districts to finance
capital facilities independently, relieving the burden on general debt capacity. For example,
regional port authorities issue revenue bonds to finance port construction and/or renovation.
for Urban Land Institute Website: http://www.uli.org, search
the Website on "special districts." Porter, Douglas R.; Lin, Ben C.; Peiser, Richard B; Special
Districts: A Useful Technique for Financing Infrastructure, Washington, D.C.: Urban Land
Institute, 1987.
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Tax increment financing (TIP) provides for the temporary allocation of increased
tax proceeds in a designated area generated by increases in assessed property values. In a basic
TIP, property assessments are made at a pre-development, or pre-remediation, level in the
specified area. Bonds are then issued to finance a portion of the redevelopment or remediation
costs. As property values and assessments in the area increase, the municipality uses the added
increment in tax revenues to meet the debt service on those bonds. The technique requires the
creation of a special district and the maintaining of two separate sets of tax records. Tax
increment financing has been used for many years by local governments across the country for a
wide variety of economic development projects. It is a particularly effective tool for financing
projects that provide measurable specific benefits to select, well defined groups of taxpayers,
such as the remediation of a hazardous waste dump near a residential neighborhood.
for Illinois Tax Increment Association Website:
City of San Antonio Economic Development Department Website:
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The term "brownfield site," as defined by the Small Business Liability Relief and Brownfields
Revitalization Act of 2002, with certain legal exclusions and additions, means real property, the
expansion, redevelopment, or reuse of which may be complicated by the presence or potential
presence of a hazardous substance, pollutant, or contaminant. The definition is available online
at http://www.epa.gov/brownfields/glossary.htm. The term "brownfield site" does not include
sites listed or proposed for listing on the National Priorities List for cleanup under the U.S.
Environmental Protection Agency (EPA)'s Superfund Program. The definition distinguishes
brownfields from "greenfields," or undeveloped properties that are not considered to be
contaminated.
While many factors can influence economic development decisions, the real or perceived
existence of contamination often steers development to greenfields. This promotes the use of
land that has never been developed, contributing to urban sprawl, increased traffic congestion,
and habitat destruction. It also limits the reuse of brownfields, hurting economic growth in
cities. Since many brownfields are located in impoverished communities, such economic
decisions may also raise environmental justice concerns. Failure to address the brownfields issue
could relegate substantial portions of major cities to environmental and economic decline.
The EPA believes that environmental cleanup is a building block, not a stumbling block, to
economic development and that cleaning up brownfields properties must go hand-in-hand with
bringing economic vitality to communities. The EPA Brownfields Program and EPA grant
programs for the cleanup and redevelopment of brownfields are described in this section. EPA
realizes that environmental policy makers must understand the major role of finance in
brownfields redevelopment and developers must be educated about environmental requirements.
This Guidebook includes many tools, found mainly in this section but in other sections as well,
that can be used to finance brownfields cleanup and redevelopment. Tools in other sections of
the Guidebook that can be applied to brownfields cleanup and/or redevelopment include "Land
Reclamation Banks" and "Tax Increment Financing" in Guidebook Section 8, and various types
of bonds, loans, and grants described in Guidebook Section 2. Additional federal financing
mechanisms that can be used for brownfields projects can be found in the Catalog of Federal
Domestic Assistance at http://12.46.245.173/cfda/cfda.html.
This section of the Guidebook evaluates financing tools that the federal government, states,
communities, and the private sector can use to finance brownfields cleanup and redevelopment.
The tools include traditional governmental assistance programs, bold new initiatives that target
brownfields sites and disadvantaged communities, innovative private sector arrangements, risk
limitation techniques, tax incentives, and use of the Clean Water State Revolving Fund
(CWSRF). Most of the financing tools presented here are deeply rooted in local community
goals, and include the public and private sectors in a variety of different types of financing
arrangements.
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1. U.S. Environmental Protection Agency: Brownfields Program
2. U.S. Environmental Protection Agency: Brownfields Workforce Development
3. U.S. Environmental Protection Agency: Brownfields Grants
4. U.S. Environmental Protection Agency: Clean Water State Revolving Fund Brownfields
Loans
5. State Voluntary Cleanup Programs
6. U.S. Department of Housing and Urban Development and U.S. Department of Health and
Human Services: Round I and II Empowerment Zones
7. U.S. Department of Housing and Urban Development: Brownfields Economic
Development Initiative Grants
8. National Brownfield Associations
9. Environmental Risk Management in the Real Estate Industry
10. Industrial Development Funds
11. State Brownfields Programs
12. Land Recycling
13. Real Estate Investment Trusts
14. Tax Abatements
15. Tax Incentives for Brownfields Cleanup and Redevelopment
16. Transferable Development Rights
17. Environmental Insurance
18. Landowner Liability Protections
19. Clean Land Fund
20. Community Development Financial Institutions
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The U.S. Environmental Protection Agency (EPA) Brownfields Program operates
under the authorization of the Small Business Liability Relief and Brownfields Revitalization
Act of 2002 (the Brownfields Act). The Brownfields Act, which is an amendment to the
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),
designates the U.S. EPA as the sole agency with authority to award grants to U.S. states, tribes,
and territories for brownfields cleanup and redevelopment. Through the Brownfields Program,
EPA awards grants to states, tribes, and territories for brownfields assessment and cleanup,
capitalization of revolving loan funds, and environmental job training. The U.S. EPA Office of
Brownfields Cleanup and Redevelopment administers the Brownfields Program.
for U.S. EPAWebsite, Brownfields Program page:
http://www.epa.gov/brownfields/. See "U.S. EPA Brownfields Grants" and "U.S. EPA
Brownfields Workforce Development" in this section of the Guidebook. Contact: Sven-Erik
Kaiser at the EPA Office of Brownfields Cleanup & Redevelopment at 202-566-2753.
The U.S. Environmental Protection Agency (EPA), other federal agencies, local
job training organizations, community colleges, and labor groups have established partnerships
to develop long term plans for Brownfields workforce development programs. These workforce
development programs, which are often funded with EPA Brownfields Job Training Grants,
provide residents of socio-economically disadvantaged communities with job training and
employment opportunities with local brownfields cleanup and development initiatives. EPA
awards Brownfields Job Training Grants of up to $200,000 to nonprofit organizations,
educational institutions, community colleges, tribes, and state and local governments for
environmental job training projects that facilitate the assessment, remediation, or preparation of
brownfields sites. Through workforce development, EPA facilitates brownfields revitalization
while preparing trainees for employment in environmental fields requiring skills in sampling and
analysis of hazardous chemicals and remediation of contaminated sites.
for U.S. EPAWebsite: http://www.epa.gov/swerosps/bf/and
http://www.epa.gov/brownfields/iob.htm and http://www.epa.gov/brownfields/html-
doc/wrkfrc2. htm.
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The U.S. Environmental Protection Agency (EPA) Brownfields Program awards
grants to states, tribes, and territories for brownfields assessment and cleanup, capitalization of
revolving loan funds, and environmental job training. EPA awards four types of brownfields
grants: Assessment Grants, Revolving Loan Fund Grants, Cleanup Grants, and Job Training
Grants. Assessment Grants provide funding for grantees to inventory, characterize, assess, and
conduct planning and community involvement related to brownfields sites. Revolving Loan
Fund Grants provide funding for the capitalization of revolving loan funds that provide sub
grants to carry out assessment and/or cleanup activities at brownfields sites. Cleanup Grants
provide funding for the cleanup of brownfields sites contaminated by petroleum, hazardous
substances, and other pollutants. Job Training Grants are awarded for environmental job training
projects that facilitate the assessment, remediation, or preparation of brownfields sites.
for
U.S. EPA Website: htt]3^/wwwj^3
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Voluntary Cleanup Programs are the state and tribal authority, granted by the U.S.
Environmental Protection Agency (EPA), to address the environmental and financing problems
associated with brownfields and other contaminated properties. Section 128 of the
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), known
as The Small Business Liability Relief and Brownfields Revitalization Act of 2002 (the
Brownfields Amendments) codifies EPA's general approach to working with states and tribes on
Voluntary Cleanup Programs. EPA enters into non-binding Memoranda of Agreement (MO As)
with states and tribes based on reviews of their Voluntary Cleanup Programs. The purpose of
these MOAs is to foster more effective and efficient working relationships between EPA and
individual states and tribes regarding their Voluntary Cleanup Programs. In addition, the
Brownfields Amendments authorize a noncompetitive $50 million grant program providing
funding for states and tribes to establish Voluntary Cleanup Programs.
for U.S. EPAWebsite:
and
http://www.epa.gov/swerosps/bf/pg/fy06 guidelines.pdf.
of
I II
Empowerment Zones (EZs) are designated geographic areas, usually economically
distressed, that are provided with grants for development purposes through the U.S. Department
of Housing and Urban Development (HUD) Community Renewal Initiative and the U.S.
Department of Health and Human Services. Round I and II EZs may use their grant funding for
brownfields cleanup and redevelopment within their borders if those efforts meets several
requirements. The requirements are: 1.) the efforts must be consistent with the strategic plan for
the EZ, 2.) the efforts must have demonstrated potential to benefit residents of the EZ, and 3.) the
governance board for the EZ must approve the expenditures. Round II Empowerment Zones are
required to use funds they receive from HUD for brownfields cleanup and redevelopment in
conjunction with economic development activities such as job creation or providing sites for
businesses. Round I Empowerment Zones, which receive their grant funding through the U.S.
Department of Health and Human Services (HHS), are not subject to that requirement. Round
III Empowerment Zones are not awarded funding.
for U.S. HUD Website:
http://www.hud.gov/offi ces/cpd/economi cdevelopment/programs/rc/.
Contact Phil Graham at HUD: 202-708-6339, ext. 4636. Contact Wally Lumpkin at the HHS:
202-401-5111.
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The Brownfields Economic Development Initiative (BEDI) is a competitive grant
program that the U.S. Department of Housing and Urban Development (HUD) administers to
stimulate and promote economic and community development. The BEDI is designed to assist
cities with the redevelopment of abandoned, idled, and underused industrial and commercial
facilities with real or potential environmental contamination. BEDI grant funds are primarily
targeted for use with an emphasis on the redevelopment of brownfields sites in economic
development projects. Grant eligible projects are expected to be geared towards creating
economic opportunities for low and moderate income persons through the creation or retention
of businesses and jobs and increases in the local tax base. BEDI grants are required to be used in
conjunction with new Section 108 guaranteed loan commitments. Section 108 is the loan
guarantee provision of the HUD Community Development Block Grant (CBDG) Program.
for U.S. HUD Website:
http://www.hud.gov/offices/cpd/economicdevelopment/progranis/bedi/index.cfm and
http://www.hud.gov/offices/cpd/communitydevelopment/programs/108/.
National Brownfield Associations (NBA) is an international umbrella organization
of national associations that is dedicated to stimulating responsible redevelopment of
brownfields. NBA is an educational nonprofit, based in Chicago, with chapters in the United
States and Canada. The chapters drive the organization by creating local forums where members
can exchange ideas, providing legislative and policy recommendations, hosting events, bridging
the communication gap between the public and private sectors, and acting as a trusted source for
brownfields information. NBA's mission is carried out through three primary conduits:
information, education, and events including conferences, trainings, and meetings in the U.S. and
Canada. The guiding principles of NBA include the representation of the diverse interests of
brownfields stakeholders nationally and internationally and the encouragement of reuse and
redevelopment of brownfields consistent with the environmental and socioeconomic needs of the
community. NBA draws its strength from corporate and professional individual members from
the public and private sectors in the U.S. and Canada. The magazine Brownfield News is
published bi-monthly by NBA, and free copies of it are available via the NBA Website.
for National Brownfield Associations Website:
http://www.brownfieldassociation.org/, phone: 773-714-0407.
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in the
The real estate industry faces financial risks associated with possible contamination
of properties that can make participation in brownfields redevelopment unattractive to property
owners, purchasers, developers, investors, and lenders. The environmental risks associated with
brownfields fall into three categories: cleanup, property value impairment, and personal injury.
Parties can reduce or eliminate these risks and make brownfields real estate transactions work
using environmental risk management techniques. These techniques either absorb risks, transfer
risks between involved parties, or transfer risks to a third party. They include:
1.) Indemnification - The seller agrees to cover costs to the purchaser resulting from specific risks.
2.) Price Adjustment - The seller reduces the property price to reflect potential contamination risks.
3.) Self-Insuring - The purchaser sets aside monies to cover the costs of potential environmental risks.
4.) Third-Party Insurance - The seller/purchaser buys insurance to cover potential environmental risks.
for Victor O. Shinnerer & Company, Inc. Website:
http_:/J_www._schinner_ei.m Hilb, Rogal & Hobbs
Website: httpj//wwwjirh^
U.S. EPA Website: http://www.epa.gov/swerosps/bf/html-doc/insurnce.htm. See
"Environmental Insurance" in this section of the Guidebook.
Industrial Development Funds (IDFs) are special funds established by state and
local governments for the purpose of improving real estate properties to make them suitable for
industrial development. These funds are economic development tools that governments use to
attract or retain industry. Governments frequently use Industrial Development Funds to fund
brownfields cleanup and redevelopment. Industrial Development Funds may be structured as
direct pass-through funds or as special purpose revolving funds. These funds are established and
replenished through a variety of mechanisms including special property taxes and other taxes,
industrial development bonds, surpluses in the controlling government's budget, and proceeds
from the sale of real estate and other property. Many states, counties, cities, and towns have
laws establishing Industrial Development Funds. These funds may be operated by established
government economic development agencies or they may fall under the jurisdiction of special-
purpose authorities or corporations. One example of a special-purpose authority is a quasi-
governmental non-profit corporation that answers to a government through an appointed board.
for National Conference of State Legislatures Website:
Mip;//wwwjici^^ this Website has links to the Websites of the
economic development agencies for all U.S. States and Puerto Rico.
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Many states and territories of the United States have brownfields programs that
provide financing in the form of loans, grants, and/or bonds for brownfields cleanup and
redevelopment. The funding provided to communities through these state and territorial
programs is often grant money from the U.S. Environmental Protection Agency (EPA) that is
used to award grants and capitalize revolving loan funds. All U.S. states and territories are
potentially eligible for EPA funding for brownfields projects. In some cases, states and
territories use their own funds for brownfields projects. There are states and territories in every
U.S. EPA region with brownfields programs.
for See "U.S. EPA Brownfields Program" in this section of
the Guidebook. U.S. EPAWebsite: http://www. gov/brownfi tribal.htm#links &
http://www.epa.gov/brownfields/. National Brownfield Associations Website:
http_:/J_www.bmwnf^ Northeast Midwest Institute Website:
Land recycling revitalizes urban areas and discourages urban sprawl through the
cleanup and development of contaminated properties such as brownfields. Identifying
brownfields properties and bringing together members of communities, government agencies,
financial institutions, and other parties to make brownfields redevelopment work for the benefit
of communities is an important part of land recycling. Private land recycling companies and
state, county, and municipal land recycling programs help coordinate and finance brownfields
assessment and cleanup activities. Many of these companies and programs award loans and
grants for brownfields revitalization and other land recycling activities.
for Center for Creative Land Recycling Website:
htt^//www.cclr1org/. Pennsylvania Department of Environmental Protection Website:
llftii^/ww^de^^ American Land
Recycling Website: httpj//wj^w,MnMra^^^ Iowa Department of
Natural Resources Website: http://www.iowadnr.com/land/consites/lrp/conLRP.html.
City of Phoenix Website: http://phoenix.gov/BROWNFLDforownfld.html.
Wisconsin Department of Natural Resources Website:
http://www.dnT.st&te^
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A real estate investment trust (REIT) is an investment corporation that specializes
in buying, improving, managing and selling real estate and real estate related assets, including
shopping centers, office buildings, hotels, and mortgages secured by real estate. A REIT is
essentially a mutual fund that specializes in pooled investments in real estate. The Internal
Revenue Code specifies the conditions a company must meet to qualify as an REIT. These
conditions include paying 90% of its taxable income to shareholders each year, investing at least
75% of its total assets in real estate, and generating at least 75% of its gross income from
investments in or mortgages on real property. REIT dividend earnings can be tax exempt for tax
exempt investors such as pension funds. REITs focusing on industrial and commercial real
estate could potentially buy, assess, clean up, redevelop, and sell brownfields properties.
for National Association of Real Estate Investment Trusts
Website: http://www.nareit.com/. U.S. Securities and Exchange Commission Website:
http://www.sec.gov/answers/reits.htm. Cornell Law School Website (Internal Revenue Code):
^
A tax abatement is a temporary moratorium on charging the usual tax rate on a new
investment. It may take the form of a full or partial exemption from taxes such as tangible
personal property and/or real estate taxes. The exemption lasts for a specific period of time such
as five or ten years. The tax abatement granted may be restricted to new development in special
designated areas, or it may be targeted on a case-by-case basis to particularly desirable individual
development. Tax abatements are individually tailored regarding time and scope to allow the
state or local government to calculate the exact cost of the tax change, and thus, the exact tax
benefit offered as well. States and communities across the country use various forms of tax
abatements to encourage and support economic development. Many additional communities
nationwide could direct the use of this type of tax incentive toward brownfields redevelopment
and realize substantial environmental economic benefits. If the new development is properly
structured and successful, the community tax base will grow at a rate, and to a size, that more
than offsets the loss of taxes due to the abatement.
for Internal Revenue Service Website: http://www.irs.gov/,
search on "abatement." Missouri: North America's Business Center Research Toolbox:
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for
There are three basic types of tax incentives offered by federal, state, and local
governments: exemptions, credits, and deductions. An exemption provides a release from
taxation. Credits provide dollar-for-dollar reductions in taxes owed. Deductions allow certain
costs or expenses to be subtracted from income over one year, which is called expensing, or
more than one year, which is called depreciation. In addition, tax abatements, which are
temporary moratoriums on charging the usual tax rate on new investments, are sometimes used
by state and local governments to encourage economic development. A number of states,
including New York and Massachusetts, use tax incentives to promote brownfields
redevelopment. The federal Brownfields Tax Incentive, a tax deduction encouraging
brownfields cleanup and redevelopment, expired on December 31, 2005. The Tax Extender Bill
that would reinstate it if passed is pending in Congress.
for Fact sheet on New York State tax credits:
Massachusetts Department of Environmental Protection Website:
http://www.mass.gov/dep/cleanup/certap 1 3 .htm .
U.S. EPAWebsite: http://www.epa.gov/brownfi el ds/html -doc/btaxgoi d. htm and
http://www.epa.gov/brownfields/bftaxinc.htm.
In transferable development rights programs, property owners are allocated a
specified number of transferable development rights (TDRs) in exchange for agreeing to forego
or limit development on their land. These property owners are permitted to sell these TDRs to
real estate developers, who are permitted to use them to exceed zoning density requirements or
other zoning requirements on properties they own in more developed areas. Many states and
counties, such as New Jersey and Boulder County, Colorado have transferable development
rights programs. In 1998, the Georgia General Assembly passed legislation authorizing local
governments to implement transferable development rights programs. Transferable development
rights programs might be adapted to encourage brownfields redevelopment, thus protecting other
properties from development. Under a brownfields transferable development rights program,
developers agreeing to redevelop brownfields could be granted TDRs.
for
National Association for Realtors Website: totgj//wwwjjg|lt^^
Sprawl Guide: Mtji://www4)lm^^
Tools for Quality Growth Website: ://outreach. ogy.uga. s/tdr. .
Boulder County, Colorado Website: http://www.co.boulder.co.iis/lii/tdr/tdrfaql.htm.
New Jersey Department of Banking and Insurance Website:
iujs/dob^^
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Environmental insurance is a tool for managing a party's environmental liability by
transferring some of the associated financial risk to another party under the limited provisions of
the policy. Essentially, it is an agreement that in return for premium payments, the insured party
is provided some protection against unanticipated costs, third party claims, the acts or omissions
of other parties, and impairment of property values related to environmental contamination.
Environmental insurance is a distinct subset of property and casualty insurance. There can be
many different names for environmental insurance policies, but the three most common types
that apply to brownfields and other contaminated properties include property transfer insurance,
cleanup cost cap or stop loss insurance, and owner controlled insurance. Environmental
insurance can be used for real estate/business projects involving the assessment, cleanup and
redevelopment of brownfields and other contaminated properties. In brownfields projects,
environmental insurance may substitute for indemnities and hold-harmless agreements, lessening
the purchaser's need to worry about the seller's financial condition. It may also eliminate the
need to report brownfields as environmental liabilities in some cases.
for U.S. Department of Housing & Urban Development
Website: http://www.huduser.org/publications/econdev/envins.html. U.S. Environmental
Protection Agency Website: http://www.epa.gov/swerosps/bf/html-doc/insurnce.htm and
http://www.epa.gov/brownfields/insurebf.htm.
Under the Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA), known as Superfund, and the Resource Conservation and Recovery Act
(RCRA), the owner of a contaminated property can be held liable for coordinating and funding
cleanup activities based solely on his or her ownership of the property. However, CERCLA
Section 128, known as The Small Business Liability Relief and Brownfields Revitalization Act
of 2002 (the Brownfields Amendments) protects landowners meeting statutory criteria from
Superfund liability. These liability protections can be applied regardless of whether the
landowner's property is a brownfield, a site on the National Priorities List (NPL), or an NPL-
caliber site. The Brownfields Amendments also codify the U.S. Environmental Protection
Agency (EPA)'s approach to establishing non-binding Memoranda of Agreement (MOAs) with
states and tribes based on reviews of their Voluntary Cleanup Programs that address the issue of
liability for cleanup of brownfields. See p. 5 of the MOA between EPA and Illinois at
http://www.epa.gov/swerosps/rcrabf/iTious/illiTiou.pdffor a discussion of liability.
for U.S. EPAWebsite:
http://www.epa.gov/compliance/cleanup/redevelop/landowner.html and
http://www.epa.gov/compliance/cleanup/redevelop/state.html.
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The Clean Land Fund (the Fund) is a 501(c)(3) nonprofit corporation established in
1999 that is dedicated to remediating and redeveloping targeted brownfields in urban
communities in the eastern U.S. Targeted brownfields are sites which 1.) are difficult for the
private sector to develop due to marginal economic returns and/or unique environmental
conditions, and 2.) are expected to provide public benefits when cleaned up and redeveloped.
The Fund provides technical assistance to stakeholders including state and local governments,
nonprofit organizations, and private entities by helping them gain access to federal government
brownfields funding programs and creating Brownfield Redevelopment Financing Plans. All
stakeholders are encouraged by the Fund to participate fully in brownfields redevelopment. The
Fund team is made up of experts in the field of brownfields redevelopment. As a nonprofit
corporation, the Fund has access to public and philanthropic funding sources to finance
brownfields redevelopment projects. The Fund is a member of the National Brownfields
Association.
for Clean Land Fund Website:
http://www.cleanlandfund.org/, e-mail BillPenn@CleanLandFund.org.
Community Development Financial Institutions (CDFIs) are private sector
financial intermediaries with community development, particularly in economically distressed
communities, as their primary mission. There are six basic types of CDFIs: community
development banks, community development loan funds, community development credit unions,
microenterprise funds, community development corporation based lenders and investors, and
community development venture funds. The CDFI Fund at the U.S. Department of Treasury
works to expand the capacity of CFDIs to provide credit, capital, and financial services to
underserved communities throughout the U.S. Examples of CFDIs include the Rural
Community Assistance Corporation (RCAC), ShoreBank, The Community Preservation
Corporation, and the Community Preservation and Development Corporation. CDFIs could
assist with brownfields cleanup and redevelopment in economically distressed communities.
for Coalition of Community Development Financial
Institutions (CFDIs) Website: http://www.cdfi .org/. U.S. Department of the Treasury
Community CFDI Fund Website: http://www.cdfifund.gov/.
Rural Community Assistance Corporation Website: http__"Mwwwjc&c.OTgl_.
ShoreBank Website: httpj//wwwjb^
The Community Preservation Corporation Website: http://www.conimunitvp.com/.
Community Preservation and Development Corporation Website: http://www.cpdc.org/.
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The environmental goods and services industry (EGSI) is made up of environmental technology
companies selling specialized goods and services used for pollution prevention, abatement and
remediation. EGSI businesses produce and sell products such as less polluting alternatives to
chlorine, bleach, and dry cleaning solvents. In addition, EGSI firms produce and sell recycled
paper products, biotechnology products for waste reduction, air pollution reduction equipment,
and products for energy conservation. EGSI firms also sell goods to water and wastewater
treatment facilities, such as pumps and instruments, and they perform environmental monitoring
and testing at those treatment facilities. Many EGSI companies are small businesses. A small
business is generally defined in the United States as a business with less than 100 employees.
Small EGSI businesses face many financing challenges that are unique to them, challenges that
larger businesses in the industry may not face. In some cases, small EGSI businesses are
difficult and costly to capitalize adequately because of weak credit considerations, inadequate
experience, poor economies of scale, lack of established markets, and other factors that increase
the cost of capital. Small EGSI businesses must compete against much larger engineering and
technology companies with market niches, in-house research and development, and years of
operating experience in the United States and overseas. Small EGSI businesses can grow and
prosper if they access the specialized forms of financing that meet their unique needs. The
financial tools presented in this section of the Guidebook include information and analysis to
help small EGSI businesses decide which financing mechanisms are right for them.
Section 10 is divided into two subsections of financial tools that can be helpful to small EGSI
businesses: Section lOa, "Equity Tools," and Section lOb, "Debt Tools." Section lOa covers
equity financing mechanisms such as venture capital, private placements, and related
mechanisms such as business plans. Equity financing is money acquired from small business
owners themselves or from other investors. Section lOb covers debt mechanisms and related
topics such as loans, credit cards, credit analysis, bonds, and leasing. The financial tools
presented in Section 10, and a considerable number of tools presented in other sections of this
Guidebook as well, could offer great promise to small EGSI businesses, helping them to acquire
the financing they need to make significant contributions in the area of environmental protection.
10-1
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1. Angel Investors
2. Business Plans
3. U.S. Small Business Administration: Active Capital Website
4. Small Business Innovation Research Program
5. Small Business Investment Companies
6. Franchising
7. Investment Forums
8. Investment Networks
9. Joint Ventures
10. Private Placements
11. Public Offerings
12. Strategic Alliances
13. Venture Capital
14. America's Small Business Development Center Network
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An angel investor, or "angel," is an individual who buys into a company, usually in
its early stages, as a private investor. Angels provide capital for businesses to start up, usually in
exchange for ownership equity. Many angel investors are retired business owners or executives.
Angels usually invest their own money. However, a small but growing number of angel
investors are organizing themselves into angel networks or angel groups to share research and
pool their investment capital. For small businesses and environmental firms, investor angels
represent a large source of capital. They are ideal for start-up companies who are too new to
qualify for bank loans, expanding companies with growth potential who are too small to attract
traditional venture capital, and companies needing only a small amount of money. Professional
angel investors seek investments that have the potential to return at least 10 times their original
investment within 5 years, through a defined exit strategy, such as a plan for an initial public
offering or an acquisition. Most angels invest only in companies that are physically located
within 50 miles of where they live or work.
for Inc.com, the Daily Resource for Entrepreneurs:
http;//w¥wlncj^ Gathering of Angels Website:
http://www.gather!ngofangels.com/. Angel Investor News Website: http://www.ange!-investor-
news.com/. The vFinance, Inc. Website at http://www.vfmance.com/ has a directory of angel
investors.
A business plan is a detailed, formal statement that outlines a company's business
goals, the reasons why those goals are believed to be attainable, and the plan for reaching the
goals. Business plans encourage managers and employees to think in a more efficient, cost-
effective, and strategic manner. The business plan is the most important document that a
company will ever produce as a means to obtain financing. Every potential equity investor will
want to see a business plan including financial projections and information on what a company
intends to do with its monetary and human resources. Business plans are used by most private
companies and many non-profit agencies as well. Utilities and other companies providing
environmental services can bolster their financial, managerial, and technical capacities to deliver
services through the use of business plans. Business plans can also be used by state and federal
government offices to spur the optimal in-house provision of environmental services.
for DeThomas, Arthur R., Ph.D.; and Grensing-Pophal, Lin;
Writing a Convincing Business Plan, Barren's Educational Services, Inc.: 2001, available at
DeThomas/dp/0764113992/ref=pd sim b 1/002-1123591-2445667.
Purchase software for creating business plans at Jian: http : // www . j i an . com/.
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Active Capital is a Website for entrepreneurs seeking private investment and
private investors seeking deals in a secure and protected environment consistent with all
investment laws. Active Capital is the replacement for the Angel Capital Electronic Network
(ACE-Net), which was created by the U.S. Small Business Administration in 1995. ACE-Net
was changed to Active Capital to express more accurately its proactive role in helping small
businesses to connect with private capital. Active Capital is the only low-cost internet-based
option for registering securities for sale; and it allows registrations of up to $5 million per year.
Active Capital's cost effectiveness rests on the fact that it allows entrepreneurial companies
seeking equity capital for growth to gain legal access to a nationwide network of investors by
answering single sets of questions derived from their business plans. Once accepted into the
network, the companies are granted exempt status according to state and federal regulators. This
exempt status allows them to go directly to Angels (investors) to acquire capital for their
businesses, without having to go through brokers that would require them to pay fees. This
exempt status is very beneficial to small businesses with a limited amount of capital.
for Active Capital Website: ://activecapital.org/.
U.S. Small Business Administration Website: http://www.sba.gov/. Consult a securities law
practitioner for additional information.
The Small Business Innovation Research (SBIR) Program was established by the
Small Business Innovation Development Act of 1982. The purpose of this Act is to strengthen
the role of small businesses in federally funded research and development and help develop a
stronger national base for technical innovation. All agencies with a federal research and
development budget exceeding $100 million are required to participate in the SBIR program.
Eleven federal agencies participate. The participating agencies that deal directly with
environmental issues include the U.S. Environmental Protection Agency (EPA), the U.S.
Department of Agriculture, the U.S. Department of Commerce, the U.S. Department of Energy,
the U.S. Department of Transportation, and the National Science Foundation. SBIR businesses
are eligible to apply for SBIR financial awards. An SBIR small business is defined as a for
profit organization with a maximum of 500 employees that is independently owned and operated
and at least 51 percent owned by U.S. citizens or lawfully admitted resident aliens. The U.S.
EPA issues annual solicitations for SBIR research proposals in three phases: Phase I, Feasibility
Studies; Phase II, Development; and Phase III, Commercialization. The environmental
protection related SBIR grant awards included in the U.S. EPA's 2007 Phase 1 solicitation
include $3.2 million in small grants for new environmental technologies for purposes such as
control and monitoring of air emissions, pollution prevention, and solid waste management.
for DARPA's SBIR/STTR Support Center Website:
U.S. EPAWebsite: hfflx/yejygi)^^
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Small Business Investment Companies (SBICs) are privately organized and
managed venture capital firms licensed by the Small Business Administration's SBIC Program to
make equity capital and long-term loans available to small companies. Using private capital and
capital borrowed at favorable rates via the federal government, SBICs channel monies to small,
fast-growing companies, both new and established. The SBIC program has provided $48 billion
in financing to more than 100,000 small U.S. companies since the program's creation in 1958.
SBICs specialize in small business financing and have considerable experience/expertise in that
area. In addition to loans, they provide expert management assistance to qualifying businesses.
Many SBICs make investments or loans in cooperation with other public or private parties. As
profit-motivated entities, SBICs expect to share in the success of the small businesses in which
they invest. SBICs could be formed for the express purpose of providing capital to small
businesses in the environmental goods and services industry, and/or to specific sub-segments of
that industry; and they could focus their investments on start-up companies and/or on promoting
environmental technology innovation.
for
National Association of Small Business Investment Companies Website: http://www.nasbic.org/.
U.S. Small Business Administration Website: http://www.sba.gov/.
Franchising is a business partnership where a franchisor licenses a trade name,
trademarks, and tried and proven methods of doing business to a franchisee in exchange for a
recurring payment, annual fees, and a percentage of gross sales or gross profits. The franchisor
provides expertise on a proven business plan to the franchisee. Franchising leverages the
franchisor's expertise with the franchisee's money and work. A recent PricewaterhouseCoopers
study found that the franchising sector generates 18 million jobs in the United States and yields
$1.53 trillion in economic output. There are a growing number of environmental franchises that
provide environmental protection related services and/or products, such as leak detection and
non-toxic household cleaning supplies. Examples of environmental franchises include Culligan,
which provides water purification and delivery services, and Envirospect, Inc., which is one of
the many successful franchises performing environmental home inspections. Envirospect, Inc.
inspects homes for mold, mildew, allergens, lead, asbestos, and radon, and performs Phase I
environmental consulting. The International Franchise Organization (IFA) is a membership
organization of franchisors, franchisees, and suppliers whose mission is to protect, enhance, and
promote franchising. The IFA's Website provides information on topics including how to
franchise a business and how to acquire a franchise.
for International Franchise Association Website:
http://www.franchise.org/. Gaebler Ventures Website: http://www.gaebler.com/Environmental-
Franchises.htm.
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Investment forums are special events, typically serving a state or region, that bring
businesses together with investors, economic development officials, and investment
intermediaries such as underwriters, venture investment bankers, finance consultants, financial
planners, loan brokers, and venture clubs, for their mutual benefit. These forums are sometimes
sponsored and attended by small businesses in the environmental goods and services industry.
For example, through the Clean Technology Finance and Investment Forums, Cleantech
Technology AustralAsia creates a platform for knowledge exchange and commercial interaction
for the full range of investors, funds, and companies interested in investing in Cleantech
Solutions. Through Cleantech Solutions, Cleantech identifies how it can innovatively finance
and deploy Australian clean technology products used to help solve environmental problems and
support sustainable development in Australia and internationally. An example of an investment
forum is the Eurasian Innovation and Investment Forum that took place in Northern Virginia in
March 2007. Earthrise Capital, an investment management company focused on renewable and
distributed energy, power conditioning, and power quality, attended that investment forum.
for Clean Technology AustralAsia Website:
http://www.cleantechnology. .au/. Eurasian Innovation & Investment Forum Website:
http://www.innovationforums.org/virginia. Earthrise Capital Website:
http://www.earthrisecapital.com/. Investment Forum Website:
Investment networks are business services that match the interests of investors with
businesses seeking capital. These networks help new investors to enter into venture capital
markets. They also help businesses to attract investment capital. Investment networks provide a
confidential way for companies and investors to broaden their range of business contacts. For
example, the Capital Network is an investment network that educates and connects entrepreneurs
seeking between $50,000 and $4 million who are building fundable businesses toward an exit
strategy. Specialized investment networks could be formed for businesses such as recycling
companies, pollution prevention enterprises, and environmental remediation technologies firms.
The Investors' Circle (1C) Network is an example of an investment network that uses private
capital to promote the transition to a sustainable economy. The 1C Network is comprised of
angel investors, professional venture capitalists, foundations, family offices and others. Recent
accomplishments of the 1C Network include linking a small venture fund in Vermont with a
community development venture fund in Philadelphia and helping an importer of organic cocoa
to secure a program -related investment from a major foundation.
for See "Venture Capital" in Section lOa of this Guidebook.
The Capital Network Website: http://www.thecapitalnetwork.org/. Investors' Circle Website:
Buzzle.com: http_"J/www_.buzzle.c^
financejjrw^
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A joint venture is an enterprise formed between two or more parties for the purpose
of undertaking economic activity together. The parties each contribute equities to the enterprise;
and they then share in the revenues, expenses, and control of the enterprise. A company with
limited resources can use a joint venture with a larger corporate partner to exploit its technology
in an identifiable market. A joint venture can be for one specific project, such as a research
project, or it can be a continuing business relationship. Joint ventures are a common financing
technique among firms seeking to bring new products to market. A joint venture can offer a
small firm an opportunity to bring technologies or products to market that advance
environmental protection goals, such as devices for reducing air pollution.
for Consult an attorney on applicable state and federal laws.
U.S. Small Business Administration (SBA) Website: ://www.sba.govA contact SBA at
answerdesk@sba.gov, or at 1-800-U-ASK-SBA (1-800-827-5722) with questions about joint
ventures or for referral to the nearest Small Business Development Center. JustinMichie.com:
A private placement is the direct sale of a limited number of shares of stock in a
company to a relatively small number of pre-selected buyers, often institutional investors. The
most common type of private placement is the limited partnership. A typical limited partnership
involves one general partner who holds full authority for all business decisions, and a number of
limited partners who serve as angel investors. Private placements are used by new companies
that are not likely to attract a single investor to come up with the entire amount of money that
they need. They are also used by established businesses that want to acquire money without the
scrutiny, expense, and paperwork involved with public offerings. Businesses providing
environmental protection related services and products could raise funds using private
placements. Private placements can normally be used to raise between $100,000 to $1,000,000,
and sometimes more. Successful private placements require very good business plans.
for See "Angel Investors" in this section of the Guidebook.
Blechman, Bruce Jan; and Levinson, Jay Conrad, Guerrilla Financing: Alternative Techniques to
Finance Any Business, Houghton Mifflin Company, Boston, Massachusetts: November 1991,
available at http://www.amazon.com/Guerrilla-Financing-Marketing-Bruce-
Blechman/dp/0395522641.
About Website: htt|r/Asbjjifon^^ "Private
Placement Letter" Website: htti3;//w^wj3riy^ issue^cfm.
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A public offering (PO) is the selling of a company's shares to the public in the form
of stock. Public offerings require registration with the Securities and Exchange Commission
(SEC) and with state regulators. The first time a company sells shares to the public is known as
an initial public offering (IPO). Small Corporate Offering Registrations allow smaller companies
raising less than $5 million to be exempt from some regulations. A growing number of
companies that focus on environmentally-related technologies are selling their stock in public
offerings. For example, CECO Environmental Corporation, a producer of air pollution control
and industrial ventilation systems, announced on April 12, 2007 that about 3.3 million shares of
its common stock will be sold in a public offering. Public offerings allow companies with well-
established records of successful performance to raise money for investment in product
development, marketing and business expansion. Through public offerings, companies normally
raise at least $5 million; and they sometimes raise hundreds of millions of dollars.
for U.S. Securities and Exchange Commission Website:
http_:/J_www.sec._govL IPOHome Website: jjttji^/wywjjgohjj^^
"CECO Announces Public Offering," Associated Press Business News, 2007, available at
http://news.moneycentral.msn.com/category/topi carticle.aspx?feed=AP&Date=20070412&ID=67
37829.
A strategic alliance is a partnership formed between two or more parties to pursue
a set of agreed upon goals. Strategic alliances are often formed to meet critical business needs.
There may be some exchange of equity in these corporate partnerships, but both companies
continue to operate as independent entities. Strategic alliances are often used in research
contracts and marketing and licensing agreements. These alliances can also be used for
financing, product distribution, and many other business activities. A strategic partner may
provide financing structured as an investment, a loan, prepayment for work to be performed, or
as an exchange or sharing of resources such as space, personnel, and equipment. Many small
businesses form strategic alliances with larger companies to get their products or services to the
market faster. An example of a potential strategic alliance with environmental protection
benefits is car manufacturers forming an intra-industry alliance to develop electric car
technology. Businesses can rely on the Association of Strategic Alliance Professionals, which is
a global professional association, to help make strategic alliances happen by providing a forum
for exchange of information on topics such as best practices, resources, and opportunities.
for Association of Strategic Alliance Professionals Website:
http://www.strate.gic-alliances.org/.
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Venture capital is a type of private equity capital typically provided by
professional, institutionally-backed outside investors to new businesses with high growth
potential. Individuals who make these types of investments are called venture capitalists.
Venture capital funds are pooled investment vehicles (often partnerships) that invest in
enterprises considered too risky for standard capital markets or bank loans. Professionally
managed venture capital firms are generally private partnerships or closely-held corporations.
Some examples of venture capital firms with an environmental focus include Alyra Renewable
Energy Finance, LLC and EnerTech Capital. Alyra provides financial advisory services to
businesses in the renewable energy sector. EnerTech helps entrepreneurs create companies that
deliver profitable, differentiated energy technologies such as wind power and solar power.
for See the EcoBusinessLinks Environmental Directory for a
directory of green venture capital firms:
http://www.ecobusinesslinks.com/green_venture_capital.htni.
See the vFinance, Inc. Website for a directory of venture capital firms:
National Venture Capital Association Website: http://www.nvca.org/def.html.
EnerTech Capital Website: http://www.enertechcapital.com/.
Alyra Renewable Energy Finance, LLC Website: http ://www. alyra. net/. .
America's Small Business Development Center (SBDC) Network, also called the
SBDC program, is a comprehensive small business assistance network serving the United States
and its territories. The SBDC Network is a partnership that includes Congress, the U.S. Small
Business Administration, the private sector, and the colleges, universities, and state governments
that manage SBDCs. The mission of the SBDC Network is to help new entrepreneurs realize
their dreams of business ownership, and assist existing businesses to remain competitive in the
complex marketplace of an ever-changing global economy. The services provided by the SBDC
Network include free face-to-face business consulting and at-cost training on writing business
plans, accessing capital, marketing, regulatory compliance, international trade, and more. The
SBDC Network provides its services to over 1.3 million small business owners and aspiring
entrepreneurs each year. SBDC in-depth clients generate $2.82 in new federal tax revenue for
every $1 spent by the U.S. government on the SBDC program.
for America's Small Business Development Center Network
Website: Mtpj//www,Mbdc-ui,org/. U.S. Small Business Administration (SBA) Website:
http://www.sba.gov/services/financialassistance/sbaloantopics/prequalification/index.html, SBA
phone # 1-800-U-ASK-SBA (1-800-827-5722).
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1. U.S. Department of Agriculture Rural Development: Intermediary Rel ending Program
2. Bank Financing
3. U.S. Small Business Administration: Prequalification Loan Program
4. U.S. Small Business Administration: Certified Development Company/504 Loan
Program
5. U.S. Small Business Administration: Basic 7(a) Loan Program
6. U.S. Small Business Administration: Microloan Program
7. Small Business Administration: CAPLines Loan Program
8. Community Reinvestment Act
9. Convertible Debt
10. Credit Analysis
11. Credit Cards
12. Export-Import Bank of the United States: Environmental Exports Program
13. Foundations: Program-Related Investments
14. Leasing
15. Mezzanine Financing
16. Microcredit
17. National Consumer Cooperative Bank
18. National Credit Union Administration: Community Development Revolving Loan Fund
19. Accounts Receivable Financing
20. Surety Bonds
21. U.S. Department of Treasury: Community Development Financial Institutions Fund
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The U.S. Department of Agriculture (USDA) Rural Development Intermediary
Relending Program (TRP) was established for the purpose of alleviating poverty and increasing
economic activity and employment in rural communities. The IRP provides loans to local
organizations that act as intermediaries for the establishment of revolving loan funds. These
revolving loan funds are used to help finance businesses and economic development activities
for the purpose of creating or retaining jobs in disadvantaged and remote communities with
populations of 25,000 or less. The intermediaries are encouraged to work in accord with state
and regional strategies, and in partnership with other public and private organizations that can
provide complimentary resources. Intermediary recipients of these loans include private non-
profit corporations, public agencies, Indian tribes, and cooperatives. An intermediary may
borrow up to $2 million for its first financing and up to $1 million for any financing thereafter.
Total aggregate debt for any intermediary is capped at $15 million. Environmental protection
related initiatives that are financed with these loans include purchases of easements to protect
land from development and pollution control and abatement projects.
for U.S. Department of Agriculture Website:
http://www.mrdev.osda.gov/rbs/busp/irp.htm. Organizations must contact their USDA Rural
Development State Offices to apply for loans through this program. To locate the Website of
your USDA Rural Development State Office, see htt^/wjywjTj^dgv.usd_^igQy/Iggd majxhtml.
Banks frequently extend credit to businesses and individuals through loans and
lines of credit. There are two types of bank loans: secured and unsecured. For secured loans, the
borrower puts up collateral such as real estate, stocks, business assets, or something else of value
that the bank can take if the borrower defaults on the loan. Unsecured loans are based on the
credit of the borrower, do not require collateral, and often have higher interest rates than secured
loans. Lines of credit are open accounts that can be drawn upon as needed up to their limit.
These accounts have higher interest rates and are more expensive compared to most loans. Small
business lines of credit generally have lower limits than loans. Bank financing is a good option
for established businesses that are profitable and have good credit records. Many businesses
providing environmental protection related services and products rely on bank financing. The
American Bankers Association (ABA), the largest banking trade association in the United States,
provides training and other resources to assist businesses with financing. The ABA Website
provides information on topics such as survey reports comparing banks to their peers, consumer
education, and the performance of farm banks in providing agricultural loans.
for American Bankers Association Website:
http://www.aba.com/default.htm.
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The U.S. Small Business Administration (SBA) Prequalification Loan Program
uses intermediary organizations to assist prospective borrowers in developing viable loan
application packages and securing loans. Through this program, loans are awarded to low
income borrowers, disabled business owners, new and emerging businesses, veterans, exporters,
and rural and specialized industries. The role of the intermediary organization is to work with
the loan applicant to make sure the business plan is complete and that the application is eligible
and has credit merit. The intermediaries send the loan applications to the SBA when they are
satisfied that they have a chance for approval. If the SBA approves the loan application, the
intermediary then helps the borrower locate a lender offering the most competitive rates.
Unlike the Small Business Development Centers serving as intermediaries for this loan program,
for profit organization intermediaries do charge a fee. The maximum loan amount offered
through this program is $250,000. Businesses providing environmental protection related
services and products could potentially be awarded these loans.
for U.S. Small Business Administration (SBA) Website:
http://www.sba.gov/services/financialassistance/sbaloantopics/prequalification/index.html. Call
the SBA at 1-800-U-ASK-SBA (1-800-827-5722) to locate a prequalification intermediary.
The Small Business Administration (SBA)'s Certified Development Company/504
Loan Program is a financing tool for economic development within a community. Under the 504
Program, nonprofit corporations called Certified Development Companies (CDCs) work with the
SBA and private- sector lenders to provide long-term, fixed-rate financing to small businesses for
substantial fixed assets, such as land and buildings. Section 504 of the Small Business
Investment Act requires the SBA to sell debt instruments called debentures to investors. A
project financed by the 504 Program generally includes a loan secured with a senior lien from a
private-sector lender covering up to 50% of the project costs, a loan secured with a junior lien
from a CDC (backed by a 100% SBA-guaranteed debenture) covering up to 40% of the cost, and
a contribution of at least 10% equity from the small business being helped. The maximum SBA
debenture is $1.5 million when meeting the job creation criteria or a community development
goal and $2 million when meeting a public policy goal. Generally, a business is required to
create or retain one job for every $50,000 provided by the SBA under this program. An example
of an environmental protection initiative that the 504 Program could potentially finance is the
modernization of buildings through making them more energy efficient.
for U.S. Small Business Administration (SBA) Website:
http://www.sba.gov/services/financialassistance/sbaloantopics/cdc504/index.html and
....... lawsrgg ...... Smajlbusmysthtnil.
SBA phone: 1-800-U-ASK-SBA (1-800-827-5722).
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The U.S. Small Business Administration (SBA) Basic 7(a) Loan Program is the
most basic and most used type of SBA's business loan programs. The program is regulated
under Section 7(a) of the Small Business Act (Public Law 85-536, as amended). To be
considered for financing under the Basic 7(a) Loan Program, businesses must show that they
lack the internal resources (business or personal) to provide financing and demonstrate that they
cannot get financing on reasonable terms via any other lending channels. Basic 7(a) loans are
only made available on a guaranty basis and they have a maximum loan amount of $2 million.
The SBA's maximum exposure for 7(a) loans is $1.5 million. Thus, if a business is awarded a
7(a) loan of $2 million, the maximum guaranty to the lender is $1.5 million. Most American
banks participate in the 7(a) program, and there are some non-bank lenders as well. Interest rates
on 7(a) loans may be fixed or variable, and they vary depending upon the size and terms of the
loan. Basic 7(a) loans could be used for environmental protection purposes such as the purchase
of equipment needed to meet Clean Air Act or Clean Water Act requirements.
for U.S. Small Business Administration (SBA) Website:
http://www.sba.gov/services/financialassistance/sbaloantopics/7a/index.htnil &
: //www. sb a. gov/regul ati on s/sb . html.
To locate a lender, call the SBA at 1-800-U-ASK-SBA (1-800-827-5722).
The U.S. Small Business (SBA) Administration Microloan Program provides very
small loans to start-up, newly established, or growing small businesses. The SBA Microloan
Program is regulated under Section 7(m) of the Small Business Act (Public Law 85-536, as
amended). Under this program, the SBA awards funds to nonprofit community based lenders
(intermediaries) which, in turn, make loans to eligible borrowers in amounts up to a maximum of
$35,000. The average sized SBA microloan is about $13,000. The maximum term permitted for
microloans is six years. Interest rates on these loans vary, depending upon the intermediary
lender and the costs to the intermediary from the U.S. Treasury. The interest rates are generally
between 8% and 13%. Many different types of small businesses can meet SBA eligibility
requirements and qualify for a microloan. Microloans can provide needed capital to start or
expand businesses in the environmental goods and services industry.
for U.S. Small Business Administration (SBA) Website:
http://www.sba.gov/regulations/sbaact/sbaact.html. Call the SBA at 1-800-U-ASK-SBA (1-800-
827-5722) or see the listing on the SBA Website to locate an SBA microlending intermediary.
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CAPLines is the umbrella program under which the U.S. Small Business
Administration (SBA) helps small businesses meet their short-term and cyclical working capital
needs. The CAPLines loan program is regulated under Section 7(a) of the Small Business Act
(Public Law 85-536, as amended). The following five short-term working capital loan programs
for small businesses are offered under the CAPLines umbrella: 1.) Seasonal Line: advances
against anticipated inventory and accounts receivable help, 2.) Contract Line: finance direct labor
and material costs of performing assignable contracts, 3.) Builders Line: finance direct labor and
material costs for construction and renovation projects, 4.) Standard Asset-Based Line:
revolving lines of credit for firms unable to meet credit standards associated with long-term
credit, and 5.) Small Asset-Based Line: revolving lines of credit of up to $200,000. The SBA
provides a maximum loan amount of $2 million for all CAPLines loans except for the Small
Asset-Based Line. CAPLines loans can help small businesses in the environmental goods and
services industry to meet payroll, acquire building materials, and pay other expenses.
for Small Business Administration (SBA) Website:
http://www.sba.gov/smallbusinessplanner/start/financestartup/SERV_CAPLINES.html and
http://www.sba.gov/regulations/sbaact/sbaact.html.
SBA phone #: 1-800-U-ASK-SBA (1-800-827-5722).
The Community Reinvestment Act (CRA) of 1977 encourages depository
institutions to help meet the credit needs of the communities in which they operate, including
low and moderate income neighborhoods, consistent with safe and sound banking operations.
The CRA requires that each insured depository institution's record in helping meet the credit
needs of the community in which it is located be evaluated periodically. The Office of the
Comptroller of Currency revised its regulations on implementation of the CRA in 1995. Under
the 1995 regulations, lenders subject to the CRA can claim community development loan credits
for loans made to help finance the environmental cleanup or redevelopment of industrial sites
when it is part of an effort to revitalize the low and moderate income communities in which these
sites are located. The 1995 regulations are designed to encourage economic activity in urban
areas and they make the financing of industrial property development more attractive to large
lenders by providing CRA credit while aiding the communities in which they operate.
for Federal Financial Institutions Examination Council
(FFIEC) Community Reinvestment Act Website: http://www.ffiec.gov/cra/default.htm. U.S.
Department of the Treasury Comptroller of the Currency Website: http://www.occ.treas.gov/.
U.S. Environmental Protection Agency Website: http://www.epa.gov/swerosps/bf/html-
doc/cra.htm. See Section 9 of this Guidebook for more information on Brownfields.
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Convertible debt is a loan instrument obtained from a potential capital investor that
can be converted to equity in the form of stock ownership under certain circumstances at a future
date. The lender earns interest on the loan until it is either paid off or the conversion option
exercised. The decision regarding whether or not to convert the debt to equity usually rests with
the lender. Convertible debt offers lenders and investors flexibility by permitting them to control
some of the risks and rewards of their investments. Lenders have the option of negotiating down
the future equity offer in return for higher interest returns on the debt up-front. Convertible debt
is usually more expensive than straight business loans. The most common forms of convertible
debt issued by businesses are securities such as debentures, bonds, and stock options. Many
businesses, including small companies, use convertible debt as a means of raising capital to
finance business start-ups and/or expansions. Businesses in the environmental goods and services
industry could evaluate the option of using convertible debt to raise capital.
for Entrepeneur.com Website:
.m
9520Jitml. Business Owners' Idea Cafe Website:
http://www.businessownersideacafe.com/financing/convertible debt.php.
Credit analysis is the process of measuring a credit applicant's ability and
willingness to repay debt. It is an assessment of the probability that the applicant will pay on
time and in full. The standard framework for credit analysis is "The Four C's" of credit: 1.)
creditworthiness: a measure of a borrower's willingness to make timely payments on debt, 2.)
collateral: the value of any assets pledged as security for a debt, 3.) capacity: an assessment of a
borrower's ability to repay a debt, and 4.) capital: a measure of how much cash (or assets readily
converted into cash) that the borrower has to make a down payment, cover closing costs, and
handle other incidental expenses. Credit analysis is done through a review of the applicant's
credit history, financial statements, and records on file with credit reporting companies. Credit
analyses are performed routinely by banks, savings and loans, other financial institutions,
investors, businesses, and individuals. Knowledge of the credit analysis process can help credit
applicants to manage their finances in such a way as to improve their credit ratings.
for Contact the credit department of any bank, savings and
loan, finance company, or other lending institution. Nationwide Advantage Mortgage Website:
Golan, Jonathan, The Bank Credit Analysis Handbook: A Guide for Analysts, Bankers, and
Investors, John Wiley & Sons, New York: 2001, available at http://www.amazon.com/Bank-
Credit-Analysis-Handbook-Investors/dp/0471 8421 76.
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Individuals, corporations, and other parties frequently use credit cards for purposes
such as covering travel expenses and purchasing office supplies. Many entrepreneurs and small
businesses use credit cards to help finance business start-ups. When used responsibly, credit
cards represent a good source of modest amounts of debt capital. Credit cards are particularly
good for meeting any expense that can be repaid within the interest free grace period, which is
generally 30 days, or during the interest free introductory periods of several months that some
cards have. Credit cards are often used for isolating and/or itemizing different business expenses
through the designation of specific cards for specific types of expenses. Businesses and
individuals could use credit cards for short-term financing of many different types of
environmental protection initiatives. Of course, care must be taken on the part of credit card
users to use good financial planning so that they enhance, rather than impair, their credit ratings.
The Credit Infocenter and Smartaboutmoney.org provide useful information on topics such as
managing your money and reading a credit report to help people use credit cards responsibly.
for See "Credit Analysis" in this section of the Guidebook.
Creditlnfocenter.com: hJt^ywjyw^creditinfocentercQm/. SmartAboutMoney.org:
http ://www. smartaboutmonev. org/nefe/pages/content. asp?page= 1720.
The Export-Import Bank of the United States (Ex-Im Bank) is the official export
credit agency for the United States. The mission of the Ex-Im Bank is to assist in financing the
export of U.S. goods and services to international markets. The Ex-Im Bank's Environmental
Exports Program (EEP) provides enhanced levels of financial support for exports of a broad
range of environmentally beneficial products including renewable energy products. Enhanced
support under EEP is made available to finance exports needed for environmentally beneficial
projects such as pollution cleanup initiatives and renewable energy projects, and for exports of
products and services specifically used to prevent, abate, control, or mitigate air, water and
ground contamination or pollution, or to provide protection in the handling of toxic substances
and wastes. Financing mechanisms offered through the EEP include: 1.) short-term
environmental export insurance policies, 2.) a working capital guarantee enabling small and
medium sized businesses to access funds to purchase materials and goods for export and to meet
other export related financing needs, and 3.) enhanced medium-term insurance and guarantees
and long-term loans and guarantees for export transactions.
for Export-Import Bank of the United States Website:
http://www.exim.gov/ & http://www.exim.gov/products/special/environment.cfni.
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A program related investment is a loan or other investment made by a foundation to
a business or nonprofit organization for a project related to the foundation's stated purpose and
interests. Program related investments often take the form of loans with limited or below-market
interest, loan guarantees, equity investments, asset purchases, linked deposits, purchases of stock,
or other forms of financial support. Foundations make program related investments mainly to
maximize the impact of their programs, provide an alternative form of financing when grants are
inappropriate or insufficient, and, in the case of loans, recycle dollars to increase funding
availability. Program related investment dollars are often used to provide capital to intermediary
organizations, such as revolving loan funds and development banks, which in turn lend funds to
development agencies and service providers. Foundations that make program-related
investments include the Ford Foundation, the John D. and Catherine T. MacArthur Foundation,
and the Met Life Foundation. Program related investments can be a source of low cost debt or
equity capital to support an organization's environmental projects.
for Foundation Center Website: htt^/foundationcgnterorg/.
John D. and Catherine T. MacArthur Foundation Website: httg^/wwwjnacfoundorg.
Ford Foundation Website: http://www.fordfound.org/program/community.cfm.
MetLife Foundation Website:
http://www.metlife.com/Applications/CorporateAVPS/CD A/PageGenerator/0,4132,P263,OO.html.
A lease is a rental contract granting the right to use or occupy personal property or
real property given by a lessor to another person (usually called the lessee or tenant) for a fixed
or indefinite period of time, whereby the lessee obtains exclusive possession of the property in
return for paying the lessor a fixed or determinable consideration (payment). There are two
general types of leases, operating leases and capital leases. Operating leases are short-term (five
years or less) instruments offered by equipment manufacturers that can frequently be canceled by
the lessee before the term expiration. Maintenance and insurance are typically included in the
operating lease payments. Capital leases, also called finance leases, generally extend over a
longer term equal to the useful economic life of the asset and they cannot be canceled by the
lessee. Lease financing is available through banks, finance companies, specialized leasing
companies, and equipment manufacturers and retailers. Leasing could be a very efficient way
for environmental firms to acquire and use equipment for environmental cleanup or other
purposes that may soon become obsolete. Lease payments can be deducted as business operating
expenses and can be written off faster than depreciation of owned equipment.
for Entrepreneur.com:
http://www.entrepreneur.com/money/howtoguide/article52720.html.
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Mezzanine financing is a hybrid of debt and equity financing that is often used to
finance the expansion of existing companies. To compensate for the greater risk involved in
their usually junior or unsecured status, mezzanine loans typically carry interest rates one to
three percentage points above senior, secured loans and include an equity kickers such as stock
warrants or convertibility. Mezzanine financing tends to be less restrictive than bank debt and
less expensive than equity capital. Companies that have outgrown the start-up phase but are not
yet large enough for traditional corporate financing are candidates for mezzanine financing if
they have strong management, identifiable growth opportunities, and stable or growing cash
flow. Mezzanine financing typically lasts five years and it is sometimes used to finance as much
as $100 million. Mid-sized companies providing environmental protection related goods and
services may find mezzanine financing to be a good source of capital if their needs are a good
match. Some Small Business Investment Companies (SBIC's) specialize in mezzanine
financing.
for U.S. Small Business Administration Website:
http://www jba.gov/. Contact the Small Business Administration Answer Desk at 1-800-U-
ASK-SBA (1-800-827-5722) for the contact information of your nearest Small Business
Development Center, which can provide information on the use of mezzanine financing.
See "Small Business Investment Companies" in Guidebook Section lOa.
Investopedia: MlEL//wwwJnyeg_ogedia.^
Microcredit is the extension of small loans called microloans to borrowers who are
not considered bankable because they lack collateral, steady employment, and verifiable credit
history. Recipients of microloans include people living in poverty and cash poor entrepreneurs.
Microcredit originated in developing countries, where it has enabled very impoverished people
(mostly women) to start successful businesses. Due to the impressive rate of payback on
microloans, many members of the traditional banking industry realize that microcredit borrowers
are pre-bankable. Thus, microcredit is gaining credibility in the mainstream finance industry.
Microloans have traditionally been offered through intermediaries including community
development financial institutions. The Small Business Administration has a microloan
program. Businesses in the environmental goods and services industry could use microloans for
startup or expansion. The International Economic Development Council offers an "Economic
Development Finance Programs" course that covers the topic of micro lending.
for International Economic Development Council Website:
http://www.iedconline.org/index.php?p=Training_Finance_Programs. See "U.S. Small Business
Administration Microloan Program" and "Community Development Financial Institutions Fund"
in this section of the Guidebook.
Lovgren, Stefan, "Nobel Peace Prize Goes to Micro Loan Pioneers," October 13, 2006, National
Geographic, at |iO]i^/new^
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The National Consumer Cooperative Bank (NCB) is a U.S. government chartered
corporation organized under the NCB Act in 1978 and privatized in 1981 as a cooperative
financial services company. The Act directs the NCB to encourage the development of new and
existing cooperatives. The NCB primarily serves cooperatives and their members in the U.S.
and its territories by providing them with loans and technical assistance. The cooperatives
served by the NCB provide goods and services, housing, education, health care, and other
facilities to their members as the ultimate consumers. Cooperatives are owned by their
members; and they can help the small businesses that own them to solve environmental,
logistical, and marketing problems. The NCB's affiliates and subsidiaries include: 1.) NCB
Capital Impact, a 501(c)3 affiliate that provides services including community lending; 2.) NCB,
FSB, a federally chartered thrift subsidiary of NCB; 3.) NCB Financial Corporation, a wholly
owned stock subsidiary of NCB; 4.) NCB Financial Advisors, a subsidiary providing
independent financial advice to nonprofits nationwide; 5.) NCB Community Works, LLC, which
provides affordable housing development services; and 6.) NCB Capital Trust I, a Delaware
statuary trust.
for See "Cooperatives" in Section 5 of this Guidebook.
National Consumer Cooperative Bank Website: http://www.ncb.coop/.
The National Credit Union Administration's Community Development Revolving
Loan Fund (CDRLF) was established by Congress to support small credit unions that serve low
income communities. The Office of Small Credit Union Initiatives administers the CDRLF,
which is designed to establish, strengthen, and improve operations of credit unions and stimulate
economic activities in the communities served by credit unions. The CDRLF does this by
making loans and Technical Assistance Grants (TAGs) available to qualifying credit unions.
The TAGs may be used for purposes such as building credit unions' internal capacity and
enhancing their consumer services. The loans may be used for specific purposes that are
different from what the grants are generally used for, such as offering new micro business loan
programs and educational loan programs, that are potentially useful for environmental protection
related purposes. Environmental protection related initiatives that credit unions could use these
loans for include providing educational loans to students in environmental studies fields, and
awarding loans to businesses providing environmental protection related services and products.
CDRLF loans have fixed interest rates of one percent. Credit unions may receive an aggregate
amount of $300,000 in loans. The credit union is usually required to provide matching funds.
for National Credit Union Administration Website:
http://www.ncua.gov/CreditUnionDevelopment/Programs/FinanceGrants.htm.
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Accounts receivable financing, also called account receivables factoring, is the
selling of a company's accounts receivable, at a substantial discount, to a factor who assumes the
risk of the account debtors and receives cash as the debtors settle their accounts. The company
receives its money from the factor when it bills or invoices its customers. The discount given to
the factor is usually a percentage of the face value of the accounts receivable, usually between
75% and 90%. The factor usually assumes the credit risks related to the receivables. The
factor's main concern is with the creditworthiness of the receivables; so factors will finance
companies with poor credit that have creditworthy customers. Accounts receivable financing
creates no official debt on the company's balance sheet; however it is expensive and significantly
reduces profit margins. Accounts receivable financing may be a viable financing approach for
firms in the environmental goods and services industry that have marketable products, but
experience substantial lag times between placement of orders and receipt of payment.
for Most factors can be found in the Yellow Pages of the local
telephone book under "Factors" or "Finance." Banks also have lists of local factors.
BusinessFinace.com: hjt]3^/w\vAvibjisinessfinan^
Investorwords.com: http://www.investorwords.com/54/accounts_receivable_financing.html.
Invoice Financial Website: http://www.invoicefmancial.com/.
A surety bond is a contract among three parties: 1.) the principal, who is the
primary party performing the contractual obligation, 2.) the obligee, who is the recipient of the
obligation, and 3.) the surety, a company ensuring that the principal's obligations will be
performed and assuming liability for nonperformance. Through this contract, the surety agrees
to uphold, for the benefit of the obligee, the contractual promises made by the principal if the
principal fails to uphold its promises to the obligee. In short, surety bonds are given to protect
the obligee against loss in case the terms of a contract are not filled. Bid bonds, performance
bonds, and payment bonds are three types of surety bonds. Surety bonds are often used to
protect the obligee from liabilities related to environmental pollution and contaminated sites. For
example, surety bonds are offered through a risk management company called Global
Environmental Partners as a means of addressing issues with long-term pollution monitoring and
facility closure. In addition, ACSTAR Insurance Company writes virtually every type of surety
bond, and has expertise in environmental, pollution, and remediation type contracts. The
National Association of Surety Bond Producers can be consulted for more information.
for National Association of Surety Bond Producers Website:
http://www.nasbp.org/.
Acstar Insurance Company Website: http://www.acstarins.com/q_and_a.htm.
Answers.com: http://www.answers.com/surety%20bonds. Global Environmental Insurance
Partners Website: http;//w3¥wj^
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U.S.
The Community Development Financial Institutions (CDFI) Fund, a program of
the U.S. Department of Treasury, promotes economic revitalization and community development
through investment in and assistance to community development financial institutions (CDFIs).
The CDFI Fund was established by the Reigle Community Development and Regulatory
Improvement Act of 1994. The Fund's mission is to expand the capacity of financial institutions
to provide credit, capital, and financial services to underserved populations and communities in
the U.S. It does this by: 1.) directly investing in, supporting, and training CDFIs that provide
loans, investments, financial services and technical assistance to underserved populations and
communities; 2.) providing tax credits to community development entities, 3.) providing
incentives to banks to invest in their communities and in other CDFIs, and 4.) providing financial
assistance, technical assistance, and training to Native American CDFIs and Native American
entities proposing to become or create Native American CDFIs. Since it was created, the CDFI
Fund has awarded $820 million to community development organizations and financial
institutions. With support from the CDFI Fund, CDFIs can increase financing for businesses
providing environmental protection related goods or services; and they can help finance
Brownfields redevelopment.
for U.S. Department of the Treasury Community
Development Financial Institutions Fund Website: htt^VwjywJ,cdfifund.goy/. See "Community
Development Financial Institutions" in Section 9 of this Guidebook (the Brownfields section).
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The U.S. Environmental Protection Agency (EPA)'s Environmental Financial Advisory Board
(EFAB) is an independent advisory committee established to advise the EPA on environmental
financing challenges facing the nation. Chartered in 1989 and operating under the authority of
the Federal Advisory Committee Act (FACA), EFAB provides advice and recommendations on
environmental finance issues, options, proposals, and trends to the EPA Administrator and
EPA's various program offices to assist the Agency in carrying out its environmental mandates.
The activities of the Board include analyzing problems, conducting meetings, presenting findings,
and other activities necessary for the attainment of its objectives.
The advice EFAB provides the EPA Administrator is about paying for the growing costs of
environmental protection and how to increase investment in environmental infrastructure through
the leveraging of public and private resources. EFAB provides advice to EPA based on a cross-
media, intergovernmental perspective on environmental finance that integrates environmental
and economic goals, while emphasizing cost-effective, risk-based approaches and public-private
partnerships.
EFAB has adopted three environmental financing goals:
• Lower the costs of environmental protection by removing financial and programmatic
barriers that raise costs and by improving the efficiency of investments needed to close
the gap between limited resources and increasing mandates;
• Increase public and private investment in environmental facilities and services as a spur
to sustainable development, job creation, productivity, and tax revenues; and
• Build state and local financial capacity necessary to carry out environmental mandates so
that gains made to date are secured and further environmental progress can be made.
The Board produces policy and technical reports on a wide range of environmental finance
related topics of interest to EPA, focusing on environmental finance issues at all levels of
government. EFAB is able to address such a wide range of topics because it is made up of
members who provide expertise in many different disciplines. The members of EFAB are
appointed by the Agency's Deputy Administrator, and they include independent experts from all
levels of government, including state and local governments. Its members are also drawn from
the banking, finance, and legal communities; business and industry, academia, non-profit
environmental organizations, and various national organizations.
The expertise of EFAB's members allows it to provide advice on cross-media financing. This is
of critical importance as the nation has invested billions of dollars in environmental facilities and
programs over the last thirty years. Environmental legislation reauthorized or enacted by
Congress in recent years has placed significant additional resource requirements on all levels of
government, increasing their infrastructure and administrative costs. At the same time, limited
budgets and changes in federal tax laws have constrained traditional sources of capital. EFAB
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serves a unique role, assisting the EPA in providing a credible and significant response to the
increasing concerns over "how to pay" for federal and state environmental mandates. The Board
has made significant contributions to EPA's efforts to address the critical environmental
financing challenges of the 21st Century. To view EFAB publications and other related
information, visit the website at www.epa.gov/efinpage/efab.htm.
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President
TAgriss Advisory Services
New York, New York
Co-Chair
Connecticut League of Conservation Voters
Westport, Connecticut
Managing Director
Municipal Finance
Goldman, Sachs, & Co.
New York, New York
Executive Director
The International Center for Environmental
Finance
Towson, Maryland
United States Senate
Washington, DC
Managing Director
Assured Guaranty Corp.
New York, New York
Steve Grossman, Executive Director
Ohio Water Development Authority
Columbus, Ohio
Partner/Co-Chair
National Environmental Team
Holland and Knight, LLP
San Francisco, California
President
Mahfood Associated, LLC
Ashland, Missouri
A. EFAB Chair
Professor of Public and Environmental
Affairs and Adjunct Professor of Law
Indiana University
Bloomington, Indiana
Professor Emeritus
The Johns Hopkins University
Baltimore, Maryland
President and CEO
American Water
Voorhees, New Jersey
Partner
Scarola Ellis, LLP
New York, New York
Chairman
Louisville Metro City Council
Louisville, Kentucky
Chief Financial Officer
New York State Environmental Facilities
Corporation
Albany, New York
Scott Haskins, Vice President
Global Water Business Group
Bellevue, Washington
Financial Advisor
Merrill Lynch
Albuquerque, New Mexico
Fellow
National Policy Consensus Center
Portland State University
Portland, Oregon
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Chief Operations Officer
Georgia Environmental Facilities Authority
Atlanta, Georgia
Deputy Director
Missouri Environmental Improvement and
Energy Resource Authority
Jefferson City, Missouri
E.
Senior Vice President and Counsel
Zurich North America
Great Falls, Virginia
Director
Environmental Services Department
Bank of America
Hartford, Connecticut
Environmental Finance Consultant
Bozeman, Montana
Executive Director
Oklahoma Department of Environmental
Quality
Oklahoma City, Oklahoma
Dr. J. Director
Multinational Business Services, Inc.
Washington, DC
C.
Environmental Finance Consultant
Middletown, California
Treasurer and Vice President of Finance
Waste Management, Inc.
Houston, Texas
Program Administrator
Maryland Department of the Environment
Baltimore, Maryland
Vice President
Piper Jaffray & Co.
Phoenix, Arizona
Managing Director
Merrill Lynch
New York, New York
Partner
Waller Lansden
Nashville, Tennessee
A. Stanley Meiburg, EFAB Designated Federal Official
National Environmental Protection Agency Liaison
Centers for Disease Control and Prevention
National Center for Environmental Health /
Agency for Toxic Substances and Disease Registry
Atlanta, Georgia
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The Environmental Finance Center Network (EFCN) is made up of nine Environmental Finance
Centers (EFCs) located at universities throughout the United States. It is the only university-
based organization in the country that provides innovative solutions to communities to help
manage the cost of environmental protection. The EFCs work with the public and private sectors
to address the issue of how to finance environmental protection programs and projects. The
EFCs provide services and advice directly to individuals and organizations that voluntarily seek
out their services.
The Network provides finance training, education, and analytical services designed around the
"how to pay" issues of environmental compliance. Each environmental finance center is
affiliated with an EPA region. Since the creation of the first center thirteen years ago, the EFCs
have expanded into a Network that comprises nine centers strategically located at major
universities in eight EPA Regions:
• University of Southern Maine (Region 1)
• Syracuse University (Region 2)
• University of Maryland (Region 3)
• University of Louisville (Region 4)
• University of North Carolina at Chapel Hill (Region 4)
• Cleveland State University (Region 5)
• New Mexico Institute of Mining and Technology (Region 6)
• Dominican University of California (Region 9)
• Boise State University (Region 10)
The EFCs provide state and local governments and the private sector with training and
educational, technical, and analytic assistance on environmental finance (see the description of
the EFCN and individual descriptions of the nine EFCs in Guidebook Section 5). The services
they provide include training programs and electronic financial planning tools. These services
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are designed around the "how to pay" issues of environmental compliance. The EFC Network
has become a significant force in assisting local governments and small businesses in meeting
environmental standards. Many of the EFCs work with specific communities to assist with
specialized needs, such as the financing of water and wastewater treatment plants. A central goal
of the Network is to help create sustainable environmental systems in the public and private
sectors.
Environmental protection goals cannot be met without financing, which is essential to
implementing state and local programs. The EFC Network's services are based on the premise
that communities want to comply with environmental regulations but often do not know how to
pay for them. Many communities, particularly small ones, lack in-house financial expertise.
Knowledge about how to fund environmental programs is often limited, especially at the local
level. The EFCs help fill this knowledge gap- they know that finance is a critical component of
sustainable environmental protection. There is a growing demand for the expertise of the EFC
directors and staff, who are on the front lines of financing environmental facilities and services.
The finance centers provide state-of-the-art expertise in areas outside of EPA's core competency
of developing and implementing environmental programs. The EFC Network has become a
significant force in assisting local governments and small businesses in meeting environmental
standards. A central goal of the Network is to help create sustainable environmental systems in
the public and private sectors. Sustainable systems have the financial, technical, and institutional
resources and capability to operate into the foreseeable future in compliance with environmental
requirements and in conformance with generally accepted environmental practices. Paying for
environmental protection is an important component of sustainability and continues to be
primarily a responsibility of local governments and the private sector.
For their part, the financial outreach services of the EFCs help meet environmental needs by
identifying ways of cutting costs, lowering and shifting costs, and increasing private sector
investment in environmental systems. The work of the EFCs is an ongoing process and the sum
total of the Network's benefits make an important contribution to environmental progress in the
United States. Further information about the Environmental Finance Center Network can be
found on the EPA Environmental Finance Program's Website at
http://www.epa.gov/efinpage/efc.htm.
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1 Environmental Finance Center
Sam Merrill, Director
University of Southern Maine
Portland, Maine
Website: http^/gfcjTiusyejjjni.rnaine1edu
2 Environmental Finance Center
Mark Lichtenstein, Director
Syracuse University
Syracuse, New York
Website: http7/gfc1syracusecoe1grg/
3 Environmental Finance Center
Joanne Throwe, Associate Director
University of Maryland
College Park, Maryland
Website:
4 Environmental Finance Center
Lauren Heberle, Director
University of Louisville
Louisville, Kentucky
Website:
http://cepm.louisville.edu/org/SEEFC/seefc.htm
4 Environmental Finance Center
Jeff Hughes, Director
University of North Carolina at Chapel Hill
Chapel Hill, North Carolina
Website: www.efc.unc.edu/index.html
6 Environmental Finance Center
Heather Himmelberger, Director
New Mexico Institute of Mining and
Technology
Albuquerque, New Mexico
Website:
5 Great Lakes Environmental Finance
Center
Kevin O'Brien, Director
Cleveland State University
Cleveland, Ohio
Website: http;//www.jlejc_._org/
9 Environmental Finance Center
Sarah Diefendorf, Director
Dominican University of California
San Rafael, California
Website
10 Environmental Finance Center
Bill Jarocki, Director
Boise State University
Boise, Idaho
Website: http://efc.boisestate.edii/efc/
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The Environmental Financing Information Network (EFIN), a component of the Environmental
Protection Agency's Environmental Finance Program (EFP), is an Internet-based service
offering electronic access to many different forms of information on environmental finance. The
purpose of EFIN is to provide information on financing alternatives for state and local
environmental programs and small businesses through several channels:
• The EFP Website: The EFP maintains a comprehensive Website of its reports, software tools,
case studies, and financial tools as a public resource. Also on the Website, the financial tools
pages provide links to sources within the Environmental Protection Agency and outside the
Agency.
• Guidebook of Financial Tools: The Guidebook is a reference work examining a wide range
of different tools for financing environmental systems.
• Online Database: The EFIN database is a searchable collection of abstracts representing
publications and other materials (e.g., articles, case studies, and reports) about environmental
financing.
• Infoline: EFIN operates an information phone line that provides callers with referrals, as well
as assistance with accessing and searching the EFIN database. The infoline phone number is
202-564-4994, and the hours of operation are 9:00am-5:30pm (Eastern Standard Time),
Monday through Friday (excluding federal holidays). EFIN can also be reached via e-mail at
efin@epa.gov.
For more information, visit the Environmental Finance Program's Website at:
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EPA
United
Environmental Protection Agency
Environmental Finance Program
(2731-R)
1200 Pennsylvania Avenue, NW
Washington, DC
EPA-205-R-08-001
August 2008
www.epa.gov/efinpage
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