On Oct. 9, during a discussion forum at WEFTEC® 2013, a panel provided insight on innovative financing mechanisms for stormwater infrastructure. Panelists discussed ways to use State Revolving Funds, incentive-based programs, and public–private partnerships to close the water infrastructure capital gap, which will approach $84 billion in 2020, according to the American Society of Civil Engineers.
Thad Wilson with M3 Capital Partners discussed ways private equity partners can play a role in public–private partnerships. According to Wilson, investment firms like M3 are searching for investment opportunities with manageable risk and annual rates of return of 8%. While the assets remain publicly owned, private entities finance the infrastructure up front in exchange for long-term performance contracts. They participate in the design, bid, and build process, then manage the asset for an extended time period. This helps lower risks for the public entity and provides a funding mechanism.
Another panelist, Alisa Valderrama with the Natural Resources Defense Council’s Center for Market Innovation, said that incentive programs can create opportunities for third-party investments in stormwater retrofits. Savings from stormwater fee discounts can theoretically be applied to infrastructure investments as repayment to the project financier.