DC Water issued a $25 million tax exempt Environmental Impact Bond (EIB) this fall to help finance its green infrastructure program to reduce combined sewer overflows. The EIB is a novel financial instrument in that the bond includes a contingent payment feature, based on the performance of the green infrastructure. Using a three-step evaluation program, if the green infrastructure outperforms, then DC Water will make an “outcome payment” to investors of $3.3 million. If it underperforms, then investors will make a $3.3 million “risk share” payment to DC Water, which will be used to redesign the green infrastructure system.
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Additional information is online at www.dcwater.com/news/listings/press_release783.cfm.