jeffrey klein - nric.pptx(edited)

Western Water Roundtable Meeting

“Creatively Capitalizing”December 12-13, 2016Las Vegas, Nevada

Jeff KleinExecutive DirectorNatural Resource Investment CenterDepartment of the Interior

Species and Habitat

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Foster private impact investments and support well-structured markets that advance efficient permitting and conservation of species, habitats, and other natural resources.

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Increase non-federal investment in water conservation and build up water supply resilience by facilitating water transfers in the western United States in partnership with local, state, and tribal governments

Water Markets

Increase non-federal investment in critical water infrastructure, both major rehabilitation and replacement of existing infrastructure and construction of new infrastructure, for water supply resilience.

Infrastructure Investment

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What we do• Educate• Advise• Convene• Advocate• Structure

Natural Resource Investment Center

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Who We Work With• DOI Leadership and its Bureaus• Irrigation Districts• Investors• Federal Family• Non-Profits• Government Entities• Policy Makers• Academia


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Examples of Projects• Yakima Integrated Plan• Work to Establish Loan Programs for Irrigation

Districts•Water Reuse Project (Title XVI)

• Irrigation District Modernization Program• Various Conservation Initiatives


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“Where is the incremental revenue coming from to service the project’s capitalization?”

Making projects financeable• Numerous and diversified off-takers that present an

acceptable credit risk • Ability to / history of increasing rates to meet

system needsSolid management team

• That has delivered solid projects, on time and on budget, and with an “on plan” operating performance in the past

• Experience in servicing project debt

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Optimize project plan•Enough system capacity to meet present and

projected needs without being overbuilt•Full vetting of multiple approaches to meet the need,

and how this was determined. Why is this alternative the best?

Other attributes•Drought relief•Climate change insulation•Instream flow benefits•Other

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Investor universe• Investment capital is plentiful• Investors are hungry for yield given the recent

interest rate environment• Socially oriented investment is a rapidly growing

asset class• Green bonds 1,2,3

• Impact Investment 4

• Foundation/Program Related Investment 5

• Traditional municipal bonds for water issues

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Investor universe continued…….• Specific programs available at EPA and USDA

•State revolving funds•Water and waste disposal loans6

•Sewer, storm, and drinking water•WIFIA/WRDA7

Existing Scenario• Bureau of Reclamation no longer funding large

greenfield projects8

• More in an operating and maintenance mode with modest appetite and pocket book for expansion of existing infrastructure

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Existing Scenario continued……

• Projects are expensive as many need to move water long distances

• Federally-owned and operated projects are difficult to finance via public-private partnerships due to OMB scoring rules

So……..Does the project lend itself to alternative finance and delivery approaches through use of a public partnership model?

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Appendix 1 1. http://Climatebonds.net/market/explaining–green-bonds

2. http://www.climatebonds.net

3. http://www.municipalbonds.com/news/2016/03/10/what-are-green-muni-bonds/

4. http://thegiin.org/impact-investing/need-to-know/#s1

5. http://www.conservationfinancenetwork.org/sites/default/files/FinalReport_YaleWaterPhilanthropy

6. http://www.rd.usda.gov/programs-services/water-waste-disposal-loan-grant-program

7. https://www.epa.gov/wifia/learn-about-wifia-program

8. https://www.texastribune.org/plus/water/vol-4/no-23/q-collins-k-balcombe/

http://climatebonds.net/market/explaining%E2%80%93green-bonds



http://www.climatebonds.net/



http://www.municipalbonds.com/news/2016/03/10/what-are-green-muni-bonds/



http://thegiin.org/impact-investing/need-to-know/#s1



http://www.conservationfinancenetwork.org/sites/default/files/FinalReport_YaleWaterPhilanthropy



http://www.rd.usda.gov/programs-services/water-waste-disposal-loan-grant-program



https://www.epa.gov/wifia/learn-about-wifia-program

https://www.texastribune.org/plus/water/vol-4/no-23/q-collins-k-balcombe/



1 Research: SRF Drought Investments

Purpose of the Project: • Why focus on State Revolving Funds (SRFs)?

• EPA’s largest infrastructure program• Each state administers them differently

• Purpose• Identify how states are addressing drought

related investments• Quantify amount of assistance provided

through SRFs• Disseminate SRF successes, case studies,

and highlight opportunities to better market SRF drought-related capabilities


Methodology: • Geography: 13 western states

often affected by drought• AZ, CA, CO, ID, MT, NV, NM,

OK, OR, TX, UT, WA, WY

• Timeframe: 2011 – 2015• Projects Funded: number and

value of assistance provided in certain categories:• Water efficiency, water

reuse, irrigation modernization, groundwater recharge, etc.

• Identifying SRF drought-related program priorities and ranking criteria


Preliminary Findings: • Clean Water SRF

• $612M for Water efficiency investments

• $235M for Recycled water distribution

• $50M for Agriculture efficiencies/irrigation modernization

• Drinking Water SRF – TBD• Target Release: December

2016EPA Region 10/Oregon DEQ, Farmers Irrigation District Project

Opportunity 1:USDA Water Program

• Provides financing to rural areas with fewer than 10,000 people for drinking, waste, and storm water systems

• Since 1957, originated $27 billion across 40,000 loans

• Current portfolio of $12 billion across 13,000 loans

Opportunity 2:Partnership with Capital Peak and CoBank

• Public-private partnership launched in 2014

• CoBank committed $10 billion of its balance sheet to lend and co-lend in support of rural infrastructure

• Since inception, the fund has financed $3 billion across 400 water, power, and community facilities projects

Opportunity 3:Rural Water Fund Pilot

• Target rural communities with populations greater than 10,000, but fewer than 50,000

• A sale of a participation interest in USDA water loans to seed a fund that would make a forward commitment of $1 billion in rural water lending

• Opportunity to bundle rural projects for institutional scale per Build America recommendations

jeffrey klein - nric.pptx(edited)

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