1

Guidebook of Financial Tools 

2008 Revision 

Table of Contents

Foreword..................................................................................................................................Page i 

Comprehensive Financial Tools

 Section 1. Tools for Raising Revenue..................................................................... Page 1-1 

 

 1A. Taxes.............................................................................................Page 1A-1 

 

 1B. Fees and Special Charges..............................................................Page 1B-1 

 

 Section 2. Tools for Acquiring Capital................................................................... Page 2-1 

 

 2A. Bonds ............................................................................................Page 2A-1 

 

 2B. Loans.............................................................................................Page 2B-1 

 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.......................................Page 4B-1 

Section 5. Tools for Delivering Financial Outreach....................................Page 5-1 

 
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Guidebook of Financial Tools 

2008 Revision 

Table of Contents

 

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-1 

 B. Environmental Finance Center Network...........................................................Page B-1 

 C. Environmental Financing Information Network...............................................Page C-1 

 D. Guidebook Alphabetical Index .........................................................................Page D-1 

 
i

Paying for Sustainable Environmental Systems:

Guidebook of Financial Tools 

2008 Revision

Foreword 

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 www.epa.gov/efinpage and limited hard copies can be obtained through the 

EFIN Librarian at efin@epa.gov. 

 
1-1

Guidebook Section 1 

Tools for Raising Revenue 

Introduction 

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.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-1

Section 1A: Tools for Raising Revenue (Taxes) 

 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-2

Alcoholic Beverage Taxes

Description: Alcoholic beverage taxes are levied by states and the federal government on overthe-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. 

Reference for Further Information: The Tax Foundation Website: 

http://www.taxfoundation.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. 

Federal Fuel Taxes on Motorboats and Small Engines 

Description: 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. 

Reference for Further Information: American Sportfishing Association Website: 

http://www.asafishing.org/asa/government/wallop_breaux.html. “Wallop/Breaux renewed & 

expanded,” Boat/US Magazine, September 2005, available at 

http://www.findarticles.com/p/articles/mi_m0BQK/is_5_10/ai_n15393958. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-3

Energy Taxes 

Description: 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. 

Reference for Further Information: 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 

http://www.theage.com.au/news/business/carbon-tax-too-costly-saysnz/2005/12/29/1135732693442.html. U.S. Environmental Protection Agency Website: 

http://yosemite.epa.gov/gw/StatePolicyActions.nsf/uniqueKeyLookup/BMOE5PVJHS?OpenDoc

ument

Ecological Taxation 

Description: 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. 

References of Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/owow/nps/MMGI/funding.html#6. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-4

Occupancy and Public Accommodation Taxes

Description: 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. 

Reference for Further Information: 

Delaware Code: http://www.delcode.state.de.us/title30/c061/sc01/index.htm. 

Dare County, North Carolina Website: 

http://www.darenc.com/depts/Taxes/collections/occp.htm. . 

Insurance Premium Taxes

Description: 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. 

Reference for Further Information: 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: http://www.taxadmin.org/fta/link/. 

 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-5

Litter Taxes

Description: 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. 

Reference for Further Information: The Tax Foundation Website: 

http://www.taxfoundation.org/blog/show/1362.html. Virginia Department of Environmental 

Quality Website: http://www.deq.state.va.us/recycle/programs.html. Washington State 

Department of Ecology Website: http://www.ecy.wa.gov/programs/swfa/litter/laws.html. 

State Tax Check-off Programs 

Description: 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. 

Reference for Further Information: 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: 

http://www.dfw.state.or.us/wildlife/diversity/tax_checkoff/. 

Kentucky State Nature Preserves Commission Website: 

http://www.naturepreserves.ky.gov/helping/taxcheckoff.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-6

Earmarked Selective Sales Taxes 

Description: 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. 

 

Reference for Further Information: The Trust for Public Land Website: 

http://www.tpl.org/tier3_cdl.cfm?content_item_id=19601&folder_id=1365 & 

http://www.tpl.org/tier3_cdl.cfm?content_item_id=19602&folder_id=1365. 

Motor Fuel Taxes 

Description: 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. 

Reference for Further Information: Internal Revenue Service Website: http://www.irs.gov/. 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-7

Motor Vehicle Sales and Registration Taxes

Description: 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. 

Reference for Further Information: Federation of Tax Administrators Website, with links to 

the tax agencies of all 50 U.S. States and Puerto Rico: http://www.taxadmin.org/fta/link/. 

Illinois Trail Riders Website: http://www.illinoistrailriders.com/Horse%20Trails.htm. 

Aviation Taxes 

Description: 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. 

Reference for Further Information: 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: http://www.globalpolicy.org/socecon/glotax/aviation/index.htm
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-8

Real Estate Transfer Taxes

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/owow/nps/MMGI/funding.html#6. The Trust for Public Land Website: 

http://www.tpl.org/tier3_cdl.cfm?content_item_id=1060&folder_id=825

Rental Car Taxes

Description: 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. 

 

Reference for Further Information: Yu, Roger, “Heavy taxes crash down on car rental 

industry,” USA Today, available at: http://www.usatoday.com/money/biztravel/2006-04-18-carrentals-taxes-usat_x.htm. The Tax Foundation Website: 

http://www.taxfoundation.org/blog/show/1172.html. Smarter Travel Website: 

http://www.smartertravel.com/car-rental/Beware-hidden-rental-fees.html?id=11308. 

Washington State Department of Revenue Website: 

http://dor.wa.gov/content/taxes/other/tax_rentalcar.aspx
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-9

Tobacco Taxes

Description: 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. 

Reference for Further Information: Campaign for Tobacco-Free Kids Website:

http://www.tobaccofreekids.org/reports/prices/. National Conference of State Legislatures 

Website: http://www.ncsl.org/programs/health/Cigarette.htm. 

Federation of Tax Administrators Website: http://www.taxadmin.org/fta/rate/tax_stru.html. 

The Tax Foundation Website: http://www.taxfoundation.org/blog/topic/103.html. 

Washington State Department of Revenue Website: 

http://dor.wa.gov/content/taxes/other/tax_cigarette.aspx. 

Russell, Betsy Z., “Cigarette tax stays at 57 cents, three Panhandle lawmakers join.....,” 

Spokesman Review, The (Spokane), March 30, 2005, available at: 

http://www.findarticles.com/p/articles/mi_qn4186/is_20050330/ai_n14589935

Open Space Sales Taxes 

Description: 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. 

Reference for Further Information: The Trust for Public Land Website: 

http://www.tpl.org/tier3_cdl.cfm?content_item_id=4521&folder_id=1365. 

Adams County, Colorado Website: 

http://webapps.co.adams.co.us/services/department/open_space/resolution.html. 

Articles from Petaluma Argus-Courier, a California newspaper: 

http://www1.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
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-10

Taxpayer Contributions Toward Toxic Waste Site Cleanup 

Description: 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. 

Reference for Further Information: U.S. Public Interest Groups (PIRG) Website: 

http://www.uspirg.org/home/reports/report-archives/healthy-communities/healthycommunities/on-april-17th-taxpayers-will-pay-to-clean-up-after-polluters-at-toxic-wastes-sites

Gross Receipts Taxes 

Description: 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. 

Reference for Further Information: 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: http://www.state.nm.us/tax/trd_pubs.htm
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-11

Corporate Income Taxes

Description: 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. 

References for Further Information: National Conference of State Legislatures Website: 

http://www.ncsl.org/programs/fiscal/fpphqsrs.htm. 

Tax Foundation Website: http://www.taxfoundation.org/research/topic/91.html and 

http://www.taxfoundation.org/publications/show/1479.html

Estate and Inheritance Taxes

Description: 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. 

Reference for Further Information: Internal Revenue Service Website: 

http://www.irs.gov/businesses/small/article/0,,id=98968,00.html. 

The Nature Conservancy Website: 

http://www.nature.org/wherewework/northamerica/states/maine/preserves/art13333.html. 

The Trust for Public Land Website: http://www.tpl.org/, search the Website on “estate tax.” 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-12

Individual Income Tax Deductions 

Description: 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. 

Reference for Further Information: The Trust for Public Land Website: 

http://www.tpl.org/tier3_cdl.cfm?content_item_id=1064&folder_id=825. 

Little Traverse Conservancy Website: http://www.landtrust.org/TaxInfo/NewTaxInfo.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: http://www.dnr.state.md.us/met/sitc.html. 

Colorado Department of Revenue Website: 

http://www.revenue.state.co.us/fyi/html/income39.html. 

See “Conservation Easements” in Section 8 of this Guidebook.

Local Sales Taxes 

Description: 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. 

Reference for Further Information: National Conference of State Legislatures Website: 

http://www.ncsl.org/programs/fiscal/fpphqsrs.htm. 

Tax Foundation Website: http://www.taxfoundation.org/research/topic/9.html. 

See Department of Revenue Websites for individual states. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-13

Tangible Property Taxes

Description: 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 highefficiency appliances such as heaters, refrigerators and air conditioners. 

Reference for Further Information: National Conference of State Legislatures Website: 

http://www.ncsl.org/programs/fiscal/fpphqsrs.htm. 

Real (Ad Valorem) Property Taxes 

Description: 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. 

Reference for Further Information: The Trust for Public Land Website: 

http://www.tpl.org/tier3_cdl.cfm?content_item_id=1053&folder_id=825. National Conference 

of State Legislatures Website: http://www.ncsl.org/programs/fiscal/fpphqsrs.htm. 

Investopedia: http://www.investopedia.com/terms/a/advaloremtax.asp

. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-14

State Sales and Use Taxes

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/owow/nps/MMGI/funding.html#6. 

Tax Foundation Website: http://www.taxfoundation.org/research/topic/9.html and 

http://www.taxfoundation.org/research/topic/85.html. 

New Jersey Green Acres Program Website: http://www.state.nj.us/dep/greenacres/. 

Solid Waste Collection Taxes 

Description: 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. 

Reference for Further Information: Washington State Public Works Board Website: 

http://www.pwb.wa.gov/. Washington State Department of Revenue Website: 

http://dor.wa.gov/content/taxes/other/tax_refuse.aspx. Minnesota Department of Revenue 

Website: http://www.taxes.state.mn.us/special/waste/index.shtml. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1A-15

Severance Taxes

Description: 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. 

Reference for Further Information: National Conference of State Legislatures Website: 

http://www.ncsl.org/programs/fiscal/severtax05.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-1

Section 1B: Tools for Raising Revenue (Fees and Special Charges)

 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-2

Water and Sewer Capacity Credits 

Description: Water and sewer capacity credits, also called access rights, are charged on a onetime 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. 

Reference for Further Information: 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: http://downtownplan.columbus.gov/skylinedec02.htm. 

Bond Issuance Fees 

Description: 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. 

Reference for Further Information: 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%20Terminology.htm. InvestinginBonds.com Glossary of Bond 

Terms: http://www.investinginbonds.com/story.asp?id=52#I. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-3

Connection Fees

Description: 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. 

Reference for Further Information: 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: http://www.stocktongov.com/MUD/General/permits_fees.cfm. 

Camden County, NJ Website: http://www.ccmua.org/connfees.html#whatis. 

Franchise Fees

Description: 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. 

Reference for Further Information: AllBusiness.com, Inc. Website: 

http://www.allbusiness.com/buying-selling-businesses/franchising-franchise-fee/2182-1.html. 

Denvergov.org: http://www.denvergov.org/Mayor/1688press2033.asp. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-4

Septic System Inspection Fees

Description: 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. 

Reference for Further Information: Arizona Department of Environmental Quality Website: 

http://www.azdeq.gov/environ/water/permits/wastewater.html#onsitefees. 

“Septic inspection resurrected,” Leelanau Enterprise, available at 

http://www.leelanaunews.com/editorial.php?id=456. 

Hunting and Fishing License Fees 

Description: 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. 

Reference for Further Information: 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: 

http://dnr.wi.gov/invest/conservation/money_spent.htm. 

Angling 4 Oceans Website: http://www.angling4oceans.org/license.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-5

Aquifer Protection Area Fees

Description: 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. 

 

Reference for Further Information: Washington State Legislature Website: 

http://apps.leg.wa.gov/RCW/default.aspx?cite=36.36. 

Spokane County Website: 

http://www.spokanecounty.org/utilities/faq.asp?faqid=8§ion=Aquife. 

“Spokane County Voters extend aquifer fees; Aquifer Protection Area,” Spokesman Review, 

Nov. 11, 2004, available at: 

http://findarticles.com/p/articles/mi_qn4186/is_20041111/ai_n11705929. 

Water and Wastewater Utility User Fees 

Description: 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. 

Reference for Further Information: 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, 3rd

edition, CRC Press, 2005; available at http://www.amazon.com. 

American Water Works Association, Principles of Water Rates, Fees, and Charges, 5th edition, 

2000; available at http://www.awwa.org/bookstore/product.cfm?id=30001. 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-6

Permitting Fees for Projects Affecting Navigable Waters 

Description: Many states and local governments levy fees on permit applications for proposed 

projects affecting the course, current, or cross-section of lakes, wetlands, rivers, and streams. 

The revenues from these fees are often used to cover the processing costs for the permit 

applications. These permits include federal Army Corps of Engineers permit programs under 

Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act. They also 

include state and local permit programs, such as the Minnesota Department of Natural 

Resources’ Public Waters Work Permit Program, Wetland Conservation Act permits 

administered by local governments in Minnesota, and permits under the Virginia Water 

Protection Permit Program. These types of permits help to protect wetlands and other water 

bodies from the impacts of development because specific environmental protection requirements 

must be met for the permits to be approved. 

Reference for Further Information: 

U.S. Army Corps of Engineers Website: http://www.usace.army.mil/cw/cecwo/reg/oceover.htm.

Minnesota Department of Natural Resources Website: 

http://www.dnr.state.mn.us/waters/watermgmt_section/pwpermits/applications.html. 

Virginia Department of Environmental Quality Website: 

http://www.deq.virginia.gov/wetlands/permitfees.html. 

Professional Certification Fees 

Description: Professional certification fees are charged to companies or individuals for the 

privilege of obtaining specific professional certifications. Fees are charged for certifications in 

disciplines including: construction management, wastewater system operation, water supply and 

wastewater engineering, air pollution control, general environmental engineering, hazardous 

waste management, industrial hygiene, radiation protection, solid waste management, and 

disposal and reuse of construction and demolition materials. The revenues raised with these fees 

can be used to fund environmental protection programs and training for professionals in 

environmental protection related industries. 

Reference for Further Information: 

American Academy of Environmental Engineers Website: 

http://www.aaee.net/Website/WhyCertified.htm. 

Water Environment Federation Website: 

http://www.wef.org/ConferencesTraining/TrainingProfessionalDevelopment/WastewaterOperatorsCertification/. 

Solid Waste Association of North America Website: 

http://www.swana.org/www/EDUCATE/CERTIFICATION/ConstructionDemolitionMaterials/tabid/94/Default.aspx.

Construction Institute Website: 

http://www.construction.org/index.php?src=gendocs&link=ProfessionalCertification&submenu=Education. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-7

Pay as You Throw Fees 

Description: 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. 

Reference for Further Information: 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. 

GreenWorks Website: http://www.greenworks.tv/wastemanagement/payt.htm. 

WasteAge Website: http://wasteage.com/mag/waste_payasyouthrow/index.html.

State Public Water Supply Withdrawal Fees

Description: 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. 

Reference for Further Information: Virginia Department of Environmental Quality Website: 

http://www.deq.state.va.us/gwpermitting/pnarchive.html. 

Announcement of new water withdrawal law for Michigan: 

http://www.deq.state.mi.us/documents/deq-wd-withdrawallaw-summary.pdf. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-8

Tolls

Description: 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. 

Reference for Further Information: 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

Description: 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. 

Reference for Further Information: Massachusetts Department of Environmental Protection 

Website: http://www.mass.gov/dep/recycle/approvals/transinf.htm. 

Pennsylvania Code: http://www.pacode.com/secure/data/025/chapter263a/subchapBtoc.html. 

Connecticut Department of Environmental Protection Website: 

http://dep.state.ct.us/pao/weedfact/wastrans.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-9

Water Rights Application Fees 

Description: 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. 

Reference for Further Information: Bureau of Land Management Website: 

http://www.blm.gov/nstc/WaterLaws/abstract1.html. Washington State Department of Ecology 

Fact Sheet: http://www.ecy.wa.gov/pubs/0511016.pdf. South Dakota Department of 

Environment & Natural Resources Website: 

http://www.state.sd.us/denr/des/waterrights/faqwr.htm. 

Septic System and Well Permit Fees 

Description: 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. 

Reference for Reference for Further Information: Town of Randolph, New Jersey Website: 

http://www.randolphnj.org/townhall/septic_wells_permits/. 

Monroe County, Michigan Website: 

http://www.co.monroe.mi.us/monroe/default.aspx?PageId=256. 

Delaware Division of Water Resources Website: 

http://www.dnrec.state.de.us/water2000/Sections/WatSupp/WellPermits/WSSWellPermits.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-10

Recycling and Disposal Fees 

Description: 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. 

Reference for Further Information: Battery Council International Website: 

http://www.batterycouncil.org/states.html. 

U.S. Environmental Protection Agency Website: http://www.epa.gov/jtr/state/funding.htm. 

Comptroller of Maryland Website: http://business.marylandtaxes.com/faq/tirefaq.asp. 

Alaska Tax Division Website: http://www.tax.state.ak.us/programs/tire/faq.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: http://www.taxadmin.org/fta/link/. 

Fertilizer and Pesticide Fees 

Description: 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. 

References for Further Information: The New Rules Project Website: 

http://www.newrules.org/environment/iaground.html. Leopold Center For Sustainable 

Agriculture Website: http://www.leopold.iastate.edu/about/igpa.htm. 

City of Iowa City Website: http://www.icgov.org/water/groundwateract.htm. 

State of Montana Website: http://www.agr.state.mt.us/licensing/fees.asp#feed1. 

Nebraska Department of Agriculture Website: 

http://www.agr.ne.gov/regulate/bpi/pes/actbm.htm#2634. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-11

National Pollutant Discharge Elimination System Permit Fees

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website:

http://cfpub.epa.gov/npdes/ and http://www.epa.gov/owm/cwfinance/npdes-permit-fee.htm. 

Michigan Department of Environmental Quality Website: 

http://www.michigan.gov/deq/0,1607,7-135-3313_3682_3713-90130--,00.html. 

Illinois Environmental Protection Agency Website: http://www.epa.state.il.us/fees/npdes.html. 

Emission Charges

Description: 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 mileagebased 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. 

Reference for Further Information: Environmental Economics, Third Edition, Chapter 12, 

McGraw-Hill: 2001, available at http://www.mhhe.com/economics/fieldee/about/toc.mhtml. 

Online TDM Encyclopedia: http://www.vtpi.org/tdm/tdm59.htm#_Toc29092444. Connecticut 

Department of Environmental Protection Website:http://dep.state.ct.us/pao/airfact/titlev.htm
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-12

Exactions

Description: 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. 

Reference for Further Information: 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: http://www.ppic.org/main/publication.asp?i=106. 

County of Albemarle, Virginia Website: 

http://www.albemarle.org/department.asp?department=planning&relpage=7084. 

Special Assessments

Description: Special assessments are recurrent surcharges levied by local jurisdictions on subgroups 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. 

Reference for Further Information: TaxProf Blog Website: 

http://taxprof.typepad.com/taxprof_blog/2007/01/baker_on_using_.html. 

Minneapolis, Minnesota Website: http://www.ci.minneapolis.mn.us/special-assessments/. 

Fargo, North Dakota Website: http://www.cityoffargo.com/Residential/SpecialAssessments/. 

Manhattan, Kansas Website: http://www.ci.manhattan.ks.us/index.asp?NID=285. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 1B-13

Impact Fees

Description: 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. 

Reference for Further Information: Wisconsin Realtors Association Website: 

http://www.wra.org/Government/Land_Use/impact_fees/default.htm. 

Collier County, Florida Website: http://www.colliergov.net/Index.aspx?page=1538. Fremont, 

California Website: http://www.ci.fremont.ca.us/Construction/Fees/DevImpactFee1.htm. 
2-1

Guidebook Section 2 

Tools for Acquiring Capital 

Introduction 

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 
2-2

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.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2A-1

Section 2A: Bonds

 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 Bonds 

14. Short-Term Municipal Bonds 

15. Special Assessment Bonds 

16. Special Tax Bonds 

17. State Revolving Fund (SRF) Revenue Bonds 

18. Tax Increment Bonds 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2A-2

Advance Refunding Bonds 

Description: 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. 

Reference for Further Information: Graham, William; Shinn, P.; Petersen, J., State Revolving 

Funds Under Tax Reform, Council of Infrastructure Financing Authorities (CIFA) Monograph 

No. 2, Washington, D.C.: June 1989, to order contact CIFA at cifa@navigantconsulting.com. 

CIFA Website: http://www.cifanet.org/publications.html. 

WM Financial Strategies Website: http://www.munibondadvisor.com/refunding.htm. 

Investopedia.com Website: http://www.investopedia.com/terms/a/advancedrefunding.asp. 

Anticipation Notes 

Description: 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 shortterm, 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. 

Reference for Further Information: 

First Public, LLC Website: http://www.firstpublic.com/cities/financing/tan.shtml. 

Investopedia.com Website: http://www.investopedia.com/terms/r/ran.asp. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2A-3

Appropriation-Backed Bonds

Description: 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. 

Reference for Further Information: 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. 

New York State Citizen’s Guide: http://www.budget.state.ny.us/citizen/financial/capital.html. 

Asset-Backed Securities

Description: 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. 

Reference for Further Information: Hayre, Lakhbir, Solomon Smith Barney Guide to 

Mortgage-Backed and Asset-Backed Securities: John Wiley & Sons, Inc., 2001, available at 

www.amazon.com. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2A-4

Capital Appreciation and Zero Coupon Bonds

Description: 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. 

Reference for Further Information: Springsteel, Ian, “Who Needs Equity?: zero-coupon 

convertible bonds,” CFO: Magazine for Senior Financial Executives, July 2001, available at 

http://www.findarticles.com/p/articles/mi_m3870/is_7_17/ai_77290112. Investorguide.com 

Website: http://www.investorguide.com/igup1-advanced-bond-concepts.htm. 

Certificates of Participation

 

Description: 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. 

 

Reference for Further Information: 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_m1571/is_13_18/ai_84804831. 

Orrick Website: http://www.orrick.com/practices/public_finance/leaseRevenue.asp. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2A-5

Derivatives

Description: 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 generically as derivative products. These financial 

instruments all derive their value from the performance of specific indices or cash markets. 

Reference for Further Information: 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. 

Double-Barrel Bonds

Description: 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. 

Reference for Further Information: “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.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2A-6

General Obligation Bonds

Description: 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. 

Reference for Further Information: 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. 

Municipal Bond Information Guide: http://www.southwest.msus.edu/RDIC/gobond.html.

Mini/Baby Bonds

Description: 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. 

Reference for Further Information: 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 

http://www.findarticles.com/p/articles/mi_m0DTI/is_1_30/ai_83790627. 

Business Editors, “Lower Colorado River Authority-TX-Rev Mini-Bonds RTD ‘AAA,’” 

Business Wire, New York, Feb. 3, 2000, available at 

http://www.findarticles.com/p/articles/mi_m0EIN/is_2000_Feb_3/ai_59169468.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2A-7

Moral Obligation Bonds

Description: 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. 

Reference for Further Information: Council of Development Finance Agencies Website: 

http://www.cdfa.net/cdfa/cdfaweb.nsf/pages/sep2003tlc.html. 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. 

Investopedia.com: http://www.investopedia.com/terms/m/moralobligationbond.asp. 

Private Activity Bonds

Description: “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. 

Reference for Further Information: 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2A-8

Revenue Bonds

Description: “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.

Reference for Further Information: 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. 

Municipal Bond Information Guide: http://www.southwest.msus.edu/RDIC/revbond.html. 

State of Montana Website: http://www.mtfinanceonline.com/typesofbonds.asp. 

Short-Term Municipal Bonds

Description: 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. 

Reference for Further Information: 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2A-9

Special Assessment Bonds

Description: 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. 

Reference for Further Information: “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; Temel, 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

Description: 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. 

Reference for Further Information: “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 http://www.amazon.com. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2A-10

State Revolving Fund (SRF) Revenue Bonds

Description: 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. 

Reference for Further Information: 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 http://www.findarticles.com/p/articles/mi_m0EIN/is_2005_Sept_23/ai_n15627483. 

Water Infrastructure Network Website: 

http://win-water.org/legislativecenter/103101farrell.shtml. Oklahoma Water Resources Board 

Website: http://www.owrb.state.ok.us/financing/news/fanews.php. 

Tax Increment Bonds

Description: Tax increment bonds, which differ slightly from special assessment bonds, are taxexempt 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. 

Reference for Further Information: “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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2B-1

Section 2B: Loans

 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 ShortTerm 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2B-2

U.S. Department of Agriculture Business and Cooperative Programs: 

Economic Development Loans 

Description: 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. 

Reference for Further Information: U.S. Department of Agriculture Business and Cooperative 

Programs Website: http://www.rurdev.usda.gov/rbs/busp/redl.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 # 10.854. 

U.S. Department of Agriculture Business and Cooperative Programs: 

Renewable Energy and Energy Efficiency Program 

Description: 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. 

Reference for Further Information: 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 

http://12.46.245.173/cfda/cfda.html, search on program # 10.775. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2B-3

U.S. Department of Agriculture Rural Utilities Service: 

Water and Waste Disposal Systems Loans for Rural Communities

Description: 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. 

Reference for Further Information: U.S. Department of Agriculture Website: 

http://www.usda.gov/rus/water/index.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 # 10.760. 

CoBank Loan Programs 

Description: 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. 

 

Reference for Further Information: CoBank Website: http://www.cobank.com/. 

Farm Credit Services Website: http://www.farmcredit.com/.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2B-4

Commercial Loans

Description: 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. 

Reference for Further Information: 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. 

U.S. Environmental Protection Agency: 

Clean Water State Revolving Fund

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Office of 

Wastewater Management Website: http://www.epa.gov/owm/cwfinance/cwsrf/index.htm, 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2B-5

U.S. Environmental Protection Agency: 

Drinking Water State Revolving Fund

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Office of 

Groundwater and Drinking Water Website: http://www.epa.gov/safewater/dwsrf/index.html, 

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. 

U.S. Environmental Protection Agency: 

State Revolving Fund Pre-Financing and Short-Term Loans 

Description: 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-finance 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. 

Reference for Further Information: 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://www.health.state.ny.us/nysdoh/water/final/2005/2005iup.htm. 

Texas Water Development Board Website: 

http://www.twdb.state.tx.us/assistance/financial/fin_infrastructure/cwsrffund.asp
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2B-6

U.S. Environmental Protection Agency: 

Clean Water State Revolving Fund Private Beneficiary Loans

Description: 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. 

Reference for Further Information: 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. 

North American Development Bank

Description: 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. 

Reference for Further Information: 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/.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2B-7

Private Investment 

Description: 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 environmentallyrelated 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. 

Reference for Further Information: 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: http://www.greyhouse.com/venture_ww.htm. Venture Capital Resource Directory: 

http://www.vfinance.com/home.asp?ToolPage=vencaentire.asp.

Environmental State Revolving Funds 

Description: 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. 

Reference for Further Information: Council of Infrastructure Financing Authorities Website: 

http://www.cifanet.org/, see the publications list on the Website. Small Business 

Environmental’s directory of state financial assistance programs: http://www.smallbizenviroweb.org/funding/fundstat.html. Michigan Department of Environmental Quality Website: 

http://www.michigan.gov/deq/0,1607,7-135-3307_3515_4143---,00.html. Kentucky 

Infrastructure Authority Website: http://kia.ky.gov/loan/. 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
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-1

Section 2C: Tools for Acquiring Capital (Grants) 

 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-2

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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-3

U. S. Department of Agriculture Forest Service: 

Cooperative Forestry Assistance Grants

Description: 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. 

Reference for Further Information: U.S. Department of Agriculture (USDA) Website: 

http://www.fs.fed.us/r6/coop/programs/forms/grant_forms.htm, 

http://www.fs.fed.us/spf/coop/library/grantguide.pdf, and 

http://www.fs.fed.us/spf/coop/programs/eap/index.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. 

U.S. Department of Agriculture Rural Development: 

Grants for Water and Wastewater Revolving Funds 

Description: 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. 

Reference for Further Information: U.S. Department of Agriculture Website: 

http://www.usda.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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-4

U.S. Department of Agriculture Forest Service: 

Forest Stewardship Program Grants 

Description: 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. 

Reference for Further Information: U.S. Department of Agriculture Forest Service Website: 

http://na.fs.fed.us/stewardship/index.shtm, 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. 

U.S. Department of Agriculture Forest Service: 

Urban and Community Forestry Program

Description: 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. 

Reference for Further Information: U.S. Department of Agriculture (USDA) Website: 

http://www.fs.fed.us/ucf/, 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 # 

10.675. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-5

U.S. Department of Agriculture Business and Cooperative Programs: 

Rural Business Enterprise Grants

Description: 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. 

Reference for Further Information: 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 http://12.46.245.173/cfda/cfda.html. 

U.S. Department of Agriculture Rural Utilities Service: 

Solid Waste Management Grant Program

Description: 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. 

Reference for Further Information: U.S. Department of Agriculture Website: 

http://www.usda.gov/rus/water/SWMG.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 # 10.762. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-6

U.S. Department of Agriculture Rural Utilities Service: 

Technical Training and Assistance Grant Program

Description: 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. 

 

Reference for Further Information: 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 Grants 

Description: Appalachian Regional Commission (ARC) grants are awarded to states, public 

bodies, and private nonprofit organizations for projects that create opportunities for selfsustaining 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. 

Reference for Further Information: Appalachian Regional Commission Website: 

http://www.arc.gov/index.do?nodeId=101. 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-7

U.S. Department of Commerce Economic Development Administration: 

Public Works and Economic Development Grants

Description: 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. 

Reference for Further Information: 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. 

U.S. Department of Commerce National Oceanic and Atmospheric Administration:

Coastal Services Center Grants

Description: 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. 

Reference for Further Information: National Oceanic and Atmospheric Administration, 

Coastal Services Center Website: http://www.csc.noaa.gov/funding/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-8

U.S. Department of Commerce National Oceanic and Atmospheric Administration:

Coastal Zone Management Act Administration Awards 

Description: 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. 

Reference for Further Information: 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 http://12.46.245.173/cfda/cfda.html, search on program # 11.419 

U.S. Environmental Protection Agency: 

Environmental Education Grant Program

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/enviroed/grants.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-9

U.S. Environmental Protection Agency: 

Environmental Justice Small Grants Program

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/compliance/environmentaljustice/grants/ej-smgrants.html, phone 202-564-

2515, or 800-962-6215. 

U.S. Environmental Protection Agency: 

Performance Partnership Grants

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/ocir/nepps/pp_grants.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-10

U.S. Environmental Protection Agency: 

Program Grants

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Grant Awards 

Database: http://yosemite.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. 

U.S. Environmental Protection Agency: 

Section 319 Nonpoint Source Pollution Control Grants

Description: 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. 

Reference for Further Information: 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”: http://www.fs.fed.us/spf/coop/library/EPA_Funds.pdf. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-11

U.S. Environmental Protection Agency: 

Superfund Technical Assistance Grants

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency (EPA) Website: 

http://www.epa.gov/superfund/tools/tag/, the site lists contact information for the TAG 

coordinator for each EPA regional office. 

U.S. Environmental Protection Agency: 

Leaking Underground Storage Tank Trust Fund Grants 

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/OUST/ltffacts.htm and http://www.epa.gov/swerust1/20clenup.htm. 

Contact Lynn Depont at the U.S. EPA at 703-603-7148. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-12

U.S. Environmental Protection Agency: 

Underground Storage Tank Categorical Grants

Description: 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. 

Reference for Further Information: U.S Environmental Protection Agency (EPA) Website: 

http://www.epa.gov/swerust1/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. 

U.S. Environmental Protection Agency: 

Wetlands Program Development Grants

Description: 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, intertribal 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. 

Reference for Further Information: U.S. Environmental Protection Agency (EPA) Office of 

Wetlands, Oceans and Watersheds (OWOW) Website: 

http://www.epa.gov/owow/wetlands/grantguidelines/, contact information for the EPA regional 

offices that administer these grants is available on the Website. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-13

U.S. Environmental Protection Agency National Center for Environmental 

Research: Science to Achieve Results (STAR) Grants 

Description: 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. 

Reference for Further Information: 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/. 

U.S. Environmental Protection Agency: 

Drinking Water State Revolving Fund Loan Principal Forgiveness 

Description: The 1996 Safe Drinking Water Act (SDWA) 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. 

Reference for Further Information: “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.gov/safewater/dwsrf/index.html#guidance. Localities should consult their state 

DWSRF officials. Contact Peter Shanaghan at the EPA at 202-564-3848 with general questions. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-14

U.S. Department of Homeland Security Federal Emergency Management Agency: 

Superfund Amendments and Reauthorization Act, Title III Grants 

Description: 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. 

Reference for Further Information: U.S. Federal Emergency Management Agency Website: 

http://www.fema.gov/government/grant/sara.shtm. 

Foundation and Corporate Giving

Description: 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. 

Reference for Further Information: The Foundation Directory: http://fconline.fdncenter.org/. 

Foundation Center Website: http://foundationcenter.org/findfunders/. Environmental 

Grantmaking Foundations, 11th ed., available through http://www.environmentalgrants.com/. 

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.mott.org/programs/environment.asp. 

Ben & Jerry’s Foundation Website: http://www.benjerry.com/foundation/guidelines.html. 

Patagonia Website: http://www.patagonia.com/web/us/patagonia.go?assetid=2927. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-15

U.S. Department of Housing and Urban Development: 

Community Development Block Grant Entitlement Communities Grants 

Description: 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. 

Reference for Further Information: The U.S. Department of Housing and Urban Development 

Website: http://www.hud.gov/offices/cpd/communitydevelopment/programs/entitlement/. 

Search on program # 14.218 in the Catalogue of Federal Domestic Assistance at 

http://12.46.245.173/cfda/cfda.html. 

U.S. Department of Housing and Urban Development: 

State Community Development Block Grants Program for Non-Entitlement Areas 

Description: 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. 

Reference for Further Information: U.S. Department of Housing and Urban Development 

(HUD) Website: http://www.hud.gov/offices/cpd/communitydevelopment/programs/stateadmin/. 

Search on program # 14.228 in the Catalogue of Federal Domestic Assistance at 

http://12.46.245.173/cfda/cfda.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-16

U.S. Department of Interior Fish & Wildlife Service: 

Standard Grants Program for Wetlands Protection 

Description: 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. 

Reference for Further Information: 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=VIEW&oppId=7818. 

U.S. Department of Interior Fish & Wildlife Service: 

North American Wetlands Conservation Act Small Grants Program 

Description: 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. 

Reference for Further Information: 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 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=VIEW&oppId=7818. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 2C-17

U.S. Department of Transportation: 

Transportation Equity Act for the 21ST Century

Description: 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. 

Reference for Further Information: 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. 
 3-1 

Guidebook Section 3 

Tools for Enhancing Credit and Lowering Costs 

Introduction 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-2

Section 3: Tools for Enhancing Credit and Lowering Costs 

 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-3

Pooled Financing Programs

Description: 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. 

Reference for Further Information: Florida Municipal Power Agency Website: 

http://fmpa.com/html/member_services/pooled_loan.html.

Association of Bay Area Governments Website: 

http://www.abag.ca.gov/services/finance/pooling/summary.htm. 

 

U.S. Small Business Administration: Surety Bond Guarantees

Description: 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 SBA. 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. 

Reference for Further Information: U.S. Small Business Administration (SBA) Website: 

http://www.sba.gov/services/financialassistance/basics/sbarole/surebond_geninfo.html. See 

“Surety Bonds” in Section 10b of this Guidebook and “Performance Bonds” in this Section of 

the Guidebook. U.S. Department of the Treasury Website: 

http://www.fms.treas.gov/c570/c570.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-4

Bond Insurance 

Description: Bond insurance is a legal commitment by an insurance company to make payments 

of principal and interest on debt in the event that the bond issuer is unable to make those 

payments on time. Bond insurance is usually paid at the time of issue as a percentage of the 

bond amount, and it may be used for any bond including general obligation and revenue bonds. 

The function of bond insurance in the market is threefold: 1.) to reduce interest costs to issuers, 

2.) to provide a high level of security to investors, and 3.) to furnish improved secondary-market 

liquidity and price support. In general, the use of bond insurance will lower annual carrying 

costs, once premiums are paid, since the use of this insurance generally results in higher bond 

ratings which lead to lower annual interest rates. Bond insurance allows many small 

communities and public and private water systems to receive investment grade ratings and thus 

improve their chances of qualifying for bonds and loans. States use bond insurance for private 

activity tax-exempt bonds, particularly for environmentally “risky” solid waste-type facilities. 

Private activity bonds are used to fund facilities for the furnishing of water and sewage, solid 

waste disposal facilities, and qualified educational facilities. 

 

Reference for Further Information: Temel, Judy W.; The Fundamentals of Municipal Bonds, 

5th ed.; John Wiley & Sons, Inc.; 2001, pp. 13-15, available at http://www.amazon.com. 

National Association of Insurance Commissioners portal to state insurance commissioner 

Websites: http://www.naic.org/state_web_map.htm. See “Private Activity Bonds” in Guidebook 

Section 2a. InvestinginBonds.com: 

http://www.investinginbonds.com/learnmore.asp?catid=8&subcatid=55&id=111. 

State Bond Banks

Description: 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. 

Reference for Further Information: Council of Development Finance Agencies Website: 

http://www.cdfa.net/cdfa/cdfaweb.nsf/pages/statebondbanksanderson.html. Maine Municipal 

Bond Bank Website: http://www.mainebondbank.com/. Virginia Resources Authority Website: 

http://www.virginiaresources.org/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-5

State Loan and Bond Guarantees

Description: 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. 

Reference for Further Information: Minnesota Department of Employment and Economic 

Development Website: http://www.deed.state.mn.us/programs/pfacountycred.htm. 

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. 

Performance Bonds 

Description: 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. 

Reference for Further Information: Surety Information Office Website: 

http://www.sio.org/html/why_bonds_reqd.html. 

See Section 2a of this Guidebook for general information about bonds. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-6

Letters of Credit

Description: 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. 

Reference for Further Information: 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. 

 

Lines of Credit 

Description: A Line of Credit (LOC) 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 LOC 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. 

Reference for Further Information: 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://financialdictionary.thefreedictionary.com/Line+of+Credit+-+LOC.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-7

Senior and Subordinated Debt Structuring 

Description: 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. 

 

Reference for Further Information: 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/owm/cwfinance/cwsrf/index.htm & 

http://www.epa.gov/safewater/dwsrf/index.html. 

State Revolving Fund (SRF) Interest Rate Subsidies

Description: 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. 

Reference for Further Information: 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/owm/cwfinance/cwsrf/basics.htm & 

http://www.epa.gov/safewater/dwsrf/frequentquestions.html#3. 

Texas Water Development Board Website: 

http://www.twdb.state.tx.us/assistance/financial/fin_infrastructure/cwsrffund.asp & 

http://www.twdb.state.tx.us/assistance/financial/fin_infrastructure/dwsrf.asp. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-8

State Revolving Fund (SRF) Cross-Collateralization

Description: 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 crosscollateralization 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. 

Reference for Further Information: U.S. Environmental Protection Agency (EPA) Website: 

http://www.epa.gov/owm/cwfinance/cwsrf/innovations.htm, 

http://www.epa.gov/safewater/dwsrf/index.html and http://www.epa.gov/fedrgstr/EPAWATER/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.

Accelerated Depreciation 

Description: The accounting term “depreciation” describes any method of attributing the 

historical purchase cost of an asset across its useful life, roughly corresponding to the normal 

wear and tear of the asset. Accelerated depreciation is defined as any one of several methods by 

which a company, for “financial accounting” and/or tax purposes, depreciates a fixed asset in 

such a way that the amount of depreciation taken each year is higher during the earlier years of 

the asset’s life. For financial accounting purposes, accelerated depreciation is frequently used 

with assets that are expected to be most productive during their early years, so that depreciation 

amounts will more accurately reflect how much the usefulness of the assets is being reduced 

each year. Through the use of accelerated depreciation, corporations can defer their income 

taxes by reducing taxable income in current years, in exchange for increased taxable income in 

future years. Accelerated depreciation allows for faster tax write-offs than straight line 

depreciation. Businesses could use accelerated depreciation to reduce their income tax liabilities 

by depreciating assets used for environmental protection such as pollution cleanup equipment. 

Reference for Further Information: Consult a tax practitioner. 

Internal Revenue Service Website: http://www.irs.gov/publications/p946/index.html. 

Wikipedia: http://en.wikipedia.org/wiki/Accelerated_depreciation & 

http://en.wikipedia.org/wiki/Depreciation. 

Investorwords.com: http://www.investorwords.com/35/Accelerated_Depreciation.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-9

Activity-Based Costing

Description: 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. 

Reference for Further Information: SAS Institute Website: http://www.sas.com/solutions/abm/. 

Infogoal.com: http://www.infogoal.com/category.php?n=19. 

Valuebased management.net: http://www.valuebasedmanagement.net/methods_abc.html. 

Accounting Software Research Website: http://www.asaresearch.com/articles/abc.htm. 

U.S. Department of Housing and Urban Development

Community Development Block Grant Program: 

Section 108 Loan Guarantees 

Description: 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. 

 

Reference for Further Information: 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-10

Amortization of Pollution Control Facilities

Description: 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. 

Reference for Further Information: Consult a tax practitioner. 

Internal Revenue Service Website: http://www.irs.gov/publications/p535/ch08.html#d0e6593. 

Cornell University Law School Website: 

http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000169----000-.html. 

BNET Business Directory Website: http://dictionary.bnet.com/definition/Amortization.html. 

Appropriate Technology

Description: 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. 

Reference for Further Information: 

National Environmental Services Center Website: http://www.nsfc.wvu.edu. 

National Center for Appropriate Technology Website: http://www.ncat.org/about_history.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-11

 

Barter

Description: 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. 

Reference for Further Information: International Reciprocal Trade Association Website: 

http://www.irta.com/Page.asp?Script=1. National Association of Trade Exchanges Website: 

www.nate.org/. Internal Revenue Service Website: 

http://www.irs.gov/businesses/small/article/0,,id=113437,00.html. 

Barter- Relevance and Relation to Money Website: http://www.ex.ac.uk/~RDavies/arian/barter.html. 

Fiscal Impact Analysis 

Description: Fiscal impact analysis identifies public sector costs, including environmental 

impacts and the potential costs of public services, associated with policies and projects. Local 

government decision making related to zoning processes, land use planning, and new housing or 

business development is frequently made with the help of fiscal 8impact analysis. Fiscal impact 

analysis considers capital costs, operating and maintenance costs, changes in revenue, impacts on 

energy requirements, anticipated costs to taxpayers, and potential legal liabilities related to 

projects and policies. Each element may be weighted. Various local governments in the United 

States use different methods for fiscal impact analysis. For example, some look at projected 

health and safety effects, community ec9onomic impacts and quality-of-life factors related to 

policies or projects. Interrelationships among projects, including those in neighboring 

jurisdictions, ae sometimes considered. Payback times for loans used to fund projects may also 

be looked at. Fiscal impact analysis helps policy makers to determine whether the prospective 

societal benefits of proposed policies and projects outweigh the anticipated costs, 

Reference for Further Information: Solnit, Albert, Job of the Practicing Planner: APA 

Planners Press, 1988 available at http://www.planning.org/apastore/Search/Default.aspx?p=1823. 

Natural Resources Defense Council Website: 

http://www.nrdc.org/cities/smartgrowth/dd/ddinx.asp. The Web Book of Regional Science: 

http://www.rr.wvu.edu/WebBook/Garrett/chaptersix.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-12

 

Full Cost Pricing

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/waterinfrastructure/pricing/About.htm & 

http://www.epa.gov/waterinfrastructure/fullcostpricing.html. 

Victoria Transport Policy Institute Website: http://www.vtpi.org/tdm/tdm29.htm. 

Expensing of Assets

Description: 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. 

Reference for Further Information: 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----000-.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-13

Pay-As-You-Go

Description: 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. 

Reference for Further Information: U.S. Department of Transportation Federal Highway 

Administration Website: http://www.fhwa.dot.gov/ 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: 

http://ca.lwv.org/lwvc/edfund/elections/2003/id/prop53.html. 

Refinancing Loans 

Description: 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. 

Reference for Further Information:

MortgageLoan Website: http://www.mortgageloan.com/refinance-mortgage. 

 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-14

Reforestation Tax Deduction and Amortization

Description: 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. 

Reference for Further Information: Consult a tax practitioner. 

Internal Revenue Service Website: http://www.irs.gov/publications/p225/ch07.html & 

http://www.irs.gov/instructions/it/ar01.html. Private Landowner Network Website: 

http://www.privatelandownernetwork.org/yellowpages/resource.asp?id=6285. 

 

Rehabilitation Tax Credits

Description: 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. 

Reference for Further Information: Internal Revenue Service Website: 

http://www.irs.gov/businesses/small/industries/article/0,,id=97599,00.html. 

Cornell University Law School Website: 

http://straylight.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000047----000-.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-15

Risk Management 

Description: 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. 

Reference for Further Information: 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. 

Discounting

Description: 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. 

Reference for Further Information: National Oceanic and Atmospheric Administration 

(NOAA) Coastal Services Center Website: 

http://www.csc.noaa.gov/coastal/economics/discounting.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-16

Value Engineering

Description: Value engineering, also called value methodology, is defined in U.S. Public Law 

104-106 as an analysis of the functions of a program, project, system, product, item of 

equipment, building, facility, service, or supply of an executive agency, performed by qualified 

agency or contractor personnel, directed at improving performance, reliability, quality, safety, 

and life cycle costs. Public Law 104-106 states that each executive agency shall establish and 

maintain cost-effective value engineering procedures and processes. The U.S. Environmental 

Protection Agency (EPA) defines value engineering as 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. EPA is required to apply 

value engineering during Superfund Fund-lead remedial design and remedial action projects. 

Value engineering can be applied to various types of environmental protection projects in the 

public and private sectors, such as pollution prevention and cleanup projects. SAVE 

International is a society devoted to the advancement and promotion of value engineering. 

 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/superfund/cleanup/rdra.htm, see “value engineering” at the end of the list of 

topics. Text of Public Law 104-106: http://oecm.energy.gov/Portals/2/PL104_106.pdf. 

SAVE International Website: http://www.value-eng.org/. 

 

Environmental Due Diligence

Description: 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). 

Reference for Further Information: Bureau of National Affairs Website: 

http://www.bna.com/products/ens/eddg.htm. 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 

http://www.lawcatalog.com/product_detail.cfm?productID=1049&return=listview&setlist=0&. 

SCS Engineers Website: http://www.scsengineers.com/duedil.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-17

Financial Due Diligence

Description: 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. 

Reference for Further Information: Lawrence, Gary M., Due Diligence in Business 

Transactions, Law Journal Press, 1994; available at 

http://www.lawcatalog.com/product_detail.cfm?productID=1049&return=listview&setlist=0&. 

Financial Evaluations & Examinations, Inc. Website: http://www.feeinc.com/burke.html. 

See “Business Plans” & “Venture Capital” in Guidebook Section 10a. Plante & Moran, PLLC 

Website: http://www.plantemoran.com/Services/Consulting/StrategyGlobalServices/Resources/Articles/Due+Diligence.htm. 

 

Benchmarking

Description: 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. 

Reference for Further Information: Book Industry Study Group Website: 

http://www.bisg.org/publications/environmental_benchmarking.html. 

Leichter, Howard M.; and Tryens, Jeffrey, Achieving Better Health Outcomes: the Oregon 

Benchmark Experience, Milbank Memorial Fund, New York, 2002, available at: 

http://www.milbank.org/reports/OregonProgres/020909Oregon.html. 

 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-18

Deduction of Agricultural Conservation Expenses

 

Description: 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. 

Reference for Further Information: Consult a tax practitioner. 

Internal Revenue Service Website: http://www.irs.gov/publications/p225/ch05.html & 

http://www.irs.gov/businesses/small/industries/article/0,,id=99004,00.html. U.S. Department of 

Agriculture Natural Resources Conservation Service Website: http://www.nrcs.usda.gov/. 

Comparative Risk Ranking

Description: 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. 

Reference for Further Information: Lower Columbia River Estuary Partnership Website: 

http://www.lcrep.org/lib_risk_ranking.htm. 

Scorecard Website: http://www.scorecard.org/comp-risk/def/comprisk_explanation.html. 

U.S. Environmental Protection Agency Website:http://www.epa.state.oh.us/oeef/ohio_comparative_risk_project.html

Franklin Pierce Law Center Website: http://www.piercelaw.edu/risk/vol6/fall/kadvany.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-19

Cost-Effectiveness Analysis

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency (EPA), 

“Guidelines for Preparing Economic Analysis,” 2000, EPA # 240-R-00-003, available at 

http://yosemite1.epa.gov/ee/epa/eerm.nsf/vwSER/DEC917DAEB820A25852569C40078105B?OpenDocument. 

AEI-Brookings Joint Center Website: http://www.aeibrookings.org/publications/index.php?tab=topics&topicid=56. 

Environmental Damage Valuation and Cost Benefit Links: 

http://www.costbenefitanalysis.org/tenbestedvcbnlinks.htm. 

Environmental Valuation & Cost Benefit News: http://www.envirovaluation.org/. 

Financial Capability Analysis

Description: 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. 

 

Reference for Further Information: Financial Capability Guidebook, March, 1984, EPA 

#832B84104, available at http://yosemite.epa.gov/water/owrccatalog.nsf/, 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/Plan2Fund/plan2fund.htm & 

http://sspa.boisestate.edu/efc/Tools_Services/CAPFinance.htm. 

 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-20

Cost-Benefit Analysis

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html. 

See the January 11, 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/riaguide.html. 

Mind Tools Website: http://www.mindtools.com/pages/article/newTED_08.htm. 

Capital Planning and Budgeting

Description: 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. 

Reference for Further Information: The President’s Commission to Study Capital Budgeting 

Website: http://clinton3.nara.gov/pcscb/index.html.

University of Wisconsin System Website: http://www.uwsa.edu/capbud/. 

U.S. Department of the Interior Website: http://www.doi.gov/ocio/cp/index.html. 

FEA DRM Registry Website: 

http://colab.cim3.net/file/work/drm/schema/examples/IRM_COI_Demo/818.htm. 

 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 3-21

Employee Stock Ownership Plans

Description: 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. 

Reference for Further Information: The National Center for Employee Ownership Website: 

http://www.nceo.org/. For tax rules, see the Internal Revenue Service Website: 

www.irs.ustreas.gov/. About.com: http://retireplan.about.com/cs/retirement/a/aa_plan_a6.htm. 

U.S. Department of Labor Website: http://www.dol.gov/dol/topic/health-plans/erisa.htm. 

 

Life Cycle Assessment and Design

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/ORD/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. 
4-1

Guidebook Section 4 

Public-Private Partnerships 

Introduction 

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 publicprivate 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 publicprivate 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 
4-2

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4A-1

Section 4A: Tools for Building Public-Private Partnerships 

(Public-Private Partnership Arrangements) 

 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. Developer Financing 

12. Turnkey 

13. Merchant Facilities 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4A-2

Privatization

Description: 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. 

Reference for Further Information: The National Council for Public-Private Partnerships 

Website: http://www.ncppp.org/howpart/fedpriv.shtml#defpriv. 

Executive Order 12803 as of April 30, 1992, available at 

http://www.theantechamber.net/UsHistDoc/Exord12803/Exord12803Page1.html. 

See “Asset Sales Under Executive Order 12803” in this section of the Guidebook. 

ITT Industries Website: http://www.itt.com/waterbook/where.asp. 

Asset Sales Under Executive Order 12803 

Description: 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. 

Reference for Further Information: Executive Order 12803 as of April 30, 1992, available at 

http://www.theantechamber.net/UsHistDoc/Exord12803/Exord12803Page1.html. 

U.S. EPA Website: http://www.epa.gov/owm/cwfinance/privatization.htm. 

ITT Industries Website: http://www.itt.com/waterbook/where.asp and 

http://www.itt.com/waterbook/privatization.asp. 

HDR Website: http://www.hdr-engineering.com/13/38/1/default.aspx?projectID=608. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4A-3

Long-Term Lease Under Executive Order 12803

Description: 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 longterm 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. 

Reference for Further Information: 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/UsHistDoc/Exord12803/Exord12803Page1.html. 

The United States Conference of Mayors Website: 

http://www.usmayors.org/uscm/best_practices/private/hawthorn.html. 

ITT Industries Website: http://www.itt.com/waterbook/where.asp. 

Investorwords.com: http://www.investorwords.com/2891/long_term_lease.html. 

Tax-Exempt Lease

Description: 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 taxexempt 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. 

 

Reference for Further Information: The National Council for Public-Private Partnerships 

Website: http://ncppp.org/howpart/ppptypes.shtml. Tax-Exempt Leasing Corporation Website 

http://www.taxexemptleasing.com/overview.html. Association for Governmental Leasing and 

Finance Online: http://www.aglf.org/faq.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4A-4

Lease/Purchase

Description: 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. 

Reference for Further Information: See “Tax-Exempt Lease” in this section of the Guidebook. 

The National Council for Public-Private Partnerships Website: 

http://ncppp.org/howpart/ppptypes.shtml. Kent, Cheryl, “U.S. Trying Lease-Purchases on its 

New Buildings,” The New York Times, May 6, 1990, available at 

http://query.nytimes.com/gst/fullpage.html?res=9C0CE1DA1530F935A35756C0A966958260. 

Sale/Leaseback

Description: 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. 

Reference for Further Information: See “Tax-Exempt Lease” in this section of the Guidebook. 

The National Council for Public-Private Partnerships Website: 

http://ncppp.org/howpart/ppptypes.shtml. Sorter, Amy Wolff, “Farmer’s Insurance Cuts $18 

million Sale-Leaseback,” GlobeSt.com, September 19, 2007, available at: 

http://www.cityfeet.com/News/NewsArticle.aspx?PartnerPath=&Id=25963. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4A-5

Lease/Develop/Operate or Build/Develop/Operate 

Description: Under a Lease/Develop/Operate (LDO) or Build/Develop/Operate (BDO) 

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 BDO 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 BDO partnership opportunities in the State. 

Other states could follow with similar laws. In addition, LDO and BDO arrangements could be 

used to finance upgrades to environmental facilities, such as wastewater treatment plants and 

recycling centers. 

 

Reference for Further Information: The National Council for Public-Private Partnerships 

Website: http://ncppp.org/howpart/ppptypes.shtml. 

The Heritage Foundation Website: http://www.heritage.org/Research/SmartGrowth/tst060704a.cfm. 

Build-Operate-Transfer 

Description: Under the build-operate-transfer (BOT) 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 buildoperate-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. 

Reference for Further Information: The National Council for Public-Private Partnerships 

Website: http://ncppp.org/howpart/ppptypes.shtml. CDM Website: 

http://www.cdm.com/knowledge_center/case_studies/camp_pendleton_water_and_wastewater_improvements.htm. 

http://ncppp.org/howpart/ppptypes.shtml. U.S. Department of Transportation Website: 

http://www.fhwa.dot.gov/PPP/bot.htm. See “Turnkey” in this section of the Guidebook. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4A-6

Contract Services: Operations and Maintenance

Description: 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. 

 

Reference for Further Information: The National Council for Public-Private Partnerships 

(NCPPP) Website: http://ncppp.org/howpart/ppptypes.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. 

Contract Services:

Operations, Maintenance, and Management

Description: 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. 

Reference for Further Information: The National Council for Public-Private Partnerships 

Website: http://ncppp.org/howpart/ppptypes.shtml and http://ncppp.org/cases/milwaukee.shtml. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4A-7

Developer Financing 

Description: 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. 

 

Reference for Further Information: 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 1b 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/. 

Turnkey

Description: 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 fasttrack 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. 

Reference for Further Information: The National Council for Public-Private Partnerships 

Website: http://ncppp.org/howpart/ppptypes.shtml. Water Partnership Council Website: 

http://www.waterpartnership.org/studies/AmericanWater/EastBank.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4A-8

Merchant Facilities

Description: 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. 

Reference for Further Information: See “Privatization” in this section of the Guidebook. 

U.S. Department of Energy, Energy Information Administration Website, see pp. 8-9: 

http://www.eia.doe.gov/cneaf/solar.renewables/renewable.energy.annual/backgrnd/chap7b.htm. 

Power Engineering Website: 

http://pepei.pennnet.com/display_article/230683/6/ARTCL/none/none/Innovative-EnergySystems'-Lanldfill-l-Gas-Plants/.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-1

Section 4B: Tools for Building Public-Private Partnerships 

(Public-Private Partnership Case Studies) 

 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-2

Jefferson Parish, Louisiana: Turnkey Operation, Maintenance 

and Management for a Water System 

Project Summary: 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. 

Key Achievements and Successes: 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. 

Reference for Further Information: Water Partnership Council Website: 

http://www.waterpartnership.org/studies/AmericanWater/EastBank.html. 

American Water Website: http://www.amwater.com/awpr1/default.html, American Water phone: 

504-736-6299. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-3

Milwaukee, Wisconsin: Operations, Maintenance, and Management 

Contract for a Municipal Wastewater System 

Project Summary: 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 multicounty 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. 

Key Achievements and Successes: 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. 

Reference for Further Information: National Council for Public-Private Partnerships Website: 

http://ncppp.org/cases/milwaukee.shtml. United Water Website: 

http://www.unitedwater.com/municpal.htm, scroll down and click on “Milwaukee, Wisconsin.” 

Milwaukee Metropolitan Sewerage District Website: http://www.mmsd.com/home/index.cfm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-4

Buffalo, New York: Operations, Maintenance, and Management 

Contract for a Water System 

Project Summary: 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. 

Key Achievements and Successes: 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. 

Reference for Further Information: The National Council for Public-Private Partnerships 

Website: http://www.ncppp.org/cases/buffalo.shtml. Water Partnership Council Website: 

http://waterpartnership.org/studies/AmericanWater/Buffalo.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-5

Camp Pendleton, California: Wastewater Treatment 

Project Summary: 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, indefinitedelivery/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. 

Key Achievements and Successes: 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. 

Reference for Further Information: CDM Website: 

http://www.cdm.com/knowledge_center/case_studies/camp_pendleton_water_and_wastewater_improvements.htm. 

U.S. Environmental Protection Agency Website: http://www.epa.gov/fedrgstr/EPAIMPACT/2001/April/Day-25/i10221.htm and http://www.epa.gov/fedrgstr/EPAIMPACT/2004/June/Day-22/i14107.htm. 

Defense Industry Daily Website: http://www.defenseindustrydaily.com/sewage-infrastructure-atcamp-pendleton-ca-prepares-for-privatization-01958/.

See “Build-Operate-Transfer” in Section 4a of this Guidebook. Build-operate-transfer is another 

name for design-build-operate-maintain. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-6

Cranston, Rhode Island: Asset Sales Under Executive Order 12803 

Project Summary: 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. 

Key Achievements and Successes: 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-7

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. 

Reference for Further Information: Executive Order 12803 as of April 30, 1992, available at 

http://www.theantechamber.net/UsHistDoc/Exord12803/Exord12803Page1.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-TreatmentSystems-Becomes-an-Option-article882. 

HDR Website: http://www.hdr-engineering.com/13/38/1/default.aspx?projectID=608. 

ITT Industries Website: http://www.itt.com/waterbook/where.asp and 

http://www.itt.com/waterbook/privatization.asp. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-8

Cartagena, Colombia: 

Water and Wastewater Services 

Project Summary: 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. 

Key Achievements and Successes: 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 crosssubsidies, under which more affluent customers helped subsidize the water rates for lower 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-9

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. 

Reference for Further Information: The National Council for Public-Private Partnerships 

Website: http://www.ncppp.org/undp/cartagena.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-10

Maryland: Chesapeake Forest Project 

Project Summary: 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-11

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 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. 

 

Key Achievements and Successes: 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. 

Reference for Further Information: The National Council for Public-Private Partnerships 

Website: http://ncppp.org/undp/chesapeake.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-12

Morocco: Solar Energy for Rural Households 

Project Summary: Morocco’s Office National de l’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. 

Key Achievements and Successes: 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-13

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. 

Reference for Further Information: The National Council for Public-Private Partnerships 

Website: http://www.ncppp.org/undp/morocco.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-14

Miami Intermodal Center 

Project Summary: 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-Dade 

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 interagency 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-15

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-Dade County 

and the South Florida region. 

Key Achievements and Successes: 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. 

Reference for Further Information: Miami Intermodal Center Website: 

http://www.micdot.com. 

Earth Tech Website: 

http://www.earthtech.com/news/EarthTechMiamiIntermodalCenterMICCentralStationDesign.htm. 

U.S. Census Bureau Website: http://www.census.gov/, search on Miami, Florida. 

InnovativeFinance.org: http://www.innovativefinance.org/projects/intermodal/miami.asp. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 4B-16

Lorton, Virginia: 

South County Secondary School 

Project Summary: 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. 

 

Key Achievements and Successes: This partnership is a 2006 National Council for PublicPrivate 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. 

Reference for Further Information: 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: 

http://ncppp.org/howpart/ppptypes.shtml. 
5-1 

Guidebook Section 5 

Tools for Delivering Financial Outreach 

Introduction

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 nonbureaucratic. 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-2 

Section 5: Tools for Delivering Financial Outreach 

 1. U.S. Environmental Protection Agency: Environmental Finance Program 

 2. Environmental Finance Center (EFC) Network 

 3. Environmental Finance Center at University of Southern Maine 

 4. Environmental Finance Center at Syracuse University 

 5. Environmental Finance Center at University of Maryland 

 6. Environmental Finance Center at University of Louisville 

 7. Environmental Finance Center at University of North Carolina 

 8. Environmental Finance Center at Cleveland State University 

 9. Environmental Finance Center at New Mexico Tech 

10. Environmental Finance Center at Dominican University 

11. 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. Catalog 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 

 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-3 

U.S. Environmental Protection Agency: 

Environmental Finance Program 

 

Description: 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 Environmental Finance Program publications, and 

some EPA publications, through its highly popular Website, telephone Infoline, and contact 

referral service. 

Reference for Further Information: Environmental Finance Program Website: 

http://www.epa.gov/efinpage, EFIN Infoline: 202-564-4994. The EFC Network is described in 

this section of the Guidebook. 

Environmental Finance Center (EFC) Network 

Description: 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. 

Reference for Further Information: 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-4 

Environmental Finance Center at University of Southern Maine 

Description: 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. 

 

Reference for Further Information: NE/EFC Website: http://efc.muskie.usm.maine.edu. 

Environmental Finance Center at Syracuse University

Description: 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. 

Reference for Further Information: Syracuse Environmental Finance Center Website: 

http://www.efc.syracusecoe.org. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-5 

Environmental Finance Center at University of Maryland

Description: 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 communitybased, 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. 

 

Reference for Further Information: University of Maryland Environmental Finance Center 

Website: http://www.efc.umd.edu/who.html. 

Environmental Finance Center at University of Louisville

Description: 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. 

Reference for Further Information: University of Louisville Environmental Finance Center 

Website: http://cepm.louisville.edu/org/SEEFC/seefc.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-6 

Environmental Finance Center at University of North Carolina 

Description: 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. 

Reference for Further Information: University of North Carolina Environmental Finance 

Center Website: www.efc.unc.edu/index.html. 

Environmental Finance Center at Cleveland State University

Description: 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. 

Reference for Further Information: Region 5 Great Lakes EFC Website:

http://www.glefc.org/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-7 

Environmental Finance Center at New Mexico Tech

Description: 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. 

Reference for Further Information: New Mexico EFC Website:. 

http://nmefc.nmt.edu/home.php

Environmental Finance Center at Dominican University

Description: 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. 

Reference for Further Information: Region 9 EFC Website http://www.efc9.org/. 

San Francisco Bay Area Green Business Program (GBP) Website: http://www.greenbiz.ca.gov/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-8 

Environmental Finance Center at Boise State University 

Description: 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. 

Reference for Further Information: The Environmental Finance Center at Boise State 

University Website: http://efc.boisestate.edu/efc/. 

Boise State University Environmental Finance Center: Plan2Fund 

Description: 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 Directory of Watershed Resources. The Directory of Watershed 

Resources is described in this section of the Guidebook. 

Reference for Further Information: 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-9 

Boise State University Environmental Finance Center: CAPFinance 

Description: 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. 

 

Reference for Further Information: 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

Finance Charrettes 

Description: 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. 

Reference for Further Information: University of Maryland Environmental Finance Center 

Website: www.efc.umd.edu/charrette.html, E-mail: efc@umd.edu. Also see the description of 

the University of Maryland Environmental Finance Center in this section of the Guidebook. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-10 

Border Environmental Cooperation Commission 

Description: 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. 

Reference for Further Information: Border Environmental Cooperation Commission (BECC) 

Website: http://www.cocef.org, E-Mail: becc@cocef.interjuarez.com. 

NADBank Website: http://www.nadb.org/. 

Rural Community Assistance Corporation 

Description: 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. 

Reference for Further Information: Rural Community Assistance Corporation Website: 

http://www.rcac.org/, E-mail: rcacmail@rcac.org, Phone: 916-447-2854. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-11 

Self-Help

Description: 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. 

Reference for Further Information: 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=123, Phone # 518-797-3783. 

Circuit Riders

Description: 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 parttime 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. 

 

Reference for Further Information: 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/compliance/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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-12 

Cooperatives

Description: 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. 

Reference for Further Information: See the U.S. Department of Agriculture, Rural 

Development, Business and Cooperative Programs Website at 

http://www.rurdev.usda.gov/rbs/index.html. Information is also available on the National 

Cooperatives Business Association Website at http://www.cooperative.org. 

Drinking Water State Revolving Fund Capacity Development 

Description: 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. 

Reference for Further Information: 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 

http://www.gpoaccess.gov/ and search on “Public Law 104-182.” 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-13 

U.S. Environmental Protection Agency:

Water and Wastewater Pricing Website 

Description: 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. 

Reference for Further Information: Water and Wastewater Pricing Website: 

http://www.epa.gov/water/infrastructure/pricing/index.htm. 

U.S. Environmental Protection Agency: 

 Enforcement Economic Models 

Description: 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. 

Reference for Further Information: 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/civil/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 benabel@indecon.com. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-14 

U.S. Environmental Protection Agency: 

Green Power Locator 

Description: 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. 

Reference for Further Information: Green Power Locator Website: 

http://www.epa.gov/greenpower/locator/index.htm. 

U.S. Department of Energy: 

Financial Opportunities Website 

Description: 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. 

Reference for Further Information: 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.grants.gov. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-15 

U.S. Department of Energy Alternative Fuels Data Center: 

State and Federal Incentives and Laws Website 

Description: 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 Energy Policy Act of 1992. 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. 

Reference for Further Information: 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. 

National Technical Assistance Programs

Description: 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. 

Reference for Further Information: American Water Works Association (AWWA) Website: 

http://www.awwa.org/, 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: http://www.nesc.wvu.edu/, 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-16 

National Rural Water Association

Description: 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. 

Reference for Further Information: National Rural Water Association Website: 

http://www.nrwa.org/, E-mail: info@nrwa.org, Phone: 580-252-0629. 

Rocky Mountain Institute 

Description: 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. 

Reference for Further Information: Rocky Mountain Institute Website: http://www.rmi.org/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-17 

U.S. Environmental Protection Agency: 

Water Efficiency Market Enhancement Program 

Description: 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. 

Reference for Further Information: 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.

Environmental Council of the States 

Description: 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. 

Reference for Further Information: Environmental Council of the States Website: 

www.ecos.org. The Website has a “contact us” form. ECOS phone #: 202-624-3660.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-18 

Pollution Prevention Resource Exchange 

Description: 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. 

 

Reference for Further Information: Pollution Prevention Resource Exchange Website:

http://www.p2rx.org/, 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/p2home/p2policy/act1990.htm. 

Energy Efficiency Organizations 

Description: 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. 

Reference for Further Information: Websites with links to lists of EEOs include 

http://www.naima.org/pages/resources/links2.html, http://eetd.lbl.gov/eXroads/ngo.html, 

http://www.ecoiq.com/onlineresources/center/energy/efficiency/nonprofit.html. and 

www.eere.gov/EE/buildings-trade.html. A list of EEOs can also be acquired by going to 

www.envirolink.org and searching on “energy efficiency organizations.” 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-19 

U.S. Department of Energy: 

Industrial Assessment Centers 

Description: 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. 

Reference for Further Information: See the Industrial Assessment Centers Website at 

http://www.eere.energy.gov/industry/bestpractices/iacs.html and the student/alumni Website at 

www.iacforum.org. 

Catalog of Federal Domestic Assistance 

Description: 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. 

Reference for Further Information: 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 http://bookstore.gpo.gov/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-20 

Database of State Incentives for Renewable Energy 

Description: 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. 

Reference for Further Information: Database of State Incentives for Renewable Energy 

Website: http://www.dsireusa.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. 

U.S. Environmental Protection Agency: 

Catalog of Federal Funding Sources for Watershed Protection 

Description: 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. 

Reference for Further Information: See the Catalog’s Website at: 

http://www.epa.gov/watershedfunding, or alternatively, at http://cfpub.epa.gov/fedfund/.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 5-21 

Boise State University Environmental Finance Center: 

Directory of Watershed Resources 

Description: 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.

Reference for Further Information: 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: http://efc.boisestate.edu/. 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.
6-1 

Guidebook Section 6 

State and Local Tools 

Introduction 

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 http://www.ecos.org/section/states. Additional 

information on state financial tools can be accessed through the Database of State Incentives for 

Renewable Energy at http://www.dsireusa.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, 
6-2 

assistance from professionals, publications, etc. If one form of assistance does not help the 

community, another probably will. 

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 selfsustainable. 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-3 

Section 6: State and Local Tools 

 1. Co-Funding 

 2. Net Metering 

 3. Solar 4R Schools Program 

 4. Renewable Energy Credits 

 5. State Conservation Tax Credits 

 6. State Energy Efficiency Tax Incentives 

 7. Unit-Based Pricing for Solid Waste Collection 

 8. Utility Rebate Programs 

 9. State of California: Electronic Waste Recycling Fee 

10. State of Colorado: Conservation Easement Tax Credit Program 

11. State of Maryland: Bay Restoration Fund 

12. State of Minnesota: Capital Assistance Program 

13. State of Montana: Renewable Resource Grant and Loan Program 

14. State of Nebraska: Illegal Dumpsite Cleanup Program 

15. State of Nevada: Financial Assistance for Drinking Water Systems Program 

16. State of New Mexico: Clean Energy Grants Program 

17. State of New York: Green Building Tax Credit 

18. State of North Carolina: Clean Water Management Trust Fund 

19. State of Ohio: Water Pollution Control Loan Fund 

20. State of Oregon: Truck Engine Tax Credit 

21. State of Pennsylvania: Growing Greener Program 

22. State of Rhode Island: Aqua Fund 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-4 

Co-Funding 

Description: 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 cofunding 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. 

Reference for Further Information: Contact state and local government offices with inquiriesthe Website for the environmental office of every state in the U.S. can be accesses through the 

Environmental Council of the States Website at http://www.ecos.org/section/states. New York 

State Water and Sewer Infrastructure Co-Funding Initiative Website: 

http://www.nycofunding.org/newcofund/. 

Net Metering 

Description: 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. 

Reference for Further Information: American Wind Energy Association Website:

http://www.awea.org/faq/netbdef.html. U.S. Department of Energy Website: 

http://www.eere.energy.gov/solar/net_metering.html and 

http://www.eere.energy.gov/greenpower/markets/netmetering.shtml. Database of State 

Incentives for Renewable Energy (DSIRE) Website: http://www.dsireusa.org/. 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-5 

Solar 4R Schools Program 

Description: 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. 

Reference for Further Information: 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-ef.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 

Description: 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. 

Reference for Further Information: 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.” 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-6 

State Conservation Tax Credits 

Description: 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. 

 

Reference for Further Information: 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 

http://teachmefinance.com, click on “financial terms,” and use the search feature. 

State Energy Efficiency Tax Incentives 

Description: 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. 

Reference for Further Information: State Environmental Resource Center Website: 

http://www.serconline.org/energytaxincentives.html. Database of State Incentives for 

Renewable Energy Website: http://www.dsireusa.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. 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-7 

Unit-Based Pricing for Solid Waste Collection 

Description: 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. 

 

Reference for Further Information: See the U.S. Environmental Protection Agency (EPA) 

Office of Solid Waste and Emergency Response (OSWER) Website at:

http://www.epa.gov/epaoswer/non-hw/payt/intro.htm. Also see the “contact us” section of 

OSWER’s Website at: http://www.epa.gov/epaoswer/osw/comments.htm. 

Utility Rebate Programs 

Description: 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. 

Reference for Further Information: 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. 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-8 

State of California: Electronic Waste Recycling Fee 

Description: 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. 

Reference for Further Information: 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). 

State of Colorado: Conservation Easement Tax Credit Program 

Description: 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-fordollar 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. 

 

Reference for Further Information: Colorado Conservation Trust (CCT) Website: 

http://www.coloradoconservationtrust.org/cctprograms/initiatives_taxcredit.php, 

Phone: 720-565-8289, E-mail: coctinfo@coct.org. 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.” 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-9 

State of Maryland: Bay Restoration Fund 

Description: On May 26, 2004, the State of Maryland Senate Bill 320 (Bay Restoration 

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 enhanced 

nutrient removal (ENR) technology to achieve a wastewater effluent quality of 3 mg/l total 

nitrogen and 0.3 mg/l 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. 

Reference for Further Information: Bay Restoration Fund Website: 

http://www.mde.state.md.us/Water/CBWRF/index.asp. 

State of Minnesota: Capital Assistance Program 

Description: 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. 

Reference for Further Information: 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. 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-10 

State of Montana: Renewable Resource Grant and Loan Program 

Description: 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. 

Reference for Further Information: Montana DNRC Website: 

http://www.dnrc.mt.gov/cardd/ResDevBureau/renewable_grant_program.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. 

State of Nebraska: Illegal Dumpsite Cleanup Program 

Description: 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. 

 

Reference for Further Information: 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 http://www.epa.gov/region07/waste/solidwaste/illegal_dumping.htm. 

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: 

http://www.kdheks.gov/waste/illegal_dump_cleanup/Illegal_dump_letter.pdf. 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-11 

State of Nevada: Financial Assistance for Drinking Water Systems Program 

Description: 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. 

Reference for Further Information: Nevada Division of Environmental Protection Website: 

http://www.ndep.nv.gov/bffwp/grants01.htm. There is a staff directory on the Website. 

State of New Mexico: Clean Energy Grants Program 

Description: 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), postsecondary 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. 

Reference for Further Information: New Mexico ECMD-EMNRD Website: 

http://www.emnrd.state.nm.us/emnrd/ecmd/CleanEnergyBills2005/CleanEnergyGrantsProgram2

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://www.dsireusa.org/. There are also many renewable energy and energy 

conservation grant programs offered in different U.S. states listed on the DSIRE Website. 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-12 

State of New York: Green Building Tax Credit 

Description: 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. 

Reference for Further Information: New York State Dept. of Environmental Conservation 

Green Building Initiative Website: http://www.dec.state.ny.us/website/ppu/grnbldg/#summary. 

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. 

State of North Carolina: Clean Water Management Trust Fund 

Description: 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. 

Reference for Further Information: The CWMTF is authorized under Article 18, Chapter 

113A 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. 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-13 

State of Ohio: Water Pollution Control Loan Fund 

Description: 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. 

Reference for Further Information: 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.ohio.us. 

State of Oregon: Truck Engine Tax Credit 

Description: 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. 

Reference for Further Information: For Truck Engine Tax Credit applications and additional 

information see: http://www.deq.state.or.us/msd/taxcredits/TruckEngine/truckengine.htm. 

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.dieselforum.org/retrofit-tool-kit-homepage/funding-a-program/step-1-identifypossible-funding-sources/. 
 Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 6-14 

State of Pennsylvania: Growing Greener Program 

Description: 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. 

Reference for Further Information: 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 GrowingGreener@state.pa.us. 

State of Rhode Island: Aqua Fund 

Description: 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. 

Reference for Further Information: Rhode Island DEM, Office of Water Resources Website: 

http://www.state.ri.us/dem/programs/benviron/water/finance/aqua. Contact: Lisa McGreavy at 

the Office of Water Resources at lmcgreav@dem.state.ri.us. 
7-1

Guidebook Section 7 

Tools for Encouraging Pollution Prevention and Recycling 

Introduction 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-2

Section 7: Tools for Encouraging Pollution Prevention and Recycling 

 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: WasteWise Program 

 23. U.S. Environmental Protection Agency: Pollution Prevention Grant Program 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-3

Assurance and Performance Bonding

Description: 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. 

Reference for Further Information: 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 http://www.rff.org/Boyd.cfm#journal. 

Demand-Side Management Pricing 

Description: Demand-Side Management Pricing, also called Peak Load Pricing, DemandResponsive 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. 

Reference for Further Information: Electric Utility Consultants, Inc. Website: 

http://www.euci.com/web_conferences/0406-advanced-metering.php. 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-4

Deposit-Refund Systems

Description: 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, depositrefund 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 leadacid/automobile batteries. 

Reference for Further Information: 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. RWP00-004, 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. 

Conservation Pricing for Water Utilities 

Description: 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. 

Reference for Further Information: See the U.S. EPA Water and Wastewater Pricing Website 

at http://www.epa.gov/water/infrastructure/pricing/index.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-5

Development Rights Purchases 

Description: 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. 

Reference for Further Information: U.S. Department of Agriculture Website: 

http://www.ny.nrcs.usda.gov/programs/programs/fpp.html. 

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. 

Environmental Self Auditing

Description: 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 selfidentified 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 selfaudit procedure and correct within 60 days. 

Reference for Further Information: U.S. EPA Website: 

http://www.epa.gov/region5/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://www.vjel.org/articles/articles/Stafford11FIN.htm. Also see that article’s references 

section for additional sources and internet links. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-6

Full Cost Environmental Accounting

Description: 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. 

 

Reference for Further Information: 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: 

http://www.sec.gov/rules/final/33-8400.htm. 

Green Investments 

Description: 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. 

Reference for Further Information: Social Investment Forum Website: 

http://www.socialinvest.org/. 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-7

Liability Assignment

Description: 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. 

Reference for Further Information: See the U.S. Environmental Protection Agency Website at 

http://www.epa.gov/compliance/cleanup/superfund/liability.html and 

http://www.epa.gov/compliance/cleanup/rcra/finance.html. 

Pollution Charges

Description: 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. 

Reference for Further Information: The following reports are available at: 

http://yosemite.epa.gov/ee/epa/eed.nsf/Webpages/SelectReports.html. 

U.S. Environmental Protection Agency (EPA) National Center for Environmental Economics, 

The United States Experience with Economic Incentives for Protecting the Environment, EPA240-R-01-001, 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-8

Forest Banks 

Description: 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 interestonly 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. 

Reference for Further Information: Dedrick, J.P.; Hall, T.E.; Hull, R.B.; and Johnson, J.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. 

Transit Pass Subsidy Programs

Description: 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. 

 

Reference for Further Information: Library of Congress Thomas Website: 

http://thomas.loc.gov/bss/d103/d103laws.html, search on Public Law 103-172 (103rd Congress). 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-9

Ecotourism 

Description: 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. 

Reference for Further Information: 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: 

http://www.greenglobe.org/. 

Conservation International Website: http://www.ecotour.org/xp/ecotour/. 

Energy Star Program 

Description: 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. 

References for Further Information: Energy Star Website: http://www.energystar.gov/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-10

Home Energy Efficiency Mortgages 

Description: 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%. 

Reference for Further Information: Residential Energy Services Network Website: 

http://www.natresnet.org/resources/lender/default.htm. 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. 

Financial Incentives for Purchasing Hybrid and Alternative Fuel Vehicles 

Description: 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. 

Reference for Further Information: See http://www.hybridcars.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: http://www.fueleconomy.gov/feg/fuelcell.shtml

 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-11

Green Suppliers Network

Description: 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. 

Reference for Further Information: Green Suppliers Network Website:

http://www.greensuppliers.gov/gsn/home.gsn. Website for 360vu: 

http://www.360vu.com/prod_serv/index.html. 

U.S. Environmental Protection Agency: Pollution Prevention (P2) Website 

Description: 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. 

Reference for Further Information: U.S. EPA Pollution Prevention Website:

http://www.epa.gov/oppt/p2home/index.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-12

U.S. Environmental Protection Agency: Natural Gas Star Program 

Description: 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.

References for Further Information: Natural Gas Star Website: http://www.epa.gov/gasstar/. 

U.S. Environmental Protection Agency: Climate Leaders Partnership 

Description: 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. 

Reference for Further Information: U.S. EPA Climate Leaders Program Website: 

http://www.epa.gov/climateleaders/index.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-13

U.S. Environmental Protection Agency: Green Power Partnership 

Description: 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 green power. 

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. 

References for Further Information: U.S. EPA Green Power Partnership Website: 

http://www.epa.gov/greenpower/aboutus.htm. 

U.S. Environmental Protection Agency: WasteWise Program 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 7-14

U.S. Environmental Protection Agency: Pollution Prevention Grant Program 

Description: 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. 

Reference for Further Information: 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. 
8-1

Guidebook Section 8 

Tools to Finance Community-Based Environmental Protection 

 

Introduction 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-2

Section 8: Tools to Finance Community-Based Environmental Protection

 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-3

Adopt-an-Animal Programs

Description: 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. 

 

Reference for Further Information: Caribbean Conservation Corporation and Sea Turtle 

Survival League Website: http://www.cccturtle.org/member.htm. World Wildlife Fund Website: 

http://www.worldwildlife.org/, click on “Adoption Center.” National Zoo Website: 

http://nationalzoo.si.edu/Support/AdoptSpecies/. 

Fundraising Merchandise

Description: States and localities, as well as the federal government, sell various items and 

dedicate the revenues to environmental programs. Sometimes revenues are earmarked to sitespecific 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. 

Reference for Further Information: Chesapeake Bay Trust Website: 

http://www.chesapeakebaytrust.org/bayplate.html. 

Virginia Chesapeake Bay Restoration Fund Website: http://www.state.va.us/dcr/sw/bayfund.htm. 

New Hampshire Moose Plate Program Website: http://www.mooseplate.com/overview.html. 

The Federal Duck Stamp Program Website: http://www.fws.gov/duckstamps/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-4

U.S. Department of Agriculture Farm Service Agency: 

Conservation Reserve Program

Description: 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 longterm 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. 

Reference for Further Information: U.S. Department of Agriculture Farm Service Agency 

Website: www.fsa.usda.gov/dafp/cepd/crp.htm. 

U.S. Department of Agriculture Natural Resources Conservation Service: 

Wetlands Reserve Program

Description: 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. 

Reference for Further Information: U.S. Department of Agriculture, Natural Resources 

Conservation Service Website: http://www.nrcs.usda.gov/PROGRAMS/wrp/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-5

Candidate Conservation Agreements with Assurances

Description: 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)(1)(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. 

Reference for Further Information: Federal Register Notice: 

http://www.fws.gov/endangered/policy/ccaa.pdf. Environmental Defense Website: 

http://www.environmentaldefense.org/home.cfm, search on “Candidate Conservation 

Agreements with Assurances” within the Website. 

Capital Improvements Programs

Description: 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. 

Reference for Further Information: Kansas City Capital Improvements Management Office 

Website: www.kcmo.org/cimo.nsf/web/home?opendocument. Baltimore County, Maryland 

Website: http://www.co.ba.md.us/Agencies/planning/public_facilities_planning/cip.html. 

Northwest Florida Water Management District Website: 

http://www.nwfwmd.state.fl.us/rmd/swim/fla_forever_grants/fla_forever_grants.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-6

Certified Green Buildings 

Description: 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. 

Reference for Further Information: Smart Communities Network Website:

http://www.smartcommunities.ncat.org/buildings/gbintro.shtml. 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/. 

Community Foundations

Description: 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. 

Reference for Further Information: Foundation Center Website: www.fdncenter.org/. 

Community Foundations of America Website: www.cfamerica.org. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-7

Community Supported Agriculture Agreements 

Description: 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. 

References for Further Information: 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/locallist.html. The following Websites have CSA 

directories: Robin Van En Center for CSA Resources: http://www.csacenter.org/, Local Harvest: 

http://www.localharvest.org/csa/, and Future Harvest-CASA: http://www.futureharvestcasa.org. 

Conservation Easements 

Description: 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. 

Reference for Further Information: 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 http://www.lta.org/publications/index.html. The Nature Conservancy 

Website: www.nature.org. The Trust for Public Land Website: http://www.tpl.org/. Little 

Traverse Conservancy Website: www.landtrust.org. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-8

Conservation Partnerships

Description: 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. 

Reference for Further Information: U.S. National Park Service Website: 

http://www.nps.gov/partnerships/about.htm. Conservation Study Institute Website: 

http://nps.gov/csi/partnership/practiceDial.htm. World Wildlife Fund Website: 

http://www.panda.org/abou t_wwf/, search within the Website on “conservation partnerships.” 

The Nature Conservancy Website: http://www.nature.org/partners/. 

U.S. Department of Agriculture Farm Service Agency: 

Conservation Reserve Enhancement Program 

Description: 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 (USDA) 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. 

Reference for Further Information: See the USDA Farm Service Agency Website at 

http://www.fsa.usda.gov/dafp/cepd/crep.htm. 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-9

Land Trusts 

Description: 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. 

Reference for Further Information: Trust for Public Land Website: http://www.tpl.org/. Land 

Trust Alliance Website: www.lta.org. The Nature Conservancy Website: 

http://www.nature.org/. American Farmland Trust Website: http://www.farmland.org/. See 

press release on Sterling Forest at http://www.ny.gov/governor/press/02/may6_02.htm. 

Cost-Share Programs for Nonpoint Source Pollution Control

Description: 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 costshare 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). 

Reference for Further Information: U.S. Environmental Protection Agency Reports: 

http://www.epa.gov/owmitnet/cwfinance/cwsrf/agfact.pdf and 

http://www.epa.gov/owm/cwfinance/cwsrf/final.pdf. Virginia Department of Conservation and 

Recreation Website: http://www.state.va.us/dcr/sw/costshar.htm. Minnesota Cost-Share 

Program Fact Sheet: http://www.bwsr.state.mn.us/grantscostshare/costshare/factsheet2.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-10

Dedicated Government Trust Funds 

Description: 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. 

 

Reference of Further Information: The Nebraska Environmental Trust Website:

www.environmentaltrust.org. U.S. Department of Energy, Energy Information Administration 

Website: http://www.eia.doe.gov/oiaf/servicerpt/subsidy/excise.html. 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. 

Emissions Trading

Description: 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.” 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/airmarkets/trading/basics/index.html. International Emissions Trading 

Association Website: http://www.ieta.org/ieta/www/pages/index.php. Michigan Department of 

Environmental Quality Website: http://www.michigan.gov/deq/, click on “Programs” first, then 

“Emissions Trading.” 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-11

Lotteries

Description: 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. 

Reference for Further Information: North American Association of State and Provincial 

Lotteries Website: www.naspl.org. State Environmental Resource Center Website: 

http://www.serconline.org/conservationfunding/stateactivity.html. 

Minnesota Environment & Natural Resources Trust Fund Website: 

http://www.commissions.leg.state.mn.us/lcmr/trustfund/tfquestion.htm. 

Great Outdoors Colorado Website: http://www.goco.org/. Arizona Heritage Fund Website: 

http://www.azgfd.gov/w_c/heritage_program.shtml. Nebraska Environmental Trust Website:

www.environmentaltrust.org. 

Green Credit Cards

Description: 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. 

Reference for Further Information: White, Stephanie, “Buy now, pay later: greening credit 

cards,” E: The Environmental Magazine, July-August 2005, available at: 

http://findarticles.com/p/articles/mi_m1594/is_4_16/ai_n14789145. List of “environment & 

cause related” credit cards on MBNA America Website: 

http://www.mbna.com/creditcards/enviro_causes.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-12

Green Energy Partnerships 

Description: 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. 

References for Further Information: Clean Energy Partnership Website: 

http://www.cleanenergypartnership.org. Green Power Market Development Group Website: 

http://www.thegreenpowergroup.org. U.S. Environmental Protection Agency Green Power 

Partnership Website: http://www.epa.gov/greenpower/aboutus.htm, also see the “EPA Green 

Power Partnership” tool in Section 7 of the Guidebook. 

Green Pricing 

Description: 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. 

Reference for Further Information: Center for Resource Solutions Website: 

http://www.resource-solutions.org/greenpricing.htm. Sterling Planet Website: 

http://www.sterlingplanet.com/. U.S. Department of Energy Website: 

http://www.eere.energy.gov/consumer/your_home/electricity/index.cfm/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-13

Individual and Corporate Donations

Description: 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. 

Reference for Further Information: Foundation Center Website: http://fdncenter.org/. 

Environmental Data Resources, Inc., Environmental Grant Making Foundations, 11th ed., 2005, 

to order see www.environmentalgrants.com, or E-mail orders@environmentalgrants.com. 

Land Reclamation Banks 

Description: 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. 

Reference for Further Information: EnviroTools Website:

http://www.envirotools.org/financing/privateresources.shtml. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-14

Location Efficient Mortgage 

Description: 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. 

Reference for Further Information: Location Efficient Mortgage Website:

http://www.locationefficiency.com/. 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/1-

55963-432-4. 

Mitigation Banking 

Description: 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. 

 

Reference for Further Information: U.S. Environmental Protection Agency (EPA) Website: 

http://www.epa.gov/owow/wetlands/guidance/mitbankn.html. 

U. S. EPA Wetlands Hotline: 1-800-832-7828. Oregon Department of State Lands Website: 

http://www.oregon.gov/DSL/PERMITS/wetland_mit.shtml. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-15

National Compliance Assistance Centers 

Description: 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. 

Reference for Further Information: 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

Description: Nonprofit organizations, such as foundations and trusts, are defined as nongovernmental 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. 

 

Reference for Further Information: U.S. Environmental Protection Agency (EPA) Resources 

for Non-Profit Organizations Website: http://www.epa.gov/epahome/nonprof.htm. Information 

for nonprofits on the Internal Revenue Service Website: http://www.irs.gov/charities/index.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-16

Point Source/Nonpoint Source Trading

Description: 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. 

Reference for Further Information: U.S. Environmental Protection Agency Website: 

http://www.epa.gov/OWOW/watershed/tradetbl.html. 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.findarticles.com/p/articles/mi_qa4038/is_200204/ai_n9020966. 

Special Districts

Description: 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. 

Reference for Further Information: 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 8-17

Tax Increment Financing

Description: Tax increment financing (TIF) provides for the temporary allocation of increased 

tax proceeds in a designated area generated by increases in assessed property values. In a basic 

TIF, 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. 

Reference for Further Information: Illinois Tax Increment Association Website: 

http://www.illinois-tif.com/. City of San Antonio Economic Development Department Website: 

http://www.sanantonio.gov/edd/incentive/tax/tif.asp. 
9-1 

Guidebook Section 9 

Tools for Financing Brownfields Redevelopment 

Introduction 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-2

Section 9: Tools for Financing Brownfields Redevelopment

 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-3

U.S. Environmental Protection Agency: 

Brownfields Program

Description: 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. 

Reference for Further Information: 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. 

U.S. Environmental Protection Agency: 

Brownfields Workforce Development

Description: 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. 

Reference for Further Information: U.S. EPA Website: http://www.epa.gov/swerosps/bf/ and 

http://www.epa.gov/brownfields/job.htm and http://www.epa.gov/brownfields/htmldoc/wrkfrc2.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-4

U.S. Environmental Protection Agency: 

Brownfields Grants 

Description: 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. 

Reference for Further Information: 

U.S. EPA Website: http://www.epa.gov/brownfields/pilot.htm and 

http://www.epa.gov/brownfields/facts/rlf_factsheet.pdf. See “U.S. EPA: Brownfields Workforce 

Development” in this section of the Guidebook regarding Brownfields Job Training Grants. 

U.S. Environmental Protection Agency: 

Clean Water State Revolving Fund Brownfields Loans 

Description: Under Title VI of the 1987 Clean Water Act, states receive federal funding 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 that protect water quality. Specific brownfields remediation activities that can 

help prevent contamination of water supplies are eligible uses for CWSRF loans. CWSRF 

eligible brownfields cleanup activities include removal and remediation of Leaking Underground 

Storage Tanks (LUSTs) and removal of contaminated soil. Brownfields redevelopment is not an 

eligible use for CWSRF loans. Any eligible brownfields project must compete with all other 

water quality projects for a place on the particular state’s CWSRF priority funding list. 

Reference for Further Information: “U.S. EPA: Clean Water State Revolving Fund” in 

Guidebook Section 2b. U.S. Environmental Protection Agency Website: 

http://www.epa.gov/brownfields/ and http://www.epa.gov/owm/cwfinance/cwsrf/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-5

State Voluntary Cleanup Programs

Description: 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 (MOAs) 

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. 

Reference for Further Information: U.S. EPAWebsite: 

http://www.epa.gov/compliance/cleanup/redevelop/state.html and 

http://www.epa.gov/swerosps/bf/pg/fy06_state_guidelines.pdf. 

U.S. Department of Housing and Urban Development and 

U.S. Department of Health and Human Services: 

Round I and II Empowerment Zones 

Description: 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. 

Reference for Further Information: U.S. HUD Website: 

http://www.hud.gov/offices/cpd/economicdevelopment/programs/rc/. 

Contact Phil Graham at HUD: 202-708-6339, ext. 4636. Contact Wally Lumpkin at the HHS: 

202-401-5111. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-6

U.S. Department of Housing and Urban Development: 

Brownfields Economic Development Initiative Grants 

Description: 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. 

Reference for Further Information: U.S. HUD Website: 

http://www.hud.gov/offices/cpd/economicdevelopment/programs/bedi/index.cfm and 

http://www.hud.gov/offices/cpd/communitydevelopment/programs/108/. 

National Brownfield Associations 

Description: 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. 

Reference for Further Information: National Brownfield Associations Website: 

http://www.brownfieldassociation.org/, phone: 773-714-0407. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-7

Environmental Risk Management in the Real Estate Industry

Description: 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. 

 

Reference for Further Information: Victor O. Shinnerer & Company, Inc. Website: 

http://www.schinnerer.com/risk_mgmt/real_estate/rmrindex.html#env. Hilb, Rogal & Hobbs 

Website: http://www.hrh.com/pages/nationalPractices/realEstatePractice.asp. 

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

Description: 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 specialpurpose authorities or corporations. One example of a special-purpose authority is a quasigovernmental non-profit corporation that answers to a government through an appointed board. 

Reference for Further Information: National Conference of State Legislatures Website: 

http://www.ncsl.org/programs/econ/eco-dev.htm, this Website has links to the Websites of the 

economic development agencies for all U.S. States and Puerto Rico. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-8

State Brownfields Programs 

Description: 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. 

Reference for Further Information: See “U.S. EPA Brownfields Program” in this section of 

the Guidebook. U.S. EPAWebsite: http://www.epa.gov/brownfields/state_tribal.htm#links & 

http://www.epa.gov/brownfields/. National Brownfield Associations Website: 

http://www.brownfieldassociation.org/. Northeast Midwest Institute Website: 

http://www.nemw.org/reports.htm#brownfields. 

Land Recycling

Description: 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. 

Reference for Further Information: Center for Creative Land Recycling Website: 

http://www.cclr.org/. Pennsylvania Department of Environmental Protection Website: 

http://www.depweb.state.pa.us/landrecwaste/cwp/view.asp?a=1243&q=462059. American Land 

Recycling Website: http://www.americanlandrecycling.com/home_1.html. Iowa Department of 

Natural Resources Website: http://www.iowadnr.com/land/consites/lrp/conLRP.html. 

City of Phoenix Website: http://phoenix.gov/BROWNFLD/brownfld.html. 

Wisconsin Department of Natural Resources Website: 

http://www.dnr.state.wi.us/ORG/caer/cfa/EL/Section/brownfield.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-9

Real Estate Investment Trusts

Description: 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. 

Reference for Further Information: 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): 

http://www.law.cornell.edu/uscode/26/usc_sup_01_26.html. 

Tax Abatements

Description: 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. 

Reference for Further Information: Internal Revenue Service Website: http://www.irs.gov/, 

search on “abatement.” Missouri: North America’s Business Center Research Toolbox: 

http://ded.mo.gov/BDT/topnavpages/Research%20Toolbox/BCS%20Programs/Chapter%20353%20Tax%20Abatement.aspx. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-10

Tax Incentives for Brownfields Cleanup and Redevelopment

Description: 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. 

Reference for Further Information: Fact sheet on New York State tax credits: 

http://www.empire.state.ny.us/pdf/brownfields/TFtaxsheet011604.pdf. 

Massachusetts Department of Environmental Protection Website: 

http://www.mass.gov/dep/cleanup/certap13.htm. 

U.S. EPAWebsite: http://www.epa.gov/brownfields/html-doc/btaxguid.htm and 

http://www.epa.gov/brownfields/bftaxinc.htm. 

Transferable Development Rights

Description: 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. 

Reference for Further Information: 

National Association for Realtors Website: http://www.realtor.org/libweb.nsf/pages/fg804. 

Sprawl Guide: http://www.plannersweb.com/sprawl/solutions_sub_tdr.html. 

Tools for Quality Growth Website: http://outreach.ecology.uga.edu/tools/tdr.html. 

Boulder County, Colorado Website: http://www.co.boulder.co.us/lu/tdr/tdrfaq1.htm. 

New Jersey Department of Banking and Insurance Website: 

http://www.state.nj.us/dobi/pinelandsbank.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-11

Environmental Insurance

Description: 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. 

Reference for Further Information: 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. 

Landowner Liability Protections

Description: 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 NPLcaliber 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/mous/illmou.pdf for a discussion of liability. 

Reference for Further Information: U.S. EPAWebsite: 

http://www.epa.gov/compliance/cleanup/redevelop/landowner.html and 

http://www.epa.gov/compliance/cleanup/redevelop/state.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 9-12

Clean Land Fund

Description: 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. 

Reference for Further Information: Clean Land Fund Website: 

http://www.cleanlandfund.org/, e-mail BillPenn@CleanLandFund.org. 

Community Development Financial Institutions 

Description: 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. 

Reference for Further Information: 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://www.rcac.org/. 

ShoreBank Website: http://www.sbk.com/bins/site/templates/splash.asp. 

The Community Preservation Corporation Website: http://www.communityp.com/. 

Community Preservation and Development Corporation Website: http://www.cpdc.org/. 

 
10-1

Guidebook Section 10 

Tools for Financing Small Businesses and the Environmental Goods and 

Services Industry 

Introduction 

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 10a, “Equity Tools,” and Section 10b, “Debt Tools.” Section 10a 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 10b 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10A-1

Section 10A: Tools for Financing Small Businesses and the 

Environmental Goods and Services Industry 

(Equity Capital) 

 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10A-2

Angel Investors 

Description: 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. 

Reference for Further Information: Inc.com, the Daily Resource for Entrepreneurs: 

http://www.inc.com/magazine/20050701/angels-in-america.html. Gathering of Angels Website: 

http://www.gatheringofangels.com/. Angel Investor News Website: http://www.angel-investornews.com/. The vFinance, Inc. Website at http://www.vfinance.com/ has a directory of angel 

investors. 

Business Plans

Description: 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, costeffective, 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. 

Reference for Further Information: DeThomas, Arthur R., Ph.D.; and Grensing-Pophal, Lin; 

Writing a Convincing Business Plan, Barron’s Educational Services, Inc.: 2001, available at 

http://www.amazon.com/Writing-Convincing-Business-ArthurDeThomas/dp/0764113992/ref=pd_sim_b_1/002-1123591-2445667. 

Purchase software for creating business plans at Jian: http://www.jian.com/.
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10A-3

U.S. Small Business Administration: 

Active Capital Website 

Description: 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. 

Reference for Further Information: Active Capital Website: http://activecapital.org/. 

U.S. Small Business Administration Website: http://www.sba.gov/. Consult a securities law 

practitioner for additional information. 

Small Business Innovation Research Program 

Description: 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. 

Reference for Further Information: DARPA’s SBIR/STTR Support Center Website: 

http://www.darpa.mil/sbir/sbir.html. U.S. EPAWebsite: http://es.epa.gov/ncer/sbir/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10A-4

Small Business Investment Companies 

Description: 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. 

Reference for Further Information: 

National Association of Small Business Investment Companies Website: http://www.nasbic.org/. 

U.S. Small Business Administration Website: http://www.sba.gov/. 

Franchising

Description: 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. 

Reference for Further Information: International Franchise Association Website:

http://www.franchise.org/. Gaebler Ventures Website: http://www.gaebler.com/EnvironmentalFranchises.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10A-5

Investment Forums

Description: 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. 

Reference for Further Information: Clean Technology AustralAsia Website: 

http://www.cleantechnology.com.au/. Eurasian Innovation & Investment Forum Website: 

http://www.innovationforums.org/virginia. Earthrise Capital Website: 

http://www.earthrisecapital.com/. Investment Forum Website: 

http://www.investmentforum.org/. 

Investment Networks

Description: 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 (IC) Network is an example of an investment network that uses private 

capital to promote the transition to a sustainable economy. The IC Network is comprised of 

angel investors, professional venture capitalists, foundations, family offices and others. Recent 

accomplishments of the IC 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. 

Reference for Further Information: See “Venture Capital” in Section 10a of this Guidebook. 

The Capital Network Website: http://www.thecapitalnetwork.org/. Investors’ Circle Website: 

http://www.investorscircle.net/. Buzzle.com: http://www.buzzle.com/chapters/business-andfinance_investments-and-ventures_networks-and-related-resources.asp. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10A-6

Joint Ventures 

Description: 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. 

Reference for Further Information: Consult an attorney on applicable state and federal laws. 

U.S. Small Business Administration (SBA) Website: http://www.sba.gov/, 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: 

http://www.justinmichie.com/free_articles/joint_venture_marketing_on_the_internet.php. 

Private Placements

Description: 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. 

Reference for Further Information: 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-BruceBlechman/dp/0395522641. 

About Website: http://sbinformation.about.com/cs/creditloans/a/prplacemt.htm. “Private 

Placement Letter” Website: http://www.privateplacementletter.com/protected/current_issue.cfm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10A-7

Public Offerings

Description: 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 wellestablished 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. 

Reference for Further Information: U.S. Securities and Exchange Commission Website: 

http://www.sec.gov/. IPOHome Website: http://www.ipohome.com/default.asp. 

“CECO Announces Public Offering,” Associated Press Business News, 2007, available at 

http://news.moneycentral.msn.com/category/topicarticle.aspx?feed=AP&Date=20070412&ID=67

37829. 

Strategic Alliances

Description: 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. 

 

Reference for Further Information: Association of Strategic Alliance Professionals Website: 

http://www.strategic-alliances.org/. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10A-8

Venture Capital

Description: 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. 

Reference for Further Information: See the EcoBusinessLinks Environmental Directory for a 

directory of green venture capital firms: 

http://www.ecobusinesslinks.com/green_venture_capital.htm. 

See the vFinance, Inc. Website for a directory of venture capital firms: 

http://www.vfinance.com/. 

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 Network 

Description: 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. 

Reference for Further Information: America’s Small Business Development Center Network 

Website: http://www.asbdc-us.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). 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-1

Section 10B: Tools for Financing Small Businesses and the 

Environmental Goods and Services Industry (Debt) 

 1. U.S. Department of Agriculture Rural Development: Intermediary Relending 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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-2

U.S. Department of Agriculture Rural Development: 

Intermediary Relending Program 

Description: The U.S. Department of Agriculture (USDA) Rural Development Intermediary 

Relending Program (IRP) 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 nonprofit 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. 

Reference for Further Information: U.S. Department of Agriculture Website: 

http://www.rurdev.usda.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 http://www.rurdev.usda.gov/recd_map.html. 

Bank Financing

Description: 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. 

Reference for Further Information: American Bankers Association Website: 

http://www.aba.com/default.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-3

U.S. Small Business Administration: 

Prequalification Loan Program 

Description: 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. 

 

Reference for Further Information: 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. 

U.S. Small Business Administration: 

Certified Development Company/504 Loan Program 

Description: 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. 

Reference for Further Information: U.S. Small Business Administration (SBA) Website: 

http://www.sba.gov/services/financialassistance/sbaloantopics/cdc504/index.html and 

http://www.sba.gov/tools/resourcelibrary/lawsandregulations/tool_lawsreg_Smallbusinvst.html. 

SBA phone: 1-800-U-ASK-SBA (1-800-827-5722). 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-4

U.S. Small Business Administration: 

Basic 7(a) Loan Program

Description: 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. 

Reference for Further Information: U.S. Small Business Administration (SBA) Website: 

http://www.sba.gov/services/financialassistance/sbaloantopics/7a/index.html & 

http://www.sba.gov/regulations/sbaact/sbaact.html. 

To locate a lender, call the SBA at 1-800-U-ASK-SBA (1-800-827-5722). 

U.S. Small Business Administration: 

Microloan Program 

Description: 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. 

Reference for Further Information: U.S. Small Business Administration (SBA) Website: 

http://www.sba.gov/services/financialassistance/sbaloantopics/microloans/ and 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-5

U.S. Small Business Administration: 

CAPLines Loan Program

Description: 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. 

Reference for Further Information: 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). 

Community Reinvestment Act 

Description: 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. 

Reference for Further Information: 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/htmldoc/cra.htm. See Section 9 of this Guidebook for more information on Brownfields. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-6

Convertible Debt

Description: 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. 

References for Further Information: Entrepeneur.com Website: 

http://www.entrepreneur.com/money/financing/startupfinancingcolumnistasheeshadvani/article15

9520.html. Business Owners’ Idea Café Website: 

http://www.businessownersideacafe.com/financing/convertible_debt.php. 

Credit Analysis

Description: 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. 

 

Reference for Further Information: Contact the credit department of any bank, savings and 

loan, finance company, or other lending institution. Nationwide Advantage Mortgage Website: 

http://www.nationwideadvantage.com/siteinfo/nw/content/jsp/YourCredit-TheFourCs.jsp. 

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/BankCredit-Analysis-Handbook-Investors/dp/0471842176. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-7

Credit Cards 

Description: 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. 

Reference for Further Information: See “Credit Analysis” in this section of the Guidebook. 

CreditInfocenter.com: http://www.creditinfocenter.com/. SmartAboutMoney.org: 

http://www.smartaboutmoney.org/nefe/pages/content.asp?page=1720. 

Export-Import Bank of the United States: 

Environmental Exports Program

Description: 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. 

Reference for Further Information: Export-Import Bank of the United States Website:

http://www.exim.gov/ & http://www.exim.gov/products/special/environment.cfm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-8

Foundations: Program Related Investments 

Description: 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. 

Reference for Further Information: Foundation Center Website: http://foundationcenter.org/. 

John D. and Catherine T. MacArthur Foundation Website: http://www.macfound.org. 

Ford Foundation Website: http://www.fordfound.org/program/community.cfm. 

MetLife Foundation Website: 

http://www.metlife.com/Applications/Corporate/WPS/CDA/PageGenerator/0,4132,P263,00.html.

Leasing

Description: 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. 

Reference for Further Information: Entrepreneur.com: 

http://www.entrepreneur.com/money/howtoguide/article52720.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-9

Mezzanine Financing 

Description: 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. 

Reference for Further Information: U.S. Small Business Administration Website: 

http://www.sba.gov/. Contact the Small Business Administration Answer Desk at 1-800-UASK-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 10a. 

Investopedia: http://www.investopedia.com/terms/m/mezzaninefinancing.asp. 

Microcredit

Description: 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. 

 

Reference for Further Information: 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 http://news.nationalgeographic.com/news/2006/10/061013-nobel-peace.html. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-10

National Consumer Cooperative Bank

Description: 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. 

Reference for Further Information: See “Cooperatives” in Section 5 of this Guidebook. 

National Consumer Cooperative Bank Website: http://www.ncb.coop/. 

National Credit Union Administration: 

Community Development Revolving Loan Fund 

Description: 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. 

Reference for Further Information: National Credit Union Administration Website: 

http://www.ncua.gov/CreditUnionDevelopment/Programs/FinanceGrants.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-11

Accounts Receivable Financing

Description: 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. 

 

Reference for Further Information: 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: http://www.businessfinance.com/account-receivables-factoring.htm. 

Investorwords.com: http://www.investorwords.com/54/accounts_receivable_financing.html. 

Invoice Financial Website: http://www.invoicefinancial.com/. 

Surety Bonds

Description: 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. 

Reference for Further Information: 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://www.globalenvironmentalpartners.com/insurance/index.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems 10B-12

U.S. Department of Treasury: 

Community Development Financial Institutions Fund 

Description: 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. 

Reference for Further Information: U.S. Department of the Treasury Community 

Development Financial Institutions Fund Website: http://www.cdfifund.gov/. See “Community 

Development Financial Institutions” in Section 9 of this Guidebook (the Brownfields section).
Paying for Sustainable Environmental Systems: Guidebook of Financial Tools A-1 

Environmental Financial Advisory Board 

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 crossmedia, 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 
Paying for Sustainable Environmental Systems: Guidebook of Financial Tools A-2 

 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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems A-3

Environmental Financial Advisory Board 

Terry Agriss, President 

TAgriss Advisory Services 

New York, New York 

A. James Barnes, EFAB Chair 

Professor of Public and Environmental 

Affairs and Adjunct Professor of Law 

Indiana University 

Bloomington, Indiana 

Julie Belaga, Co-Chair 

Connecticut League of Conservation Voters 

Westport, Connecticut 

John Boland, Professor Emeritus 

The Johns Hopkins University 

Baltimore, Maryland 

George Butcher, Managing Director 

Municipal Finance 

Goldman, Sachs, & Co. 

New York, New York 

Donald Correll, President and CEO 

American Water 

Voorhees, New Jersey 

Michael Curley, Executive Director 

The International Center for Environmental 

Finance 

Towson, Maryland 

Rachel Deming, Partner 

Scarola Ellis, LLP 

New York, New York 

Honorable Pete Domenici 

United States Senate 

Washington, DC 

Kelly Downard, Chairman 

Louisville Metro City Council 

Louisville, Kentucky 

Mary Francoeur, Managing Director 

Assured Guaranty Corp. 

New York, New York 

James Gebhardt, Chief Financial Officer 

New York State Environmental Facilities 

Corporation 

Albany, New York 

Steve Grossman, Executive Director 

Ohio Water Development Authority 

Columbus, Ohio 

Scott Haskins, Vice President 

Global Water Business Group 

Bellevue, Washington 

Jennifer Hernandez, Partner/Co-Chair 

National Environmental Team 

Holland and Knight, LLP 

San Francisco, California 

Keith Hinds, Financial Advisor 

Merrill Lynch 

Albuquerque, New Mexico 

Stephen Mahfood, President 

Mahfood Associated, LLC 

Ashland, Missouri 

Langdon Marsh, Fellow 

National Policy Consensus Center 

Portland State University 

Portland, Oregon 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems A-4

Gregory Mason, Chief Operations Officer 

Georgia Environmental Facilities Authority 

Atlanta, Georgia 

Karen Massey, Deputy Director 

Missouri Environmental Improvement and 

Energy Resource Authority 

Jefferson City, Missouri 

Lindene E. Patton 

Senior Vice President and Counsel 

Zurich North America 

Great Falls, Virginia 

Cherie Collier Rice 

Treasurer and Vice President of Finance 

Waste Management, Inc. 

Houston, Texas 

Helen Sahi, Director 

Environmental Services Department 

Bank of America 

Hartford, Connecticut 

Andrew Sawyers, Program Administrator 

Maryland Department of the Environment 

Baltimore, Maryland 

James Smith 

Environmental Finance Consultant 

Bozeman, Montana 

Greg Swartz, Vice President 

Piper Jaffray & Co. 

Phoenix, Arizona 

Steve Thompson, Executive Director 

Oklahoma Department of Environmental 

Quality 

Oklahoma City, Oklahoma 

Sonia Toledo, Managing Director 

Merrill Lynch 

New York, New York 

Dr. Jim J. Tozzi, Director 

Multinational Business Services, Inc. 

Washington, DC 

Justin Wilson, Partner 

Waller Lansden 

Nashville, Tennessee 

John C. Wise 

Environmental Finance Consultant 

Middletown, California 

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 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems B-1 

Environmental Finance Center Network 

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 universitybased 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 

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. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems B-2 

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. 

 

 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems B-3 

Environmental Finance Center Network 

Environmental Finance Center 

Sam Merrill, Director 

University of Southern Maine 

Portland, Maine 

Website: http://efc.muskie.usm.maine.edu

Environmental Finance Center 

Mark Lichtenstein, Director 

Syracuse University 

Syracuse, New York 

Website: http://efc.syracusecoe.org/

Environmental Finance Center 

Joanne Throwe, Associate Director 

University of Maryland 

College Park, Maryland 

Website: http://www.efc.umd.edu/who.html

Environmental Finance Center 

Lauren Heberle, Director 

University of Louisville 

Louisville, Kentucky 

Website: 

http://cepm.louisville.edu/org/SEEFC/seefc.htm

Environmental Finance Center 

Jeff Hughes, Director 

University of North Carolina at Chapel 

Hill 

Chapel Hill, North Carolina 

Website: www.efc.unc.edu/index.html

Great Lakes Environmental Finance Center 

Kevin O’Brien, Director 

Cleveland State University 

Cleveland, Ohio 

Website: http://www.glefc.org/

Environmental Finance Center 

Heather Himmelberger, Director 

New Mexico Institute of Mining and 

Technology 

Albuquerque, New Mexico 

Website: http://nmefc.nmt.edu/home.php

Environmental Finance Center 

Sarah Diefendorf, Director 

Dominican University of California 

San Rafael, California 

Website http://www.efc9.org/

Environmental Finance Center 

Bill Jarocki, Director 

Boise State University 

Boise, Idaho 

Website: http://efc.boisestate.edu/efc/
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems C-1 

Environmental Financing Information Network 

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: 

• 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 9:00 am - 5:30 pm (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 EFP’s Website at: http://www.epa.gov/efinpage/efin.htm. 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-1

Guidebook Alphabetical Index 

A 

Page 3-8 Accelerated Depreciation 

Page 10B-11 Accounts Receivable Financing 

Page 3-9 Activity-Based Costing 

Page 8-3 Adopt-an-Animal Programs 

Page 2A-2 Advance Refunding Bonds 

Page 1A-2 Alcoholic Beverage Taxes 

Page 10A-8 America’s Small Business Development Center Network 

Page 3-10 Amortization of Pollution Control Facilities 

Page 10A-2 Angel Investors 

Page 2A-2 Anticipation Notes 

Page 2C-6 Appalachian Regional Commission Grants 

Page 3-10 Appropriate Technology 

Page 2A-3 Appropriation-Backed Bonds 

Page 1B-5 Aquifer Protection Area Fees 

Page 2A-3 Asset-Backed Securities 

Page 4A-2 Asset Sales Under Executive Order 12803 

Page 7-3 Assurance and Performance Bonding 

Page 1A-7 Aviation Taxes 

B 

Page 10B-2 Bank Financing 

Page 3-11 Barter 

Page 3-17 Benchmarking 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-2

Page 5-9 Boise State University Environmental Finance Center: CAP Finance 

Page 5-21 Boise State University Environmental Finance Center: Directory of Watershed Resources 

Page 5-8 Boise State University Environmental Finance Center: Plan2Fund 

Page 3-4 Bond Insurance 

Page 1B-2 Bond Issuance Fees 

Page 5-10 Border Environmental Cooperation Commission 

Page 4B-4 Buffalo, New York: Operations, Maintenance, and Management Contract for a Water System 

Page 4A-5 Build-Operate-Transfer 

Page 10A-2 Business Plans 

C 

Page 4B-5 Camp Pendleton, California: Wastewater Treatment 

Page 8-5 Candidate Conservation Agreements with Assurances 

Page 2A-4 Capital Appreciation and Zero Coupon Bonds 

Page 8-5 Capital Improvements Programs 

Page 3-20 Capital Planning and Budgeting 

Page 4B-8 Cartagena, Colombia: Water and Wastewater Services 

Page 5-19 Catalogue of Federal Domestic Assistance 

Page 2A-4 Certificates of Participation 

Page 8-6 Certified Green Buildings 

Page 5-11 Circuit Riders 

Page 9-12 Clean Land Fund 

Page 6-4 Co-Funding 

Page 2B-3 CoBank Loan Programs 

Page 2B-4 Commercial Loans 

Page 9-12 Community Development Financial Institutions 

Page 10B-5 Community Reinvestment Act 

Page 8-6 Community Foundations 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-3

Page 8-7 Community Supported Agriculture Agreements 

Page 3-18 Comparative Risk Ranking 

Page 1B-3 Connection Fees 

Page 8-7 Conservation Easements 

Page 8-8 Conservation Partnerships 

Page 7-4 Conservation Pricing for Water Utilities 

Page 4A-6 Contract Services: Operations and Maintenance 

Page 4A-6 Contract Services: Operations, Maintenance, and Management 

Page 10B-6 Convertible Debt 

Page 5-12 Cooperatives 

Page 1A-11 Corporate Income Taxes 

Page 3-20 Cost-Benefit Analysis 

Page 3-19 Cost-Effectiveness Analysis 

Page 10B-7 Cost-Share Programs for Nonpoint Source Pollution Control 

Page 4B-6 Cranston, Rhode Island: Asset Sales Under Executive Order 12803 

Page 10B-6 Credit Analysis 

Page 10B-7 Credit Cards 

D 

Page 5-20 Database of State Incentives for Renewable Energy 

Page 8-10 Dedicated Government Trust Funds 

Page 3-18 Deduction of Agricultural Conservation Expenses 

Page 7-3 Demand-Side Management Pricing 

Page 7-4 Deposit-Refund Systems 

Page 2A-5 Derivatives

Page 4A-7 Developer Financing 

Page 7-5 Development Rights Purchases 

Page 3-15 Discounting 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-4

Page 2A-5 Double-Barrel Bonds 

Page 5-12 Drinking Water State Revolving Fund Capacity Development 

E 

Page 1A-6 Earmarked Selective Sales Taxes 

Page 1A-3 Ecological Taxation 

Page 7-9 Ecotourism 

Page 1B-11 Emission Charges 

Page 8-10 Emissions Trading 

Page 3-21 Employee Stock Ownership Plans 

Page 5-18 Energy Efficiency Organizations 

Page 7-9 Energy Star Program 

Page 1A-3 Energy Taxes 

Page 5-17 Environmental Council of the States 

Page 3-16 Environmental Due Diligence 

Page 5-3 Environmental Finance Center (EFC) Network 

Page 5-8 Environmental Finance Center at Boise State University 

Page 5-6 Environmental Finance Center at Cleveland State University 

Page 5-7 Environmental Finance Center at Dominican University 

Page 5-7 Environmental Finance Center at New Mexico Tech 

Page 5-4 Environmental Finance Center at Syracuse University 

Page 5-5 Environmental Finance Center at University of Louisville 

Page 5-5 Environmental Finance Center at University of Maryland 

Page 5-6 Environmental Finance Center at University of North Carolina 

Page 5-4 Environmental Finance Center at University of Southern Maine 

Page 9-11 Environmental Insurance 

Page 9-7 Environmental Risk Management in the Real Estate Industry 

Page 7-5 Environmental Self Auditing 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-5

Page 2B-7 Environmental State Revolving Funds 

Page 1A-11 Estate and Inheritance Taxes 

Page 1B-12 Exactions 

Page 3-12 Expensing of Assets 

Page 10B-7 Export-Import Bank of the United States: Environmental Exports Program 

F 

Page 1A-2 Federal Fuel Taxes on Motorboats and Small Engines 

Page 1B-10 Fertilizer and Pesticide Fees 

Page 5-9 Finance Charrettes 

Page 3-19 Financial Capability Analysis 

Page 3-17 Financial Due Diligence 

Page 3-11 Fiscal Impact Analysis 

Page 7-10 Financial Incentives for Purchasing Hybrid and Alternative Fuel Vehicles 

Page 7-8 Forest Banks 

Page 2C-14 Foundation and Corporate Giving 

Page 10B-8 Foundations: Program-Related Investments 

Page 1B-3 Franchise Fees 

Page 10A-4 Franchising 

Page 7-6 Full Cost Environmental Accounting 

Page 3-12 Full Cost Pricing 

Page 8-3 Fundraising Merchandise 

G 

Page 2A-6 General Obligation Bonds 

Page 8-11 Green Credit Cards 

Page 8-12 Green Energy Partnerships 

Page 7-6 Green Investments 

Page 8-12 Green Pricing 

Page 7-11 Green Suppliers Network 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-6

Page 1A-10 Gross Receipts Taxes 

H 

Page 7-10 Home Energy Efficiency Mortgages 

Page 1B-4 Hunting and Fishing License Fees 

I 

Page 1B-13 Impact Fees 

Page 1A-12 Individual Income Tax Deductions 

Page 8-13 Individual and Corporate Donations 

Page 9-7 Industrial Development Funds 

Page 1A-4 Insurance Premium Taxes 

Page 10A-5 Investment Forums 

Page 10A-5 Investment Networks 

J-K 

Page 4B-2 Jefferson Parish, LA: Turnkey Operation, Maintenance and Management for a Water System 

Page 10A-6 Joint Ventures 

L 

Page 8-13 Land Reclamation Banks 

Page 9-8 Land Recycling 

Page 8-9 Land Trusts 

Page 9-11 Landowner Liability Protections 

Page 4A-5 Lease/Develop/Operate or Build/Develop/Operate 

Page 4A-4 Lease/Purchase 

Page 10B-8 Leasing 

Page 3-6 Letters of Credit 

Page 7-7 Liability Assignment 

Page 3-21 Life Cycle Assessment and Design 

Page 3-6 Lines of Credit 

Page 1A-5 Litter Taxes 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-7

Page 1A-12 Local Sales Taxes 

Page 8-14 Location Efficient Mortgage 

Page 4A-3 Long-Term Lease Under Executive Order 12803 

Page 4B-16 Lorton, Virginia: South County Secondary School 

Page 8-11 Lotteries 

Page 4B-10 Maryland: Chesapeake Forest Project 

Page 4A-8 Merchant Facilities 

Page 10B-9 Mezzanine Financing 

Page 4B-14 Miami Intermodal Center 

Page 10B-9 Microcredit 

Page 4B-3 Milwaukee, Wisconsin: Operations, Maintenance, and Management Contract for a Municipal 

Wastewater System 

Page 2A-6 Mini/Baby Bonds 

Page 8-14 Mitigation Banking 

Page 2A-7 Moral Obligation Bonds 

Page 4B-12 Morocco: Solar Energy for Rural Households 

Page 1A-6 Motor Fuel Taxes 

Page 1A-7 Motor Vehicle Sales and Registration Taxes 

N 

Page 9-6 National Brownfield Associations 

Page 8-15 National Compliance Assistance Centers 

Page 10B-10 National Consumer Cooperative Bank

Page 10B-10 National Credit Union Administration: Community Development Revolving Loan Fund 

Page 1B-11 National Pollutant Discharge Elimination System Permit Fees 

Page 5-16 National Rural Water Association 

Page 5-15 National Technical Assistance Programs 

Page 6-4 Net Metering 

Page 8-15 Nonprofit Organizations 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-8

Page 2B-6 North American Development Bank 

O 

Page 1A-4 Occupancy and Public Accommodation Taxes 

Page 1A-9 Open Space Sales Taxes 

P-Q 

Page 3-13 Pay-As-You-Go 

Page 1B-7 Pay as You Throw Fees 

Page 3-5 Performance Bonds 

Page 1B-6 Permitting Fees for Projects Affecting Navigable Waters 

Page 8-16 Point Source/Nonpoint Source Trading 

Page 7-7 Pollution Charges 

Page 5-18 Pollution Prevention Resource Exchange 

Page 3-3 Pooled Financing Programs 

Page 2A-7 Private Activity Bonds 

Page 2B-7 Private Investment 

Page 10A-6 Private Placements 

Page 4A-2 Privatization 

Page 1B-6 Professional Certification Fees 

Page 10A-7 Public Offerings 

R 

Page 1A-13 Real (Ad Valorem) Property Taxes 

Page 9-9 Real Estate Investment Trusts 

Page 1A-8 Real Estate Transfer Taxes 

Page 1B-10 Recycling and Disposal Fees 

Page 3-13 Refinancing Loans 

Page 3-14 Reforestation Tax Deduction and Amortization 

Page 3-14 Rehabilitation Tax Credits 

Page 6-5 Renewable Energy Credits 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-9

Page 1A-8 Rental Car Taxes 

Page 2A-8 Revenue Bonds 

Page 3-15 Risk Management 

Page 5-16 Rocky Mountain Institute 

Page 5-10 Rural Community Assistance Corporation 

S 

Page 4A-4 Sale/Leaseback 

Page 3-7 Senior and Subordinated Debt Structuring 

Page 5-11 Self-Help 

Page 1B-4 Septic System Inspection Fees 

Page 1B-9 Septic System and Well Permit Fees 

Page 1A-15 Severance Taxes 

Page 2A-8 Short-Term Municipal Bonds 

Page 10A-3 Small Business Innovation Research Program 

Page 10A-4 Small Business Investment Companies 

Page 6-5 Solar 4R Schools Program 

Page 1A-14 Solid Waste Collection Taxes 

Page 2A-9 Special Assessment Bonds 

Page 1B-12 Special Assessments 

Page 8-16 Special Districts 

Page 2A-9 Special Tax Bonds 

Page 3-4 State Bond Banks 

Page 9-8 State Brownfields Programs 

Page 6-6 State Conservation Tax Credits 

Page 6-6 State Energy Efficiency Tax Incentives 

Page 3-5 State Loan and Bond Guarantees 

Page 1B-7 State Public Water Supply Withdrawal Fees 

Page 3-8 State Revolving Fund (SRF) Cross-Collateralization 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-10

Page 3-7 State Revolving Fund (SRF) Interest Rate Subsidies 

Page 2A-10 State Revolving Fund (SRF) Revenue Bonds 

Page 1A-14 State Sales and Use Taxes 

Page 1A-5 State Tax Check-off Programs 

Page 9-5 State Voluntary Cleanup Programs 

Page 6-8 State of California: Electronic Waste Recycling Fee 

Page 6-8 State of Colorado: Conservation Easement Tax Credit Program 

Page 6-9 State of Maryland: Bay Restoration Fund 

Page 6-9 State of Minnesota: Capital Assistance Program 

Page 6-10 State of Montana: Renewable Resource Grant and Loan Program 

Page 6-10 State of Nebraska: Illegal Dumpsite Cleanup Program 

Page 6-11 State of Nevada: Financial Assistance for Drinking Water Systems Program 

Page 6-11 State of New Mexico: Clean Energy Grants Program 

Page 6-12 State of New York: Green Building Tax Credit 

Page 6-12 State of North Carolina: Clean Water Management Trust Fund 

Page 6-13 State of Ohio: Water Pollution Control Loan Fund 

Page 6-13 State of Oregon: Truck Engine Tax Credit 

Page 6-14 State of Pennsylvania: Growing Greener Program 

Page 6-14 State of Rhode Island: Aqua Fund 

Page 10A-7 Strategic Alliances 

Page 10B-11 Surety Bonds 

T 

Page 1A-13 Tangible Property Taxes 

Page 4A-3 Tax-Exempt Lease 

Page 9-9 Tax Abatements 

Page 9-10 Tax Incentives for Brownfields Cleanup and Redevelopment 

Page 2A-10 Tax Increment Bonds 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-11

Page 8-17 Tax Increment Financing 

Page 1A-10 Taxpayer Contributions Toward Toxic Waste Site Cleanup 

Page 1A-9 Tobacco Taxes 

Page 1B-8 Tolls 

Page 9-10 Transferable Development Rights 

Page 7-8 Transit Pass Subsidy Programs 

Page 1B-8 Transporter Fees 

Page 4A-7 Turnkey 

U 

Page 6-7 Unit-Based Pricing for Solid Waste Collection 

Page 2B-2 U.S.D.A. Business and Cooperative Programs: Economic Development Loans 

Page 2B-2 U.S.D.A. Business and Cooperative Programs: Renewable Energy and Energy Efficiency 

Program 

Page 2C-5 U.S.D.A. Business and Cooperative Programs: Rural Business Enterprise Grants 

Page 8-8 U.S.D.A. Farm Service Agency: Conservation Reserve Enhancement Program 

Page 8-4 U.S.D.A. Farm Service Agency: Conservation Reserve Program 

Page 2C-3 U.S.D.A. Forest Service: Cooperative Forestry Assistance Grants 

Page 2C-4 U.S.D.A. Forest Service: Forest Stewardship Program Grants 

Page 2C-4 U.S.D.A. Forest Service: Urban and Community Forestry Program 

Page 8-4 U.S.D.A. Natural Resources Conservation Service: Wetlands Reserve Program 

Page 2C-3 U.S.D.A. Rural Development: Grants for Water and Wastewater Revolving Funds 

Page 10B-2 U.S.D.A. Rural Development: Intermediary Relending Program 

Page 2C-5 U.S.D.A. Rural Utilities Service: Solid Waste Management Grant Program 

Page 2C-6 U.S.D.A. Rural Utilities Service: Technical Training and Assistance Grant Program 

Page 2B-3 U.S.D.A. Rural Utilities Service: Water and Waste Disposal Systems Loans for Rural 

Communities 

Page 2C-7 U.S. Department of Commerce Economic Development Administration: Public Works and 

Economic Development Grants 

Page 2C-7 U.S. Department of Commerce NOAA Administration: Coastal Services Center Grants 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-12

Page 2C-8 U.S. Department of Commerce NOAA: Coastal Zone Management Act Administration 

Awards 

Page 5-14 U.S. Department of Energy: Financial Opportunities Website 

Page 5-19 U.S. Department of Energy: Industrial Assessment Centers 

Page 5-15 U.S. Department of Energy Alternative Fuels Data Center: State and Federal Incentives and 

Laws Website 

Page 9-5 U.S. Department of Health and Human Services: Round I and II Empowerment Zones 

Page 2C-14 U.S. Department of Homeland Security Federal Emergency Management Agency: Superfund 

Amendments and Reauthorization Act, Title III Grants 

Page 9-6 U.S. Department of Housing and Urban Development: Brownfields Economic Development 

Initiative Grants 

Page 3-9 U.S. Department of Housing and Urban Development Community Development Block Grant 

Program: Section 108 Loan Guarantees U.S. Department of Housing and Urban Development 

and U.S. 

Page 2C-15 U.S. Department of Housing and Urban Development: Community Development Block Grant 

Entitlement Communities Grants 

Page 2C-15 U.S. Department of Housing and Urban Development: State Community Development Block 

Grants Program for Non-Entitlement Areas 

Page 2C-16 U.S. Department of Interior Fish and Wildlife Service: North American Wetlands 

Conservation Act Small Grants Program 

Page 2C-16 U.S. Department of Interior Fish and Wildlife Service: Standard Grants Program for Wetlands 

Protection 

Page 2C-17 U.S. Department of Transportation: Transportation Equity Act for the 21st Century 

Page 10B-12 U.S. Department of Treasury: Community Development Financial Institutions Fund 

Page 9-4 U.S. Environmental Protection Agency: Brownfields Grants 

Page 9-3 U.S. Environmental Protection Agency: Brownfields Program 

Page 9-3 U.S. Environmental Protection Agency: Brownfields Workforce Development 

Page 5-20 U.S. Environmental Protection Agency: Catalog of Federal Funding Sources for Watershed 

Protection 

Page 2B-4 U.S. Environmental Protection Agency: Clean Water State Revolving Fund 

Page 9-4 U.S. Environmental Protection Agency: Clean Water State Revolving Fund Brownfields 

Loans 

Page 2B-6 U.S. Environmental Protection Agency: Clean Water State Revolving Fund Private 

Beneficiary Loans 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-13

Page 7-12 U.S. Environmental Protection Agency: Climate Leaders Partnership 

Page 2B-5 U.S. Environmental Protection Agency: Drinking Water State Revolving Fund 

Page 2C-13 U.S. Environmental Protection Agency: Drinking Water State Revolving Fund Loan Principal 

Forgiveness 

Page 5-13 U.S. Environmental Protection Agency: Enforcement Economic Models 

Page 2C-8 U.S. Environmental Protection Agency: Environmental Education Grant Program 

Page 5-3 U.S. Environmental Protection Agency: Environmental Finance Program 

Page 2C-9 U.S. Environmental Protection Agency: Environmental Justice Small Grants Program 

Page 5-14 U.S. Environmental Protection Agency: Green Power Locator 

Page 7-13 U.S. Environmental Protection Agency: Green Power Partnership 

Page 2C-11 U.S. Environmental Protection Agency: Leaking Underground Storage Tank Trust Fund 

Grants 

Page 2C-13 U.S. Environmental Protection Agency National Center for Environmental Research: Science 

to Achieve Results (STAR) Grants 

Page 7-12 U.S. Environmental Protection Agency: Natural Gas Star Program 

Page 2C-9 U.S. Environmental Protection Agency: Performance Partnership Grants 

Page 7-11 U.S. Environmental Protection Agency: Pollution Prevention (P2) Website 

Page 7-14 U.S. Environmental Protection Agency: Pollution Prevention Grant Program 

Page 2C-10 U.S. Environmental Protection Agency: Program Grants 

Page 2C-10 U.S. Environmental Protection Agency: Section 319 Nonpoint Source Pollution Control Grant 

Page 2B-5 U.S. Environmental Protection Agency: State Revolving Fund Pre-Financing and Short-Term 

Loans 

Page 2C-11 U.S. Environmental Protection Agency: Superfund Technical Assistance Grants 

Page 2C-12 U.S. Environmental Protection Agency: Underground Storage Tank Categorical Grants 

Page 2C-12 U.S. Environmental Protection Agency: Wetlands Program Development Grants 

Page 5-13 U.S. Environmental Protection Agency: Water and Wastewater Pricing Website 

Page 5-17 U.S. Environmental Protection Agency: Water Efficiency Market Enhancement Program 
Guidebook of Financial Tools: Paying for Sustainable Environmental Systems D-14

Page 7-13 U.S. Environmental Protection Agency: WasteWise Program 

Page 10A-3 U.S. Small Business Administration: Active Capital Website 

Page 10B-4 U.S. Small Business Administration: Basic 7(a) Loan Program 

Page 10B-5 U.S. Small Business Administration: CAPLines Loan Program 

Page 10B-3 U.S. Small Business Administration: Certified Development Company/504 Loan Program 

Page 10B-4 U.S. Small Business Administration: Microloan Program 

Page 10B-3 U.S. Small Business Administration: Prequalification Loan Program 

Page 3-3 U.S. Small Business Administration: Surety Bond Guarantees 

Page 6-7 Utility Rebate Programs 

V 

Page 3-16 Value Engineering 

Page 10A-8 Venture Capital 

W 

Page 1B-2 Water and Sewer Capacity Credits 

Page 1B-5 Water and Wastewater Utility User Fees 

Page 1B-9 Water Rights Application Fees 
United States

Environmental Protection Agency

Environmental Finance Program

(2731-R)

1200 Pennsylvania Avenue, NW

Washington, DC 20460

EPA-205-R-08-001

August 2008

www.epa.gov/efinpage