Go green: Muni Bond Financing for distributed water solutions
A primer for water leaders on how to debt-finance distributed infrastructure projects and consumer rebates
In 2017, we continued to change how national agencies account for natural capital. We strengthened our partnership and influence with the General Accounting Standards Board (GASB), which sets accounting rules for state and local governments throughout the country. By helping GASB clarify the use of one of its standards – a clarification that was recently published in GASB’s 2018 Implementation Guide – we opened a way for state and local agencies to count natural capital as assets. This change will allow agencies to unlock the financing needed to scale up installations of green infrastructure as well as conservation and restoration projects that can save utilities money while also improving community health and resilience.
What is distributed infrastructure and how can it help my agency? Distributed infrastructure (DI) refers to technologies and practices that are decentralized and thus distributed across many locations, like businesses, homes, streets, and parks.
What is GASB 62? GASB 62 is a compilation of various standards issued by GASB’s sister agency, the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA). GASB 62 paragraphs 476-500 establish the accounting standards for “Regulated Operations,” which is based on FASB’s Statement of Financial Accounting Standards No. 71 from 1982.21 In that statement, FASB pointed out that utility accounting is different enough from simple accounting to require a separate standard. FASB said: “This Statement may require that a cost be accounted for in a different manner from that required by another authoritative pronouncement. In that case, this Statement is to be followed because it reflects the economic effects of the rate-making process—effects not considered in other authoritative pronouncements.
How does the Regulated Operations approach work? Regulated Operations is an accounting convention that allows public agencies to book as assets certain “business type activities” that would normally be treated as annual expenses. In other words, Regulated Operations is a clear-cut alternative to typical accounting conventions for determining what is and is not an asset for balance sheet purposes. The purpose of the Regulated Operations rule was to provide public agencies with accounting flexibility, recognizing that not all long-term investment results in fixed assets.
Green Stormwater Infrastructure
Screening-Level Valuation Tool
Built to support rapid screening-level analysis
Example: Terraced Reforestation | Covington, Kentucky
Example: Marsh Park | Los Angeles, California
Guide to Distributed Infrastructure
A Water Leader’s Guide
to Financing Distributed Infrastructure
How to scale these programs
Using cash instead of capital
Where to start
IN THE NEWS
Governing Magazine, August 2018.
Go Green: Muni Bond Financing for Distributed Water Solutions. Earth Economics. Tacoma, WA. 2018.
This report was written in partnership with the WaterNow Alliance