The Innovative Ways Cities Are Funding Climate Action

‍Fifth Wall Newsletter: https://mailchi.mp/fifthwall/how-are-cities-funding-their-climate-goals 

The Power of Local Government

Cities hold a lot of power when it comes to decarbonizing the built environment. Regulation is important, but so is financing.

Money Matters

It could cost major cities billions to retrofit buildings, construct new transit, and modernize electricity distribution, according to a Brookings Institution report analyzing decarbonization plans from 50 U.S. cities. So it's crucial that climate goals are backed by realistic implementation plans.

By the numbers: Only 54% of cities proposed specific, innovative, consistent, and/or long-term funding sources. Yes, but there are a number of creative financing strategies already happening.

What cities stood out:

• Portland, Oregon: In 2018, the city passed an initiative that requires large retailers to pay a 1% surcharge on revenue from sales which goes into a fund that pays for climate action projects. It exceeded expectations, raising about $90 million annually and has funded projects like efficiency upgrades for a local affordable housing developer and a timber office project.
• Denver, Colorado: In 2020, voters passed a similar initiative with a .25% sales tax increase which was expected to generate between $30-40 million annually for a climate action fund. In the first round of projects, the city focused on building a network of solar-powered EV charging stations.

What's more:

• Property assessed clean energy programs are the most common strategy which incentivizes property owners to make building efficiency upgrades with upfront costs fully covered and repaid through property tax assessments. At least 31 states have active programs.
• Local financing authorities: New York has the Green Housing Preservation Program offering low- and no-interest energy efficiency loans, while Washington D.C.'s Green Bank has committed over $26 million in capital to improve infrastructure, reduce carbon emissions, and transition the city to renewable energy.

The big picture: “Anyone who cares about climate needs to care about mayors. Here's why: They're the most influential people in regulating real estate,” Fifth Wall Co-Founder and Managing Partner Brendan Wallace tweeted here. City leaders control the regulation that real estate faces, and those leaders also influence the financing to get initiatives moving.

For more: How US cities are finding creative ways to fund climate progress