In Milwaukee, a new generation of “fresh coast” infrastructure along the shores of Lake Michigan is showing how a resilient capital stack can turn climate risk into investable opportunity at neighborhood scale.
Instead of waiting for slower, centralized public funding, climate-resilience specialist Corvias Infrastructure Solutions, or CIS, and the Milwaukee Metropolitan Sewerage District are accessing a private line of credit to build green stormwater projects on church grounds, corporate campuses, conservation lands and other private properties — and getting paid only when those projects attain the targeted results.
Addressing the vulnerabilities in Milwaukee’s sewer system has become an urgent priority. In August, a severe storm led to five billion gallons of sewage overflow — the largest overflow in 31 years.
In this next installment of our “Resilient Capital Stacks” series, we focus on how four elements — private financing, a pay-for-success model, municipal repayment and community partnerships — can reduce project risk, speed implementation and engage the community.
Replacing bonds
Traditional municipal bond financing remains the backbone of local infrastructure, but it is typically used for large, lump-sum borrowings tied to specific projects. It often requires voter authorization, lengthy underwriting and rigid amortization schedules.
Environmental impact bonds can add a pay‑for‑success overlay to this model, but they still require complex, upfront structuring of performance tiers, monitoring regimes and contingent payments, as seen in our national capital with DC Water’s pioneering use of an environmental impact bond for green infrastructure.
Milwaukee’s Fresh Coast Protection Partnership takes a different approach by anchoring its resilient capital stack in a private credit facility — which CIS can tap into incrementally as projects are identified, designed and built. This process better matches the reality of distributed green infrastructure, in which dozens of mid-sized projects come online over several years rather than all at once.
The benefits of private credit
A private credit line gives Milwaukee and CIS three key advantages over conventional municipal bonds or one-off environmental impact bonds.
- Pace and flexibility. Because the financing is pre‑negotiated at the program level, CIS and Milwaukee do not need a new bond issue, public vote or bespoke environmental impact bond term sheet every time a promising site emerges.
- Incremental deployment. A revolving facility allows CIS and Milwaukee to borrow only what is needed at each stage, repay as payments come in, and re‑use capacity for new projects, smoothing cash flow and reducing the cost of carrying unused capital.
- Outcome alignment without structuring drag. Whereas an environmental impact bond can take years to design around one performance test and payment date, Milwaukee embeds pay‑for‑success in its service contract.
In other words, the resilient capital stack in Milwaukee uses private credit to achieve the risk‑sharing goals of an environmental impact bond — with payment contingent on performance — without subjecting each deal to the transaction costs and delays that can accompany publicly listed securities like bonds.
Enhancing private property
A core design choice in the Fresh Coast Protection Partnership is a strong preference for enhancing private property as distributed climate infrastructure. CIS and Milwaukee have already completed 17 projects totaling 11.3 million gallons of stormwater management, about 73% of which has been delivered on privately owned sites, and the broader program is on track for roughly 11.5 million gallons with about 93% on private land.
Key reasons for favoring private property include:
- Scale and scope: Most impervious surface in cities lies on private parcels (approximately 62% in Milwaukee), so meeting stormwater regulations and managing flood risk requires addressing runoff at its source, not only in streets and public parks.
- Leveraging private funds: By engaging developers, businesses and institutions, CIS can blend owner contributions and in‑kind support with program finance, stretching limited public dollars and enabling larger, faster deployment.
- Incentivized maintenance: When owners see direct benefits — from property value gains to reduced flooding and attractive landscapes — and in some cases put in their own capital, they have stronger incentives to maintain rain gardens, bioswales and wetlands over the long term.
Additional benefits include the flexibility of tailoring projects to a specific site, property value enhancement, and addressing local flood “pain points.”
Pay for success and shared risk
Milwaukee’s program embeds pay‑for‑success at the level of gallons captured, where “gallons” are defined as the volume of stormwater that would be captured by green infrastructure during a 100‑year storm event. A third‑party certifier validates that each project is built to approved specifications before Milwaukee issues payment.
Under the standard model, CIS serves as the at‑risk developer: It hires designers and general contractors, manages permitting and construction, and pays vendors as work proceeds, but it receives no payment until gallons are certified.
Six of the 17 completed projects currently use a “gallon purchase agreement” structure in which CIS leads design and approvals, the property owner hires and manages the contractor, and CIS contributes a portion of funding at certification, allowing the program to support projects that might otherwise be out of budget while still offsetting most owner costs. Notably, 50% of the projects are located in low- to moderate-income areas, and 46% of contracts are awarded to small, women-, minority- and veteran-owned businesses.
The result is a resilient capital stack in which institutional private lenders, local property owners and the Milwaukee Metropolitan Sewerage District all take risk in the places they are best equipped to manage it.
A resilient capital stack for local climate action
The Fresh Coast Protection Partnership illustrates how a resilient capital stack can rewire local climate adaptation finance around outcomes instead of inputs.
Program‑level private credit from CIS’s partners like Goldman Sachs’ Urban Investment Group is combined with Milwaukee’s long‑term pay‑for‑gallons commitment and, in some cases, property-owner matches via gallon purchase agreements. This diversified approach creates a layered structure that can withstand project delays, regulatory shifts or cost volatility while still paying only for verified performance.
For local governments seeking to go beyond traditional municipal bonds and one-off environmental impact bonds, Milwaukee’s model offers an encouraging blueprint: Use flexible private credit to move quickly; prioritize enhancements to private property where the runoff and the people are; and link repayment to real, measured climate resilience in the communities that need it most.
Nick Gower is a senior vice president at HIP Investor.
The “Resilient Capital Stacks” series is a partnership between ImpactAlpha and HIP Investor. It explores how communities and climate leaders are mobilizing diverse funding sources to implement critical climate infrastructure, actions and initiatives.
Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.
