Solution

Pooled Funds

This solution addresses a need to more efficiently leverage grant funds in global cities for city and state government, and investors

Problem Description

Capital costs for investing in comprehensive and integrated resilient infrastructure systems are significant, but the benefits are often diffuse, accruing diverse direct and indirect beneficiaries from across sectors. Facing shrinking budgets, cities need ways to motivate resilience investments on private properties and support private investment in public goods. While often the savings of these investments are real for private buildings, the challenge of financing privately owned resilient infrastructure systems is capturing those savings and turning them into viable cash flows. Structuring a pooled fund to leverage existing federal, state or local grant funds to support investment in building and system retrofits offers an alternative solution for attracting private capital.

Building Blocks

Story

The City of San Francisco established a pooled fund to address earthquake vulnerabilities due to soft-story buildings. Through this fund, selected contractor(s) would work with property owners and manage the building retrofit process from design through construction. Applying this same approach to water-related building retrofits, the contractor could then sign performance contracts to recoup their investment plus interest, including an obligation by property owners to pass-through energy and/or water savings, and an agreement with the City and/or utility to ensure a regular payment scaled to savings accruing to the system as a whole. A pooled fund would go beyond providing financing to help streamline the retrofit process and reduce transaction costs to increase project uptake.

Resources

Contributed By

Elle Hempen, re:focus partners

Solution Stage

One of the 7 stages of an innovation. Learn more

STAGE	SPECIALIST SKILLS REQUIRED	EXAMPLE ACTIVITIES	RISK LEVEL AND HANDLING	FINANCE REQUIRED	KINDS OF EVIDENCE GENERATED	GOAL
Generating ideas2	Ideation and facilitation of creative thinking	Creativity methods Design tools Crowdsourcing Open innovation Awards and rewards Challenge prizes	High failure rate should be an explicit expectation Visible senior leadership essential HIGH	Usually grants, occassionally convertible LOW	A clear account of change or likely causation, supported – but not overly constrained – by evidence	An idea or set of ideas to develop and test

Submitted By

Elle Hempen