Borough eyes community bond to fund green infrastructure
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West Berkshire Council is exploring proposals to set up a community bond to fund a green infrastructure project aimed at achieving the authority’s carbon-reduction ambitions.
Executive committee members are being urged to back the district’s participation in a pilot project to create a bond or loan for a yet-to-be-specified scheme that would help the district become carbon-neutral by 2030. A solar photovoltaic project or new cycling infrastructure are possible options.
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March 25th, 2020, Manchester
Council treasury investment & borrowing
According to a council report , the “climate change bond” would be administered by Financial Conduct Authority-regulated ethical-investment firm Abundance and issued to residents and investors from across the country.
The pilot would be part of a study of community municipal bonds paid for by the European Union-funded SocialRES project.
Recommending West Berkshire’s bid to become a pilot authority, executive director of resources Joseph Holmes said participation would involve the council getting a grant of £25,000 and open up the potential to borrow more cheaply than is currently possible from the Public Works Loan Board.
“On a £1m capital scheme, the saving over five years of a rate that is 35 basis points lower than the prevailing rate would be £10,000,” he said.
“This proposal is strongly aligned to the council’s policy within the council strategy of ‘maintain a green district’.
“The ability to provide funding for initiatives that support this activity should enable these to take place through this ‘climate change bond’.
“This scheme also supports the priority of ‘ensure sustainable services through innovation and partnerships’.”
Supporting information on the project, provided by Abundance, said academic evaluation of the identification and due-diligence work on selected schemes would be part of the pilot programme, as well as research on what ideas were “motivating” for investors.
Earlier this year, a government-backed study by the University of Leeds concluded that online fundraising is a “viable and significant opportunity for public bodies seeking additional models of finance”.
The research – based on pilot schemes at Bristol City Council, Isle of Wight Council and Leeds City Council and three NHS trusts – concluded crowdfunding had the potential to rival the PWLB for major projects.
Holmes’ report to West Berkshire’s executive committee said a community municipal bond would allow the authority to access funding more cheaply than the PWLB and would give greater control over borrowing costs because the PWLB rate is “prone to sudden change”.
“This is an opportunity for the council to utilise an innovative form of financing for the public sector and be part of a wider scheme that will have the benefit of an independent review of the project,” he said.
“The pilot aligns well to the council’s strategic priorities and represents an innovation with the potential to deliver schemes at a lower cost than the prevailing borrowing costs to the council.”
The executive committee meets to consider the report at 5pm on 19 December.
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