In the hours before Hurricane Sandy turned northward to bash New Jersey and flood Lower Manhattan, there was fear it might drive a virtual tsunami up the Potomac to bury parts of the capital under water.
The threat to low-lying cities has spiked in an era when massive weather disruptions fueled by global warming result in the sort of unprecedented flooding that for days shut down much of New York’s subway system, halted the stock market and paralyzed the heart of the nation’s premier financial district .
The Rockefeller Foundation is to announce Friday its backing for a proposal to use an innovative financing strategy to help eight cities create defense systems against storm waters and the rising sea.
“We are seeing increasingly what used to be once-in-a-century storms or tornadoes or typhoons,” said Judith Rodin, the foundation’s president. “It’s the harbinger of an escalating series of these events that really will tax the systems and the infrastructures of all cities.”
The foundation’s financial plan, which will begin with a competition among cities until the list of applicants is pared to eight, may create a model of greater importance than simply dealing with future flooding.
If successful, it could show how to fit together the puzzle pieces of a larger conundrum. Austerity has stymied public funding for most big-ticket initiatives. The chatter on Capitol Hill runs thick with the promise of public-private partnerships, and conventional wisdom holds that corporations are sitting on the sidelines with billions of dollars to invest.
But corporations are not charities and must show shareholders a return on investments. Projects like storm water containment are on a long list of public needs that provide no obvious profit for private investors. Unlike road-building or power-generating projects, there is no way to collect tolls or tap electrical ratepayers to turn a profit if, for example, someone builds a flood gate on the Potomac.
So, the Rockefeller Foundation has come up with a innovative, though not unique, plan to bundle projects into a package attractive to private investors.
Boiled down to what may be its simplest example: an investor such as Verizon or Pepco might be enticed to help finance a storm water defense project by the opportunity to install miles of underground cable while the streets were dug up for the water project.
“To make these critical infrastructure projects a reality across the country, we need to explore every option, such as infrastructure banks and public-private partnerships,” said Philadelphia Mayor Michael Nutter. “Mayors are painfully aware of the funding limitations for critical infrastructure needs.”
In addition to $3 million to prime the pump, the Rockefeller Foundation plans to provide cities with expertise it gained through projects in India, Indonesia, Vietnam and Thailand.
“We’ve been working on those cities that are either on river deltas or the most fragile ecologies, a lot of them having exactly the same terrain as many of our most vulnerable cities in the United States,” Rodin said. “We want to help cities in the U.S. gain from that knowledge and develop their own plans. We want to help cities find ways to adapt and plan for the unexpected, to build resilient systems that have better ability to rebound, and rebound quickly, from catastrophe.” The foundation’s $100 million investment in the four Asian countries hardly would make a dent in the need to protect U.S. cities against catastrophic storms, or do much to address larger infrastructure needs.
“We recognize that there just aren’t enough dollars in government or in philanthropy to solve all these problems,” Rodin said. “So, how do you bring in the private sector?”
The answer, she said, is creating package deals for investors that achieve civic goals while turning a profit for the financiers.
“This is designed, if this succeeds, to attract private investors to move beyond pilots or demonstration [projects] to large-scale system financing,” she said. “That’ll create a template for other cities to use as well.”