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SpurringEntrepreneurshipandInnovationinStormwaterMarkets1

AlisaValderrama

NaturalResourcesDefenseCouncil

August2016

Introduction

InJuly2014,thePhiladelphiaWaterDepartment(PWD)launchedaninnovativecompetitivegrantprogramtoencouragethedevelopmentofgreeninfrastructureonprivateproperty.Greeninfrastructurepractices—whichincludetreetrenches,raingardens,greenroofs,andporouspavement—restorethelandscape’sabilitytoretainstormwateronornearwhereitfalls,keepingpollutedrunoffoutofmunicipalsystemsandoutofwaterways,rivers,andoceans.Philadelphia’sprogram,calledtheGreenedAcreRetrofitProgram(GARP),encouragescontractorsordesign/constructionfirmstocompeteforlimitedpublicgrantfundingbyaggregatingandbringingtoPWDthelowest-costretrofitopportunitiesavailableonprivateland.TheavailabilityofpublicdollarsthroughGARPisintendedtocreateacompetitivegreeninfrastructuremarketthatcanhelpPWDsourcelow-coststormwatermanagement,whilealsogeneratingapotentiallynewlineofbusinessforengineering/design/constructionfirms.PrivatepropertyownersinPhiladelphiaalsobenefitfromGARP,asitsfundingprovidesameansforprivatepropertyownerstoreducetheimperviousareaontheirparcelsandtherebyreducetheirmonthlystormwatermanagementfees.

Today,twoyearsafterthelaunchofGARP,PWDisinterestedinunderstandinghowtheProgramcouldbemodifiedtoencouragealargernumberofvendorstosubmitGARPapplicationsandhowGARPcouldstimulateinnovativeapproachestostormwatermanagement,forexample,morevegetatedstormwaterpracticesratherthansub-surfacedetention.

TheNaturalResourcesDefenseCouncil(NRDC),whichhelpedPWDenvisiontheGARPstructure,andtheSustainableBusinessNetworkofGreaterPhiladelphia(SBN),whichhoststheGreenStormwaterInfrastructurePartnersgroup,arebothveryfamiliarwithGARPandwell-positionedtohelpPWDanswertheseimportantquestionsthroughoutreachtolocalserviceproviders.Overthecourseofapproximatelysixweeks,NRDCandSBNinterviewedapproximatelytwentylocalfirmstounderstandtheirperceptionsofGARPandtohearfirst-handwhatchangestotheprogramstructurewouldmakeit

1ReportpreparedfortheWilliamPennFoundationbyAlisaValderrama,SeniorPolicyAnalyst,TheNaturalResourcesDefenseCouncil(NRDC),withassistancefromAnnaShipp(SustainableBusinessNetworkofGreaterPhiladelphia)andRogerBaneman(NRDC).InterviewswereconductedbyAlisaValderramaandAnnaShippoftheSBN).FundingforthisreportwasprovidedbytheWilliamPennFoundation.

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easierforthemtosubmitGARPapplicationsandprepareinnovativeprojectplans.2Weinterviewedarangeofdesign,build,engineering,andmaintenancefirms,allofwhomhadexperiencewithgreenstormwaterinfrastructureinsomecapacity.Someofthefirmsinterviewedweremajorfirmsoperatingintheregion;othersweresmalltomediumsizedfirmslocaltothearea.WhilesomeofthefirmsweinterviewedhadparticipatedinGARP’ssisterprogram,theStormwaterManagementIncentivesProgram(SMIP),noneofthefirmsweinterviewedhadparticipatedinGARP.ThisreporthighlightsthefindingsfromourinterviewsofthesefirmsandsynthesizesseveralrecommendationsforPWD’sconsideration.

2.ThelistofvendorsandtheinterviewquestionswerecollaborativelygeneratedbyPWD,SBN,andNRDC.ThelistoffirmsinterviewedisprovidedinAppendix1.TheinterviewquestionsareprovidedinAppendixII.

HowIntervieweesDefinedTheirFirms

CivilEngineer

Design/build

Monitoring/maintenance

Multi-service(lanscape/design/build/civilengineering)

Other("sitework,utilities")

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SummaryofRecommendations

Challenge RecommendationforPWDDifficultforfirmstoreachoutto/assesspropertyownerinterestinGARP

ü Developaclearinghouseofpropertyownersinterestedinstormwaterretrofits

GARP’scurrentgrantdisbursementstructureisnotsuitedforvendors(engineeringanddesignfirms)businessmodels

ü DevelopaphasedpaymentstructureforGARPthatrelievessomeoftheupfrontfinancialburdenandrisktovendors

Thecost/acrePWDoffersthroughGARPdoesnotcovertheworkthatGARPrequiresofvendors.

ü IncreasetheamountPWDofferspergreenedacrethroughGARPtomeetorexceedthatwhichisofferedthroughSMIP.

ü Consideratieredfundingapproachthatincentivizes/provideslargergrantdollaramountsforvegetatedpractices.

Difficultyinaggregatingtenacresgiventhepropertytypes/sizeofpropertiesinPhiladelphia’scombinedsewershed

ü Allowforflexibilityintheacreagerequiredforapproval.

ü Consideratieredfundingapproachthat

incentivizes/provideslargerdollargrantamountsforlargerareasmanaged.

FirmSize(NumberofFullTimeEmployees)

1to10

11to50

51to99

100 +

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VendorfirmsneedmoreinformationaboutPWD’sgrantprograms(SMIPandGARP)andtherequirementstoparticipateinGARPinparticular

ü ProvidemoreinformationaboutGARPtopotentialvendorsviathewebsite,casestudies,webinars,and/orworkshops/seminars.

ü ConsideramergerofSMIPandGARPto

createonesingleflexibleprogram.

ü ConsiderspeakingtopropertyownerstoheartheirperspectiveonbothSMIPandGARP,andhostingworkshopstoheardirectlyhowtheprogramcouldbetterengagethem.

InterviewFindings

Mostinterviewees’responsescanbeunderstoodasadiscomfortwiththerisk/rewardpropositionpresentedbytheGARP.FirmsstruggledtoseehowthepotentialpayoffprovidedbyGARPwassufficientforthefirmstotakeonthecostandriskofpreparingGARPapplications,whichrequireaminimumofapproximatelytenacres’worthofimperviousareamanaged.Asdetailedbelow,firmscommonlycitedchallengesaccessinginformationrelatedtopropertyownershipandowneroutreach,andcitedthemismatchbetweenthereimbursementofferedbytheGARPandthemodelofthetraditionalfee-for-servicestructureofmostdesign/build/engineeringfirms.

1.ChallengesaccessingpropertyownersandassessingownerinterestinGARP

GARP,incontrasttoitspredecessor,theStormwaterManagementIncentiveProgram(SMIP),isdesignedtoputvendors“inthedrivers’seat”ofretrofitprojects.UnderGARP,vendorscanlocateandreachouttopotentialpropertyowners,developstormwaterretrofitprojectplansonbehalfofthesepropertyowners,andsubmittheseplansdirectlytoPWDintheformofaGARPapplication.Onceanapplicationisapproved,theGARPfundsflowdirectlytothevendor;thepropertyownerisonlyajoindertothegrantagreement.TheideaofputtingvendorsincontroloftheGARPapplicationprocesswasintendedtoleveragethefactthatthevendorsaretheoneswhomostimmediatelystandtoprofitfromGARP–thereforeitisthevendorswhoshouldbemostmotivatedtolocateownerswithsuitableGARPproperties.WhilepropertyownersalsobenefitfinanciallyfromGARP,theirbenefitismorespreadoutovertime,asitaccruesovertimeintheformofreducedstormwaterfeesoncetheymanagethestormwaterfromtheimperviousareaontheirproperties.

However,theGARPmodelassumesthatvendors’businessmodelscanaccommodateasalesandcustomeracquisitionrole.Ourinterviewssuggestthatmanyfirmsareeitherunableorunwillingtoengageinasales/lead-generatingrole:

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“Wehavenorealestateexpertisesowewouldnotbeabletoaffordtodoallthebackgroundresearchtoevenbegintoidentifyareaswherethistypeof[GIretrofit]projectcouldbefeasible.”

“…informationcostsaretoohighformarketparticipantstofindoneanother…”

“IfwehaveanexistingclientwithalargepropertywemightpresentGARPasanoption,butit’sraretofindsomeonewithtenacres.Alternatively,wecouldpursuesomeone,butthatisalsochallenging.”

AtleastonefirmwespokewithwasawarethatPWDprovidesa“parcelviewer”atwww.phillystormwater.org.Thissiteprovidesdetailsonspecificparcelboundaries,ownername(asprovidedbypropertyassessor)andpropertysizeandimperviousarea.However,mostfirmsstruggledtounderstandhowtheircompanycouldfulfillthe“sales”rolethatGARPeffectivelyrequiresonceanappropriatesite(s)islocated.

“Wedon’twanttocallownerscold.Wedon’thavesalesstaff;werespondtoinvitationstobid.It’ssimpleanditkeepsusbusy.”

“Weneedapathwaytoowners.”

“Thebiggestchallenge[toparticipateintheGARP]istheupfrontlegworkandstaffing...it’salotofworktocontactpropertyownersanddotheupfrontplanningtogettotenacres.”

“…AmIgoingtoneedtohiresomeonetogooutandknockondoors?Wedon’thaveasalesperson.”

RecommendationtoremedythechallengeofidentifyingpropertyownersinterestedinGARP

• Intervieweessuggestedthatanonlineplatformcouldhelpthemconnectwithpropertyownersinneedofservicesor,conversely,provideavenueforownerstoconnectwithfirmsthatcanprovideretrofitservicesandsubmitGARPgrantsontheirbehalf.Allintervieweeswhowereaskedagreedthatanonlinecustomerconnectionplatformwouldbeveryuseful:

“Ifweknewwhichpropertyownerswereinterestedthatwouldbegreat…”

“…Anytypeofdatabaseofinterestedownerswouldbehelpful.”

“Ownermapsarealreadyavailableincludingstormwaterfee.Sofindingownersiseasy.Butactualfollow-upandcontactingiswhatistough.”

“Aclearinghousewouldbeveryhelpful…likegangbusters!”

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2.Engineeringanddesignfirmsbelievethattheirfirms’profitmodelsarepoorlysuitedtoGARP

ThecomponentsofaGARPapplicationincludealistofparticipatingproperties,contactinformationforeachproperty,andsignedlettersofintentfromeachparticipatingpropertyowner.Inaddition,applicantsmustsubmitaconceptplan—includingtheimportantfeaturesofthesite(s),suchastopography,todemonstratewherewaterisflowingonthesite(s).Theconceptplanmustalsoindicatethelocationofallplannedstormwatermanagementinstallationsandlocationofanynewutilitiesthatwouldbeneededtoconveystormwater.Afullengineeringdrawingisnotneeded,buttheapplicationmustgobeyonda“desktopanalysis”doneonacomputer.Somevalidationoftheconceptplanfromasitevisitisnecessary.

Acommonthemeinourinterviewswashearingfromvendorsthattheir“feeforservice”modelisill-suitedtotheGARPmodel.Allexceptoneofthefirmsweinterviewedarefee-for-servicefirms,whoseprofitstructureisbasedonbillingofclientsatanhourlyrate.ThestepsinvolvedinsubmittingaGARPapplicationrequirefirmstospendmanyhoursoftheirtimelocatingappropriateGARPsites,contactingowners,andthenfinallypreparingsiteconceptplansandobtainingowneragreementtotheplan.WhileGARPdoesreimbursethese“pre-development”costsoncetheapplicationissuccessful,everyfirmwespokewithindicatedthatthelagbetweenprojectinitiation(e.g.,identifyingowners)andgettingpaidbyPWDwasthesinglebiggestchallengetotheirparticipationinGARP.TheonlytypeoffirmthatisstructuredtosucceedunderthecurrentGARPstructure,intervieweesindicated,wouldbea“developer”—afirmthatisaccustomedtotakingondebtattheoutsetofaprojectandcouldgetcomfortablewithwaitingtoearnaprofit.

“Wearenotanaggregatorordeveloper—we’reaserviceprovider…we’vebeenconsideringstartingasistercompanythatcouldapplyforGARP.”

“Grantsaretoomuchworkandtoomuchoverheadifwearegettingworkotherwise.Notworthit.”

“Wehavethedesignteamandmaybewehaveinterestedclients,butit’sthetimebetweenthe‘interest’andthe‘work’…that’sthejam.”

“WeknowGARPapplicationshaveahighsuccessrate,butgettingthereistheproblem.”

“…allthesestepscantakeasmuchassixmonthsoftimeandpossiblyhundredsofhours--beforegettingacheck.”

“Therewardisdirectinvoicing[withGARP],butit’snotworththework;we’retalkingfullbillableweekstogetalltheownersinline.IcandooneSMIPatatimeandmakeahigherrateperprojectandit’sasaferbet.”

“…in[this]scenario,thereisnoclientandthereforenowaytoreceiveanyreimbursementforourservice.Itislikeweareaskedtobeworkingforeveryoneelseprobono.”

“Doinganexistingfeaturesanalysisfortenacresmightcostbetween$8-10k.”

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“Wecouldspend$15-20kofourowntimeandsurveytheareaanddosomeengineeringtocomeupwithaplan…onlytofindoutthatPWDwon’tsupportitortheownerwon’tsign.”

“GARPisaskingustoactmoreadevelopmententity,notanentitythatneedstogetpaidbythehour.”

“Alow-endconceptfortenacreswouldcost$3-5,000.”

“…it’shardtoestimatewhattheupfrontcostswouldactuallybe.”

Interviewees(noneofwhichhadpreparedaGARPapplication)estimatedthattheywouldlikelyspendanaverageof$15-$20,000inbillablehourspreparingaGARPapplication.AllagreedthatthiscostwasprohibitivetotheirparticipationinGARP.Somefirmserroneouslybelievethatanengineeringsurveyofthesitewouldalsobeneeded,whichtheyestimatedcouldcostasmuchas$50,000fortenacres.

Whenaskedhowmuchtheymightbewillingtospend,inbillablehours,todevelopaGARPapplication,firmsindicatedthattheymightbewillingtospendapproximatelyafewthousand(~$1,500-$2,000)upfront.

Atleastonevendorindicatedthataggregatingtenacres’worthofsitespresentedaproblemforbuildingownersaswellasserviceproviders:

“Propertyowners[whowanttomoveforwardwitharetrofit]don’twanttowaitaroundtogetbundledwithothersandhavetheirtimetabledictatedbyotherentities.”

“…areownerswillingtomakethetimecommitmenttoexplorethepossibility[ofGARP]?Theperspectiveofthebuildingownershouldbeconsideredaswellastheaggregator.”

“…wechargeownersforourdesigns.Butclientsdon’twanttopayfor[GARP]designsbecausetheydon’tknowiftheGARPapplicationwillbesuccessful.It’sallnewandriskandfront-endinvestmentthatclientsaren’thappyabout.ItwouldbehelpfultoknowtheacceptancerateofGARPapplications.Thenclientsmightbemorelikelytopayfordesign.”

Bridgecapitalisnottheanswer

WithsomanyfirmsindicatingthattheupfrontcapitalinvestmentwasthemajorbarriertotheirabilitytoparticipateinGARP,weaskedwhetherloworno-costcapital“bridge”financingwouldbehelpful.TheresponsewasuniversalthatbridgecapitalwouldnothelpthesefirmstoparticipateinGARP.Nofirmweaskedwouldbewillingtotakeondebt,evenatzerointerest,tosubmitaGARPapplication.Itwouldbetantamount,theyindicated,todoingafreedesign,intheeventthattheprojectfellthroughandthefirmhadtore-paythebridgeloan.

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“…for[our]traditionallandscapedesignwork,ifwedothedesignandaclientdecidestogowithus,we’llabsorbthefee,ifnot,theclientpaysfordesign.”

“…bridgefundingwouldnotbehelpfulbecausethereistoomuchuncertaintyabouttheproject.Thereisother,morecertain,workwecouldbedoing.”

“Weneedascenariowhereeveniftheprojectdoesnotmoveforwardwedon’tneedtogivethemoneyback.”

“…[WouldItakealoanifIhad]togivethemoneyback?Nope.”

“Wecouldnotparticipateifwehadtogivethemoneybackifadealfallsthrough.Itwouldneverbeworthtakingthatrisk.Ontheprivatesidewewouldnevertakethatrisk.”

“It’snotafinanceproblem;it’saprogramstructureproblem.”

“Nofirmwillworkonaloanbasis.”

“[Ourfirm]isnotinsuredtobeadesign-buildfirm.Infact,fewfirmsareinsuredthisway.Wewouldneedacontractortodothebuild;sothe[GARP]wouldneedtoberestructuredtocoverthecostofdesignasa“phaseone,”andconstructioncoveredasa“phasetwo.”Butthe$90kneedstocomeuptoo.AtleastmakeitevenwithSMIP.”

Recommendationtohelptraditionalpay-for-servicefirmstoparticipateinGARP

• CreateanimprovedGARPapplicationprocessthatwouldreducethefinancialriskforvendorsthatwouldliketoparticipateinGARP.Firmsnearlyallagreedthataphasedapproachtotheapplicationprocess,whichacknowledgesthedistinct“pre-development,”“design,”and“construction”phasesofaproject,andprovidesreimbursementforfirmsearlierintheGARPapplicationprocesswouldbeveryhelpful,andmoreattractivethanabridgeloan.(Seediagrambelow.)This‘phased’approachcouldhaveseveralvariations,buttheessentialideaistoenabletheapplicanttogetpaidforthehoursof“pre-development”work(e.g.,owneridentification,outreach,andprojectconceptplan)beforeadvancingtotheengineeringandconstructionphasesofaGARPproject.

“[GARP]isahigh-riskpropositionfrom[my]standpoint.Iftherewasawaytogetaportionofthegrantpaidupfronttherewouldbebetterconditions.”

“Engineeringfirmscannotsurviveiftheydon’tmakemoney.Wecandonatesomebuttimeismoney.Ifwewerepaidtodevelopanapplicationandworkwithalandowner,thatwouldchangethings.”

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“…requirelessdesignupfront.[Letus]dodesignbasedonGISandreadilyavailabledataandprepareaminimumconceptualsubmission.”“…[PWDshouldprovide]…interimfundingforabasemap.[Weshouldbeableto]cometoPWDwithabasemapandaletterofinterestfromapropertyowner,andbasedonthatgetfunding[thatwouldhelpustogetto]thenextstep.”

CurrentandProposedGARPStructures

1. CurrentGARPStructure:

VendorsMustAssumeFinancialRisksofProjectuntilApplicationisApproved

ü Customeridentificationandoutreachü Initialsitevisit(s)ü Sitecharacterizationandsurveyü Conceptdevelopmentandpreliminaryprojectestimateü SubmitGARPapplication

ü Engineeringdesignü Constructiondocumentscompletedü Constructionbeginsü Constructioncompletionandprojectverification

2. Proposed3-phaseGARPStructure:

PWDSharesFinancialRisksofProjectwithVendors

ü Customer identification and outreach ü Initial site visit(s)

Costsincurredduringthisphasearefundedbyvendors

CostsincurredduringthisphasearefundedbytheGARPgrant,whichalsoreimbursescostsincurredduringPhase1.

Phase1:Pre-development

Phase2:Design&Construction

CostsincurredreimbursedbyGARPgrant

Phase1:Pre-development

IfGARPapplicationisnotsuccessfulatthispointthevendormustshoulderthepre-developmentcosts

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ü Produce proposal and cost estimate for engineering services and any pre-development work completed

Vendor submits GARP application for reimbursement of pre-development work

ü Engineering design ü Construction documents completed and construction cost estimate produced

for each site ü Submit GARP application for construction services based on cost estimates

ü Construction ü Construction completion and project verification

3.Firmsbelievethataggregatingtenacresisinfeasible

Mostfirmsagreedthatwhileeconomiesaretrofitonalargersitewillgenerallybecheaperpersquarefootthanasmallersite,thesameeconomiesofscaledidnotapplytonon-contiguoussites,aswouldbethecasewithnearlyallGARPprojects.Moreover,firmsdidnotseehowtheycouldeasilygetmanypropertyownerscoordinated.Theyfeltthatmostthesitesinthecombinedsewerareawerelessthanoneacre,andthuswouldrequirethemtoreachoutandacquireatleasttendiscreteprojectstobundletogether.SomerespondentssuggestedmergingaspectsofSMIPandGARPtocombinethevendor-ledaspectsofGARPwithsmaller(nosizeminimumthresholdunderSMIP)projectsize.

“IfIhadfiveproperties[equalingatotaloftenacres]inthecombinedsewerareaI’dgoforGARP;itmakessensefromacontractingperspective,butIjusthaven’tseenthosesituations.”

“It’spossiblethatIcouldcombineSMIPprojectsbuttheyareall[happening]ondifferenttimelines,sofinding[tenacres’worth]ofpropertiesthatarereadyatthesametimeistricky”

“Theten-acre[requirement]isn’tprovidingtheeconomyofscaletomakethe$80-$90k/acrethreshold…IamalsounsureifPWDwouldbeflexiblewithacresifpresentedwithanopportunitytofundaproject[ofslightlylessthantenacres.]”

“…because[myfirm]isintouchwithalotofsmallerproperties,itmakessensetogodirectlyformultipleSMIPgrantversusgettingmorepropertiestogetherforGARP.Tenacresisalottogettowhenpropertiesareoneacre.”

Phase2:Design

CostsincurredfundedbyGARPgrant

CostsincurredfundedbyGARPgrant

Phase3:Construction

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“Therearenotreallyalargeenoughnumberof[large]sitestomakefirmsthinkthereisareallineofbusinesshere.”

OneintervieweesuggestedthatPWDcouldmoreeasilyachievelarger-scalegreenedacreprojectsifitwouldallowprojectdeveloperstoco-minglepublicandprivaterunoff:

“…thiswouldcreateefficiencieswithstorageandtie-ins,whichsavescostsandenableseconomiesofscale.Ifasiteisopen…wecouldeasilygettwentypercentmorecaptureatmanyofthesesites….”

Recommendationtohelpfirmsachievetenacreprojects:

• Anincentivestructurethatprovidesbonuses(orwhichoffershigherdollarvaluepersquarefootofimperviousareamanaged)forlarger“portfolios”ofretrofitprojects.

4.IntervieweesbelievethattheGARPfundinglevelistoolow

Firmsuniversallyindicatedthatthe$90k/greenedacreofferedbyGARPwasinsufficienttocoverthecostsofa“greenedacre”retrofitproject.ParticularlyconsideringthelessriskyandmoreprofitablegreeninfrastructureprojectsavailablethroughPWD’spublicprojectsoreventhroughSMIPgrants,firmssaidthattherewasnostrongreasontoturnawayfrom“safer”andmorelucrativeprojectstotrytoputtogetheraGARPapplicationatthecurrentfundinglevel.Whenaskedwhatwouldberequiredtoencourageabove-groundvegetated(ratherthansub-surface)practices,whichwouldprovidemoreco-benefitsforcommunities,theanswerwas,thatitwasjustamatterofPWDofferingmoreperacreofimperviousareamanaged.

“EvenwithSMIP,wherePWDoffers$100kanacre,it’stight.$80-90kanacre[underGARP]isnotenoughespeciallywhenit’smorework.”

“…realisticallywewouldneed$200k+pergreenedacre”

“…[atthecurrentgrantlevel]Ican’tmakemoney,evenifit’sadreamsite.”

“Ipayallmysub-contractorsfirst,thenIpaymyself.Ihavetokeepmyrelationshipswithmysubs.Afterpayingthem,GARPdoesnotleaveenoughforme.”

ThereisnoincentivetodoGARPoverSMIP.IfGARPpaidmore,say$125kanacre...”

“Itwouldbeanillogicalbusinessmodelforustotryanddoaggregationofsites,coordinateallthepropertyowners,havethemallsignmaintenanceagreements,andthenstilldoalloftheanalysisandplansourselves.Economically,Idon’tseehowwere-coupthecostsofallthelegworkinvolved.”

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“Thereisnoflexibilityoncostpergreenedacredependingonsiteconstraints.Someareeasy,somearemorecomplex—maybePWDneedstoputtogetheraslidingscalebasedonsiteconstraints…”

“…$150k[pergreenedacre]wouldbeveryhelpfultofirmsandit’sstillahugewinforthecitycomparedtothecostofpublicprojects.ThentherewillbecompetitionandmarketforceswillworkinPWD’sfavor—costswillbedrivendown.”

“PWDshouldexploreascaledfundingsystemandadjusttheirgrantstoprovidemoregrantdollarsforpracticesthattheywanttosee”

“Offer$150kforthepreferred[vegetated]solution,andtieritsothat$90kisofferedforsub-surface…”

“FundinglevelofGARPistheproblem.Traditionalfirmssimplycannotgetcostsdownto[$90k/acre].IntheD.C.program,reimbursementsforcompletedprojectsaremuchhigher,backoftheenvelopenumberslookmuchbetter.”

RecommendationonthefundinglevelforGARP

• ConsiderraisingGARPfundinglevelstomakeitequaltoSMIPataminimumbutalsoconsiderahigherbaselineforGARPgiventhetimerequiredtoaggregateproperties,suchasaminimumof$150kpergreenedacre.

• Tocreateanincentiveforabove-groundorvegetatedpractices(seeTable3.2-4:SMPHierarchyinPWD’sStormwaterManagementGuidanceManualV3.0),atieredgrantprogramcouldofferapremiumor“bonus”forgreeninfrastructurepracticesthatprovideco-benefitssuchasimprovedaesthetics,improvedairquality,orreducedurbanheatimpact.

5.FirmsseemedsurprisinglypoorlyinformedaboutGARP—evenmajorlocalplayersdidnothavestronggraspoftheprogrambasics

ThereweremanycontradictorystatementsmadebydifferentfirmsthatindicatedalowlevelofknowledgeaboutfundamentalcharacteristicsofGARP.Commonmisconceptionsincludedthebeliefthatafullengineeringreviewwasneededaspartoftheapplication,orthatthetenacreminimumwasastrictthreshold,orthatGARPwouldonlyreimburseconstructioncosts.

“SomecasestudyinformationonpastGARPprojectswouldbehelpful.Itwouldbenicetoseehowothercontractorshavebeensuccessfulwiththeprogram…getmoreinsightintotheprocess.”

“…whataboutworkshopsforcontractors…?”

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“Thereisnotalotofinformationorpubliclyaccessibleinformationaboutthe[GARP]—justtheonepager.”

“WewouldlikemoreinformationfromPWD—indicating,forexample,thetypesofprojectsthathavebeenapproved,toexplainhowGARPworks.Thenourclientsmightbemoreintoit.”

“Websiteisconfusing.Doesitneedtobeaten-acreparcel?”

RecommendationstoinformpotentialGARPparticipants

• IncludemoreinformationontheGARPwebsiteaboutthespecificrequirementsforwhatfirmsneedtosubmitandprovidecasestudiesshowingdifferentexamplesofsuccessfulGARPapplications.

• PWD,workingwithlocalpartnerssuchasSBN,ortheBuildingOwnersandManagersAssociation(BOMA),couldhostwebinarsshowcasingdetailedcasestudiesofcompletedGARPprojects,withafocusonthestep-by-stepofhowtheprojectswereoriginatedandsubmitted.

• PWDshouldconsidermergingtheSMIPandGARPprogramsintoone,larger,andmoreflexibleprogramthatrewardsaggregationbutdoesnotrequireit,andenableseitherthevendororthepropertyownertosubmitanapplication.Thiswouldeliminatecompetitionbetweengrantprogramsandsimplifytheoptionsforvendors.

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AppendixI:ParticipatingFirms

AKRF

BohlerEngineering,PA,LLC

EngineeringandLandPlanners

IMHydro

MaserConsulting

MichaelBakerInternational

NTMEngineering

OptiRC

PEEREnvironmental

Pennoni

PennsylvaniaHorticulturalSociety(PHS)

RodriguezConsulting,LLC

Roofmeadow

Seravalli,Inc.

ShearonEnvironmentalDesignCompany

Stantec

TheRBAGroup

UnitedAmericanBuilders

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AppendixII:Interviewquestions

BackgroundQuestions

FirstName,LastName,Title,Firm,Yearfounded,Numberoffull-timeemployees,approximateannualrevenue,Corebusiness,CoreGSI-relatedservice,CompanyHQaddress,locationoflocalBranch(es).

GARP-specificquestions:

1. What,ifany,workhasyourcompanydoneforPWD/withPWDfunding(i.e.,prime/subcontractorvs.grantrecipient,other)

2. DoyouknowaboutGARP?Ifso,howdidyoulearnaboutit?a. Hasyourfirmconsideredparticipating?Why/Whynot?

3. What,ifany,changescouldbettersupportyourfirmtoparticipate?a. Ifoperatingcapitalisachallenge,wouldaccesstobridgefunding(grant,loan)be

helpful?i. Onwhatterms?Whatwouldrepaymenttermsneedtolooklike?

b. Ifnot,whatotherchangeswouldhelpmakeGARPworkbetterforyourfirm?4. HowmuchdoyouthinkyourfirmwouldspendinordertoacquireaGARPgrant?

a. Howwouldyou/doyouvaluethestafftimethatwouldbeneededtoseekandacquireclients[Encouragethemtoelaborateasmuchastheycan]

5. WhatprofitdoyoucurrentlymakeonprojectsthataresimilartoGARP?6. Howbigdoesthemarketneedtobeinorderforyoutobelievethatit'sworthwhiletoadaptto

GARP?"a. Whereintheprocessisthemainchallengeforyourfirm?[Encouragethemtoelaborate

asmuchastheycan] 7. Whatadditionaltoolsorresourceswouldbeuseful?