RI Americas 2014: New York City scopes out major green bond issuance plans

City working on its own standards and forms working group

As swiftly as the green bond market has grown in 2014, it’s not showing any signs of slowing in 2015.

Quite the contrary: Early indicators point to a rapid expansion in the U.S.’s municipal green bond market next year, with New York City planning to join the green bond fray, and a program from the U.S.-based Natural Resources Defense Council encouraging other cities to follow suit.

Speaking at last week’s RI Americas conference in New York, Carol Kostik, deputy comptroller for the city’s public finance department, laid out plans for what could quickly become the country’s largest municipal green bond program.

Kostik said that the city’s Municipal Water Finance Authority alone issues roughly $1.5 billion in bonds a year, and that a significant proportion could easily be labeled “green.”

NYC’s green bond program, a joint effort between Mayor Bill de Blasio and Comptroller Scott Stringer – both have to sign off on all city bond issuance – has been in formation for about a year, Kostik said. The office is currently in the process of establishing its own standards for what constitutes “green,” and has formed a working group to examine other issuers’ criteria and meet with key investors.Kostik noted that the question of whether the new green bond program could prove costly to the city has sparked a “lively debate” within her office.

“The benefit to the city is in that it would increase our investor base,” she said. “No one’s saying it would save us money.”

Speaking as part of the same panel discussion at RI Americas, Douglass Sims, director of strategy and finance for the Center of Market Innovation at the Natural Resources Defense Council (NRDC), the non-profit environmental advocacy group, said his organization is working to ensure that other cities take New York’s example to heart.

“We’re trying to create an accelerator for other cities who don’t know how to be in this space,” Sims said. “There’s lots of demand for understanding how to do it, even in red [Republican] states—but not a lot of know-how or national support.” Sims added that the NRDC will help municipal bond issuers share best practices and other advice related to green bond issuers. He pointed to the green bank space as one that has successfully organized meetings among country and state practitioners to spread the uptake of its model: “We’re replicating that for municipal bankers in this country.”

The RI Americas conference took place on 9th and 10th December in New York.