Regional Conservation Toolbox

The Conservation Toolbox catalogues 1) conservation practices available to local governments and their partners, and policies that enable them; 2) potential partners for local governments implementing conservation practices; and 3) funding mechanisms to support these projects.

Examples of successful efforts illustrate the potential role each practice, policy, partner, and funding mechanism can play in promoting conservation.

Practices and Policies

Local governments can implement a broad range of conservation practices by themselves or with partners to preserve, enhance, and restore natural areas in their jurisdictions. Typical practices employed by local governments include land acquisition, physically restoring natural areas, incorporating conservation themes into education programs, implementing fees to support conservation efforts, and participating in regional conservation planning efforts, among others. The following policies can facilitate effective conservation practices in cities and counties.

Home Rule cities in Texas can enact parkland dedication ordinances requiring developers to dedicate land for new parks to serve housing being built, or to deposit money into a fund held by the city for the purpose of buying parkland. In addition, a parkland development fee can be collected by the municipality to offset the cost of improving the land for park purposes.

The City of La Porte requires developers to dedicate one acre of land for every 93 dwelling units built. Developers may also pay a fee-in-lieu of land dedication at the rate of $490.00 per dwelling unit to the City of La Porte's Park Development Fund. The City additionally collects a Parkland Development Fee of $318.00 per dwelling unit for the improvement and maintenance of parklands.

Sources
La Porte Parkland Development Fee
La Porte Code of Ordinances

Riparian buffers—conserved land bordering bodies of water—protect surface and groundwater quality, reduce the potential for downstream flooding and the need for manmade flood control measures, and offer public health and quality of life benefits. Municipalities can adopt land use regulations to protect riparian buffers from development and ensure they are properly maintained.

The City of Baytown’s code of ordinances (Chapter 34 “Environment,” Article VIII “Watershed Protection,” Section 34-427 “Buffer Requirements”) establishes a 75-foot-wide buffer strip along the edge of public water bodies. The buffer strip must be maintained in its natural state to the maximum extent possible and planted with an erosion resistant vegetative cover in areas that have been disturbed.

Source

Baytown Code of Ordinances

Home Rule cities can adopt tree ordinances to set management practices for the preservation, planting, or proper removal of trees. Dozens of municipalities in Texas have exacted tree ordinances, including several cities in the Houston-Galveston region. The cities of Bunker Hill Village, Columbus, Houston, League City, Pearland, and Seabrook have enacted tree protection or preservation ordinances. The cities of Baytown, Cleveland, La Marque, Lake Jackson, League City, Missouri City, Pasadena, Sealy, Stafford, Sugarland, and Tomball have enacted tree planting or landscaping ordinances.

League City requires a tree disposition plan to specify how trees on their protected tree list will be removed or protected from development and pre-development activity proposed at a particular site. The City uses a tree replacement calculation based on tree size and location to regulate the replacement of any trees removed during the course of development. Fees-in-lieu are accepted at a rate of $250.00 per caliper inch of required replacement tree(s). League City also has tree preservation and maintenance standards.

Taking care of and protecting public trees can greatly enhance a city for residents and visitors. The Texas A&M Forest Service has an online tutorial for how to become a Tree City USA Community by enacting a public tree care ordinance. A fillable ordinance document is available for download. In the H-GAC region, the cities of Galveston and League City have both become Tree City USA Communities in the past 3 years. To qualify as a Tree City USA community, cities must meet four standards of sound urban forestry management: maintaining a tree board or department, having a community tree ordinance, spending at least $2 per capita on urban forestry, and celebrating Arbor Day.

Sources
Tree Ordinances in Texas
League City Code of Ordinances
Texas A&M Forest Service Tutorial

Low-impact development (LID) is an approach to site development and stormwater management that preserves or creates natural systems that manage stormwater. Low-impact development features like vegetated swales, constructed wetlands, green roofs, and permeable pavement can enhance the conservation benefits of ongoing development, redevelopment, or retrofit projects. Features can be designed to not only manage stormwater, but to serve as a public, natural amenity.

From a regulatory standpoint, LID can help developers meet Municipal Separate Storm Sewer requirements. If a developer installs LID design features to reduce the amount of stormwater runoff that leaves the property, the municipality can reduce their stormwater fee or provide credits to meet a water quality performance or design requirement.

The Houston-Galveston Area Council has several resources that explain the benefits of LID, how to properly maintain LID features, and how to remove regulatory barriers to LID in municipal codes or ordinances.
Harris County established interim design criteria for low-impact development in 2011. Any development or redevelopment projects that chose to incorporate LID practices to satisfy requirements for detention, stormwater quality, or other applicable requirements were subject to the design criteria. The criteria did not require a conventional development project to follow LID requirements, nor did they intend for every project to be a LID project.

Travis County, the Edwards Aquifer Protection Program, and the City of Austin all require permanent controls to treat storm water runoff from new or modified development. Travis County has adopted the low-impact development storm water controls found in the Highland Lakes Watershed Ordinance technical manual and these controls can be used on most projects in all unincorporated areas of Travis County.

Sources
H-GAC Low-Impact Development Resources
Harris County LID Design Criteria
Travis County Stormwater Controls

A detention volume banking program allows credits for excess detention capacity to be sold to developers downstream. Developers less constrained by available space can build more detention capacity into projects than otherwise required by regulation. Developers constrained by space can purchase detention volume credits towards their total stormwater detention requirements.

Cities and counties can also levy a fee for developers in exchange for reduced detention volume requirements. The fees collected are placed in a dedicated fund for other flood mitigation and stormwater detention projects. Chapter 395 of the Local Government Code allows local governments to levy impact fees against new development.

The City of Sugar Land Design Standards, revised in 2019, requires the use of on-site detention for all new developments unless regional detention facilities are built to mitigate the developmental impacts. To use a regional detention facility the development must be located within the regional detention service area and document that flows can be conveyed from the subject tract to the regional facility without adversely impacting property owners adjacent to or along the path of conveyance.

In 2018, the City of Houston convened a Redevelopment and Drainage Task Force to make recommendations for the creation and enforcement of drainage-related development rules. The task force recommended that the City require fee-in-lieu of detention for lots under 15,000 square feet and create a dedicated fund for detention projects in the surrounding area. The task force additionally recommended that the City provide detention credits for developers who use low-impact development features and allow for the sale of those credits.

Sources
City of Sugarland Design Standards
City of Houston Task Force Report

A mitigation bank allows developers to purchase green space or habitat in a pre-determined area to offset the negative impacts of their projects elsewhere in the impacted area. Areas purchased are typically wetlands, streams, or endangered species’ habitats. Mitigation banking is considered a good option when compared to project-by-project or "permittee-responsible mitigation" on smaller, often isolated tracts. Larger tracts provide greater floodplain storage, support a greater diversity of habitat, and give wildlife room to roam freely. By creating the mitigation bank before development impacts occur, temporary losses of important wetlands functions are prevented.

The Greens Bayou Wetlands Mitigation Bank in Harris County is an example of a mitigation bank. The Harris County Flood Control District established the Mitigation Bank to compensate for unavoidable negative consequences on wetlands elsewhere in Harris County. The Flood Control District has successfully developed high-quality wetlands on about 250 acres of the Mitigation Bank property, creating approximately 156 wetland credits, many of which have already been sold or reserved for use by local governments and private entities ranging from churches to commercial builders. The wetlands bank provides wildlife habitat, naturally improves water quality, and stores stormwater during rain events.

Source
Greens Bayou Wetlands Mitigation Bank

Cities have the authority to adopt rules governing plats and subdivisions of land within their jurisdictions to promote the health, safety, morals, or general welfare of residents through Texas Local Government Code Chapter 212. Likewise, counties can require green space in subdivisions through authority granted to Counties through Section 232.003 of the Local Government Code. Green space requirements in subdivisions can be used to create park space, reduce impervious surfaces, and guide the density of future development.

Fort Bend County requires all plat applications for subdivisions to dedicate ¼ acre of green space per every 100 lots. Subdivisions that have fewer than 100 lots are required to provide a minimum of ¼ acre green space. Large residential lots greater than 1 acre in size are exempt from this requirement.

Source
Fort Bend County Regulations of Subdivisions

Potential Partners

Many conservation initiatives benefit from partnerships between local governments, and with other public and private entities. The Houston-Galveston region contains a dense network of potential partners that may bring unique abilities and resources to a project. 

The Texas Constitution (Section 59, Article XVI) authorizes the creation of conservation and reclamation districts to conserve and develop the state’s natural resources and authorizes such districts to incur indebtedness, including bonds supported by taxes, to finance improvements related to the state’s natural resources. Conservation and reclamation districts, often referred to as “water districts,” may be created for a wide variety of purposes, including river authorities, groundwater districts, flood districts, and municipal utility districts.  These districts may be coterminous with a single county, comprise multiple counties, or operate in only a portion of a city or county. Some examples of conservation and reclamation districts in Texas include: 

Harris County Flood Control District

Harris County Flood Control District is a conservation and reclamation district created by the Texas legislature in 1937. The Flood Control District actively partners with entities on conservation projects, including tree preservation and plantings. The District typically plants 12,000 to 15,000 trees annually to replace those lost during construction, to enhance capital improvement projects, and as part of a routine maintenance program. The District does not run its own parks system but allows for and encourages third parties to build and maintain trail systems, greenway corridors, and other park amenities in channel and detention rights-of-way. The District has dedicated staff members who work with public and private entities on multi-use projects in conjunction with District facilities. 

Source
Harris County Flood Control District

Lower Colorado River Authority 

The Lower Colorado River Authority (LCRA) was created by the Texas Legislature in 1934. The LCRA produces and delivers electric power, manages the lower Colorado River and provides a reliable water supply, manages a public parks system and supports community development. LCRA is funded primarily by revenue from generating and transmitting electricity. They do not receive state appropriations or have the ability to levy taxes.

The LCRA also manages the Creekside Conservation Program in partnership with the U.S. Department of Agriculture’s Natural Resources Conservation Service, and local soil and water conservation districts. The program offers cost-sharing incentives that help landowners plan and implement conservation practices to reduce soil erosion and protect water resources, including projects such as brush management, cross-fencing, rangeland planting and alternative water source development, among others.

Water Supply Corporations

Water supply corporations, (WSCs) enabled by the Texas Water Code Chapter 67, are sometimes referred to as “Water Supply or Sewer Service Corporations.” Operating as nonprofit organizations, water supply corporations (1) supply water, sewer service, or both for a municipality, a private corporation, an individual, or a military camp or base; and (2) provide flood control and drainage systems for political subdivisions, private corporations, or another person. Water supply corporations do not have taxing authority but may contract with certain entities to issue bonds.

Typically, WSCs are granted funds from the United States Department of Agriculture or the Texas Water Development Board. The TWDB’s Texas Water Development Fund is continuously available to all political subdivisions of the state and nonprofit water supply corporations. Financial assistance, usually in the form of loans, may be used for acquisition of floodplain land for use in public open space, public beach re-nourishment, and control of coastal erosion, in addition to water related infrastructure planning, acquisition, and construction. Water supply corporations are additionally eligible for several other financial assistance programs through the Texas Water Development Board. 

Regional Parks Districts 

A regional parks district is an entity that bears responsibility for maintenance and management of parklands across multiple counties or jurisdictions. In states like California and Illinois, regional parks districts have been active since the 1930s. In both states, parks districts are enabled by legislation to be funded through bond measures, property taxes, park user fees and leases, and state and federal grants. In Texas, certain conservation and reclamation districts can use taxes, bond measures, or other fees to maintain parks in their jurisdictions.

The Texas Parks and Recreation Facilities Amendment, also known as Proposition 4, was passed by ballot measure on September 13, 2003. The measure authorized conservation and reclamation districts to use taxes to develop and finance certain parks and recreation facilities. Also, the amendment authorized the legislature to allow local elections for the issuance of bonds to improve and maintain parks and recreational facilities in the Tarrant Regional Water District or a conservation and reclamation district located in whole or in part of Bastrop, Bexar, Brazoria, Fort Bend, Galveston, Harris, Montgomery, Tarrant, Travis, Waller and Williamson counties. The Tarrant Regional Water District (TRWD) manages four lakes, three parks and more than 70 miles of trails. TRWD’s Trinity Trails System winds through much of Fort Worth and is one of the Metroplex’s most used recreational facilities.

The Lower Colorado River Authority (LCRA) also manages a public parks system. LCRA owns nearly 11,000 acres of parkland along the Colorado River from the Hill Country to the Gulf Coast. A number of these parks are operated by LCRA staff, while others are operated by third parties, which include private companies and local government agencies. LCRA parks are funded by park fee revenue rather than taxes.

Source
Lower Colorado River Authority Parks System

A Municipal Utility District (MUD) is a conservation and reclamation district authorized by Article XVI, Section 59 of the Texas Constitution and Chapter 54 of the Water Code to provide water, sewage, drainage and other services within set MUD boundaries. Originally designed to provide water supply to unincorporated areas, a MUD may also aid in wastewater and stormwater services, fire protection, drought planning and the provision of parks and recreation facilities. In Texas, a MUD is funded by charges, fees, and taxes.

To coordinate and pay for critically important parks, green space and natural areas MUDs can use a variety of tools, including 1) Recreational Facilities Bonds that are eligible for some counties in Texas, including many of those in H-GAC region, 2) the new Texas Flood Infrastructure Fund, and 3) private/public funding and conservation easements.

Under Texas law, MUDs may acquire recreational facilities, such as parks, forests, greenbelts, open spaces, trails, ballfields, and amenity lakes, and obtain funds to develop and maintain them in the same manner as authorized for the acquisition, development, and maintenance of other district facilities—through bonds supported by ad valorem taxes.

The Timber Lane Utility District, located in north Harris County, has constructed and operates a variety of parks and recreation facilities for the use and benefit of residents of the District and the public. For example, Cypress Creek Park at Timber Lane was financed with two grants from Texas Parks and Wildlife Department: an Outdoor Recreation Grant with 50% match from District bond funds and a Trails Grant with 20% match from Timber Lane Utility District operating funds. This project completed in 2013.

In the H-GAC region, MUDs located in Brazoria, Fort Bend, Galveston, Harris, Montgomery, or Waller counties may issue recreational bonds supported by ad valorem taxes if authorized by a majority vote of the district voters. A MUD’s outstanding bonds supported by ad valorem taxes for recreational facilities may not exceed 1% of the taxable value of property in the district at the time of issuance of the debt.

In 2020, Fort Bend MUD 142 requested authorization from the voters of the District to issue bonds up to $7,000,000 to fund the construction of desired park and recreational facilities, including community parks, small neighborhood parks, passive and natural amenities, and an integrated community trails system. Proposition B passed with 67% voter approval.

Sources
Timber Lane Utility District Parks and Trails
Fort Bend MUD 142

Opening schoolyards and school playgrounds to the public outside of school hours is one approach to addressing parks and recreation facility deficits. This arrangement is usually implemented with a joint-use agreement between schools and the local government entity. Shared use agreements can present challenges, including additional cost to schools, liability protection, communication among constituencies interested in sharing space and decision-making about scheduling and space allocation.

The SPARK School Program is a leading example of joint use agreements with schools. SPARK works with schools and neighborhoods to develop community parks on public school grounds.  In the past 30 years, SPARK has built over 200 community parks throughout Houston and Harris County.  Each park is unique, with its design based on ideas and needs of the school and surrounding neighborhoods.  While all of the parks are different, a typical park consists of modular playground equipment, a walking trail, benches, picnic tables, trees, an outdoor classroom, and a public art component.  SPARK Parks are available for public use after the school day and after-school programs have ended, and on weekends.

Source
SPARK School Program

Conservancies and Friends Groups

Conservancies have long been formed by civic-minded citizens with a passion for specific parks or entire park systems. These non-profit organizations advocate, fundraise, and provide volunteer labor for parks creation, enhancement and stewardship. Conservancy partners are important for more than just the resources they raise directly and their volunteer labor; they can create a constituency for increased and more equitable public spending on parks. Although traditional park conservancies focus on a single park, citywide conservancies and parks foundations can raise significant funds for an entire park system.

Exploration Green Conservancy is a volunteer-driven nonprofit dedicated to the protection and enhancement of Exploration Green – a permanently-protected, 200-acre green space for conservation, recreation, and flood detention in greater Houston. The community steering committee, originally formed to gather public input on the Exploration Green master plan, evolved into the Conservancy, going through the process to become a 501(c)3 nonprofit.

The “friends of the park” group model differs from conservancies in that they are typically all-volunteer organizations that focus on advocating for and supporting parks through clean ups and other activities.  Volunteer-led organizations can offer excellent returns on investments for cities that support them.  The Keep Brownsville Beautiful campaign leveraged $75,000 in that city’s general funds and $67,000 in grants to coordinate volunteer hours estimated to be worth over $3 million.

Private Donations

Fundraising for conservation projects by soliciting individual donations can be highly successful. Local governments can help coordinate social media fundraising campaigns. Private donations or philanthropic programs coordinated by nonprofits and governmental entities have funded major parks projects in Texas.

In 2013, the Bayou Lands Conservancy raised $4 million from a social media campaign to save the Deer Park Prairie. Both private contributions and donations from conservation groups—including the Bayou Land Conservancy, Native Prairies Association of Texas, Houston Audubon, Katy Prairie Conservancy and Gulf Coast Bird Observatory—made the land acquisition possible. After purchasing the property, the Bayou Land Conservancy donated it to the Native Prairies Association of Texas. Bayou Land Conservancy holds a conservation easement on the property to protect it from development in perpetuity.

Sources
Exploration Green
Keep Brownsville Beautiful

County and city-led conservation projects can require or benefit from structured support from non-profit organizations. Partnering with a non-profit allows governments greater flexibility, and the capabilities of public and private entities are often complementary. For instance, land trusts—as private, nonprofit organizations—can often work with private landowners more effectively than a public park or conservation agency to put land in conservation status, typically through a conservation easement.

The Spring Creek Greenway has been successful due to a longtime partnership between Montgomery and Harris counties and the Bayou Land Conservancy for conservation easements, maintenance, and programming. Previously known as the Legacy Land Trust, the Bayou Land Conservancy holds conservation easements along Spring Creek between Harris and Montgomery counties. The greenway covers thousands of acres and contains miles of walking and biking trails. Natural surface trails on the north side of Spring Creek are regularly maintained by Bayou Land Conservancy's Spring Creek Nature Trail Stewards. Bayou Land Conservancy also partners with The Woodlands to protect thousands of acres along this corridor.

Source
Bayou Land Conservancy

Municipal Management Districts, established in Chapter 375 of the Texas Local Government Code, finance improvements in a defined geographic area.

The board of a district may undertake improvement projects and services that confer a special benefit on all or a definable part of the district, including the acquisition, improvement, operation and maintenance of parks and open space. A district must obtain the approval of the governing body of the municipality in which it is located for bond issues for an improvement project.

In the City of Houston, the Midtown Management District has been providing a wide variety of services since 2000. They have cared for and maintained existing trees, planted new trees, purchased new playground equipment, and otherwise maintained infrastructure in parks and other public places.

Source
Midtown Management District

Funding Mechanisms

In addition to enabling policies and ordinances and sustaining partnerships, successful local conservation efforts should consider initial and ongoing funding resources. While the primary resources many local governments may rely on are established ad valorem taxes or dedicated tax revenue funds, a wide variety of potential resources is available to supplement existing resources.

Landowner Donations

Many parks in Texas have been made possible through the generosity of their former owners, who agreed to deed their land to public parks and conservation agencies (or to nonprofit organizations) to leave a permanent legacy benefiting wildlife, culture, or public use. Landowners may also donate a conservation easement over their land; typically, a conservation easement protects the natural, cultural or agricultural values of a property but does not allow for general public access.  Donors of land or easements are often motivated in part by the income tax benefits of making a gift. A gift of a property interest can be treated as a charitable contribution. 

In setting out to implement a park or conservation plan, a good strategy may be to start by soliciting donations of land and/or easements. In addition to outright gifts of real estate interests, landowners may also be willing to consider a “bargain sale” through which the owner receives a portion of the property’s value in cash, with the remainder being considered a charitable contribution that can give rise to an income tax deduction. Non-profit organizations are often instrumental in soliciting donations of land and/or establishing easements.

Conservation Easement Assistance

There are many grants from federal, state, and private sources that can facilitate conservation easements on lands. The National Resource Conservation Service within the U.S. Department of Agriculture funds the Agricultural Conservation Easement Program to provide financial and technical assistance for the conservation of agricultural lands and wetlands. The Agricultural Land Easements component of the program provides funding to local governments, and non-governmental organizations to purchase agricultural easements, protecting working agricultural lands and limiting non-agricultural uses of the land. The Wetlands Reserve Easements component helps restore, protect and enhance farmed or converted wetland that can be successfully and cost-effectively restored as wetlands. Applicants in Texas often leverage the Agricultural Conservation Easement Program opportunity with the Texas Parks and Wildlife Department’s Farm and Ranchland Protection Program.

The Clean Water State Revolving Fund and Drinking Water State Revolving Fund, administered by the Texas Water Development Board, can also be used to fund conservation easements. Both programs offer below market rate loans and forgivable loans that can be used to control nonpoint source pollution, including the acquisition of conservation easements and permanent or long-term acquisition of water rights for eligible entities.

Sources
Agricultural Conservation Easement Program
Clean Water State Revolving Funding
Drinking Water State Revolving Fund

There are various debt instruments available to counties and cities to support capital improvements including parks, trails, land conservation, and recreation facilities. Some require or may require an election. The length of time for the financing differs with the type of instrument. The primary instruments are ad valorem tax-backed financing such as general obligation bonds, certificates of obligation and tax notes, and revenue bonds backed by a pledge of project revenues.  Local governments may also green bonds or use a form of debt financing referred to as an “environmental impact bond.” In this variation, payments due to bond holders are linked to the performance of the project in achieving environmental goals.

General Obligation Bonds

Counties and cities in Texas have the authority to issue general obligation bonds payable from property taxes, provided bonds receive voter approval at an election. In Texas, general obligation bonds are the most common way that cities and counties raise significant dedicated funding for parks and land conservation. On average, 90% of the park and land conservation bonds submitted to Texas voters have been approved.

Although the bond proposition must provide the authority for property taxes to be raised as necessary to retire the bonds, in practice, local governments often schedule bond sales to coincide with prior debt that is maturing. “Replacement bonds” therefore may not require a property tax increase.

Certificate of Obligation

A certificate of obligation (CO) is a debt instrument that can be issued by a city, county, or health/hospital district to: (1) pay for the construction of a public work; (2) purchase materials, supplies, equipment, machinery, buildings, land, and rights-of-way for authorized needs and purposes; and (3) pay contractual obligations for professional services. COs function similarly to bonds, but with fewer procedural requirements.  COs are issued for terms of up to 40 years and usually are supported by property taxes or other local revenues.

Unlike general obligation bonds, COs do not require up-front voter approval. Notices must be published in a newspaper of general circulation in the area that the jurisdiction intends to issue a certificate of obligation. Unlike a voter-approved general obligation bond, CO debt does not give a jurisdiction authority to impose additional taxes. Legislation passed in 2015 prohibits the issuance of COs for any project voters rejected in the preceding three years.

Tax Notes or Limited Tax Notes

Anticipation notes, also known as tax notes or limited tax notes, are a financing option made available to cities and counties by the Texas Legislature in 1993.  Anticipation notes can be secured by pledging either ad valorem taxes or revenue, or both.  In the case of a revenue pledge, the jurisdiction must give specific authority to permit the particular revenue source to be used for the note. 

Anticipation notes can be used to:

  • Pay for construction of a public work.
  • Pay for purchase of materials, supplies, equipment, machinery, buildings, lands and rights-of-way for the issuer’s authorized needs and purposes.
  • Pay for professional services such as engineers, architects, attorneys and financial advisers.

Green Bonds

Green bonds have all the characteristics of general obligation bonds or revenue bonds, but specifically designate the “use of proceeds” from the bond to finance positive environmental projects. The label “green bonds” indicates to investors that money will be used for clean energy, natural infrastructure, waste management and pollution control, green building projects, and other environmentally beneficial activities.

In 2017, Fort Bend Independent School District became the first school district in Texas to issue green bonds. Voters approved a $484 million bond program in November 2014, with about $52 million designated as green bonds. Proceeds from the sale of the green bonds financed the construction of three Leadership in Energy and Environmental Design (LEED) certified elementary schools in Fort Bend County.

Environmental Impact Bonds

Environmental Impact Bonds (EIBs) are a form of municipal bonds in which financial returns vary with the success of the project demonstrating measurable environmental benefits.  Pay-for-performance bonds are particularly well suited for local governments financing non-traditional, innovative investments like green infrastructure, whose impact is uncertain. Investors agree to accept a lower return when the project under-performs and a higher return when the project exceeds expectations. In this way, pay-for-performance bonds shift some of the risk of poor outcomes to private investors and shield issuers who want to explore investments in innovative strategies.

EIBs can be used to finance investments in flood risk mitigation, air quality, water quality, water supply, energy efficiency, land conservation, recreation and other projects that generate measurable environmental and economic benefits. EIBs are sold to a growing pool of private investors who want their money to generate positive environmental outcomes as well as a financial return.

The first environmental impact bond was structured in 2016 by the capital firm Quantified Ventures for the Washington, DC Water and Sewer Authority (DC Water) to finance green infrastructure in support of its stormwater management goals and EPA consent decree obligations to stem water quality issues from Combined Sewer Overflows. Recognizing the potential cost-effectiveness of green infrastructure compared to traditional grey infrastructure and the environmental, economic, and health benefits it provides, DC Water had green infrastructure projects planned and ready to go. However, they lacked capital to deploy those projects and were concerned about taking on debt, given that green infrastructure hadn't yet been tested in DC. This created the need for pay-for-performance financing.  Through an EIB, DC Water is piloting green infrastructure on 20 acres and pays interest near its municipal bond rate. DC Water is protected through a pledge from investors to return most of the interest payments if the project does not reduce stormwater flow in the sewer system by at least 18.6%.  If the green infrastructure reduces stormwater flow by more than 41.3%, investors will be compensated through a performance payment from DC Water. Essentially, DC Water gets risk protection in exchange for offering the potential for higher returns.

Sources
Fort Bend Independent School District
DC Water Environmental Impact Bond

A lease-purchase agreement may be structured as a short-term method of non-debt financing, or as a long-term lease with an option to buy during or at the end of the term.  Lease payments may be credited in whole, in part, or not at all to the purchase price.  The key feature of a lease-purchase contract is that it does not bind the lessee to any payments beyond the first year’s installment. As such, a lease-purchase agreement is not a form of debt and does not require the potentially risky and expensive procedures necessary for debt approval.

The Trust for Public Land assisted the City of San Marcos by purchasing the 102-acre Sink Creek tract for $1,270,000 and leasing it to the city for a period of three years. Each year, the agreement provided for the city to make a payment of $423,333. This not only spaced out the city’s financial contribution, but it also gave the city time to explore other sources of support.  The Trust for Public Land agreed to help the city raise public and private funding toward the second- and third-year payments.  Private foundations contributed, and the U.S. Forest Service awarded a Community Forest Program grant that covered one of the annual lease payments.  At the end of three years, the Trust for Public Land conveyed title to the city.

Source
City of San Marcos Sink Creek Project

Property taxes, sales taxes, and hotel occupancy taxes can all be used to finance conservation projects. While property taxes are the largest revenue source for many municipalities in Texas, the dedication of property taxes towards parks and open space improvements can be difficult and must be budgeted annually. City charter amendments and Tax Increment Reinvestment Zones offer alternatives to the annual budgeting cycle.

Ad Valorem (Property) Tax

While proceeds from property tax may be expended for parks and open space, property taxes cannot be dedicated to specific purposes. Therefore, funding for parks and conservation is subject to the annual budgeting process and appropriations made by a city council or county commissioners court. 

Sales Tax

Unlike the property tax, available local government sales tax capacity may be dedicated to parks or land conservation with the support of a majority of voters at an election.  According to The Trust for Public Land, three municipalities in Texas have successfully dedicated a sales tax to parks and open space: Grand Prairie, Highland Village and San Antonio.

The City of San Antonio dedicates 0.125% of their 8.25% sales tax rate to the City of San Antonio Edwards Aquifer Protection and Parks Development and Expansion Venue Projects fund. Voters first approved the 1/8-of-a-cent addition to the local sales tax in 2000 to collect $45 million needed to purchase sensitive properties located over the Edwards Aquifer. Every five years, the sales tax dedication must be renewed. To date, after three successful renewals, over 150,000 acres have been protected.  Some of the funds have been spent in counties to the west and north of San Antonio to protect important recharge and contributing zones.

Hotel Occupancy Tax

The Texas Legislature has authorized municipalities and some counties to levy and collect local hotel occupancy taxes (HOT). There are several restrictions on how revenues may be spent; permitted uses are only peripherally connected to parks and land conservation.

Expenditures of local HOT revenues are restricted to certain categories of projects. Every expenditure of hotel occupancy taxes must attract overnight tourists to the jurisdiction’s hotels and motels, thus promoting the local hotel industry. Every expenditure of hotel occupancy taxes must also fit into one of nine statutorily authorized categories:  (1) convention and visitor centers; (2) convention registration; (3) advertising the city; (4) promotion of the arts; (5) historical restoration and preservation; (6) sporting events in a county under one million in population; (7) enhancing or upgrading existing sports facilities or sports fields (only in certain cities); (8) tourist transportation systems; and (9) signage directing the public to sights and attractions that are visited frequently by hotel guests. 

The Park Board of Trustees of the City of Galveston is a governmental entity created by a special act of the Texas Legislature in 1962 for the purpose of directing all tourism efforts for Galveston. The Galveston Parks board is responsible for beach maintenance for the Galveston coast as required by the Texas Natural Resource Code. The City of Galveston partially funds beach maintenance with portions of the locally collected hotel occupancy tax. Beach maintenance activities includes the removal of trash and debris from the beach and the relocation of Sargassum, or seaweed, during extraordinary circumstances. The City of Galveston allocates 11% of all locally collected HOT to these activities. The State of Texas additionally dedicates 33% of the total locally collected HOT. These funds are supplemented in some areas with beach user fees generated by gate admissions at Galveston’s popular beach parks.

Tax increment financing is not a new tax; instead, it redirects some of the ad valorem tax from property in a geographic area designated as a Tax Increment Reinvestment Zone (TIRZ) to pay for improvements in the zone. Local governments can use tax increment financing to pay for improvements that will draw private investment to an area that would otherwise not attract sufficient private development in a timely manner. Tax Code Chapter 311 governs tax increment financing.

In May 2018, the Austin City Council voted to devote $110 million in tax increment financing revenues into the Waller Creek chain of parks. Funding went towards restorations to the lower Waller Creek area, new bike and pedestrian trails, and other park redevelopment expenses. The money committed by the city is part of a long-term $375 million project to turn 35 acres of land along the creek into a chain of parks and civic spaces called Waterloo Greenway. The other $275 million is supposed to come from private fundraising conducted by the Waller Creek Conservancy, a non-profit organization. The Waller Creek Tax Increment Reinvestment Zone (TIRZ) was initially set up in 2007 to fund construction of the Waller Creek Tunnel, which would protect much of the surrounding area from flooding, thereby making it more attractive to development and more valuable. At the same time, the Waller Creek Conservancy was formed to raise money to build the parks.

Various organizations around the region have instituted programs to collect funds from their communities to support open space conservation. In a checkout campaign, participating local businesses collect a small, voluntary donation from customers at checkout that is used to acquire land to conserve or to help maintain conserved spaces. These programs are much more effective if they require a customer to opt-out rather than opt-in to the donation.

Artist Boat is a nonprofit group that promotes awareness and preservation of coastal margins and the marine environments through the disciplines of the sciences and the arts. After careful study and with grant support from two foundations, Artist Boat launched a “1% To Conserve Galveston Island™” voluntary sales tax campaign for land acquisition.  The organization created marketing materials, issued press releases, wrote guest op-eds and used social media to build awareness. In-person discussions about participating in the campaign were held with 79 businesses.  At one point, 42 businesses were participating in the program during its 2½ years of being staffed full time. Only about one-third of businesses implemented the program as designed (opt-out), with the rest choosing to donate as individuals, put donation boxes at their check-out areas, or have the customer select an amount to add to their bill. Although the amount of money raised was modest, it was used strategically to leverage a major federal grant for a land conservation project.