Over two centuries ago, in 1812, the City of New York issued the nation's first municipal bonds for the construction of City Hall and the digging of a canal. Other cities and states soon joined Gotham's efforts -- constructing the schools, water systems, roads and subways that would power America's growth.
Today, with Earth Day upon us, it is important to recognize that investment in our infrastructure remains as important as ever, particularly as the dire effects of climate change -- from rising sea levels and drought, to extreme storms and economic disruption -- have focused worldwide attention on the need to make our built environment more resilient and sustainable.
That is why New York City must once again lead the way in shaping the bond marketplace by launching a Green Bond program -- providing what could be the largest municipal vehicle in the nation to fund environmentally-friendly projects throughout the five boroughs.
The time for this is now. New York learned the hard way how costly Mother Nature can be when Superstorm Sandy hit the five boroughs in October 2012, claiming the lives of 44 New York City residents, destroying thousands of homes and causing $20 billion in economic damages.
A Green Bond program would help lower the City's carbon footprint and fund future resiliency projects -- from hardening our sewage treatment plants and installing bioswales, to undertaking energy efficiency and conservation projects in City buildings. Green Bonds would also help to attract a new generation of investors who want to see social return on their investments as well as financial gain.
There's no question that demand for this kind of socially conscious investing is strong and getting stronger. On Monday, my office will release an update to a Green Bond report we issued last September which shows that the market for these securities is expanding exponentially. Total issuance in 2014 was $36 billion, more than triple the previous year's level. Market leaders predict strong growth will continue in the coming years.
Our report considers four major benefits New York City could see from a high-quality Green Bond Program:
First, Green Bonds would broaden the City's investor base, potentially saving taxpayer dollars. New York City sells, on average, $10 to $15 billion of debt each year. The market determines the price of the debt -- the more demand, the lower the interest rate New York can expect to pay.
Second, a high quality Green Bonds program in New York City would signal to the marketplace that we're engaged in the long-term planning that is the hallmark of smart, forward-thinking management. This signal could have a "halo" effect that would help support all of our debt programs.
Third, Green Bonds would promote further investment in resiliency projects by shining a spotlight on existing work being done by City agencies to improve sustainability and protect New York from the next storm. Green Bonds will help City residents and investors understand which projects the City is already undertaking and provide funding for important work that still needs be done.
Finally, the sheer size of New York City's program would help the municipal Green Bond market grow, opening up a new type of capital investment with environmental benefits for big cities and small towns across the country and around the world.
Climate change is a generational challenge and it requires leadership at every level of government -- local, state, federal, and transnational. In New York City, our coastline, growing population and aging infrastructure put us on the front lines of the climate battle, which poses challenges to our future prosperity and quality of life.
While it is critical that the City thoroughly and imaginatively plan to mitigate and guard against climate change, we must take action today to withstand the next catastrophic event tomorrow.
A Green Bond program can translate our City's commitment to a more sustainable future into present day infrastructure that will green our streets, cut our carbon footprint, deliver clean water and build a more livable city in all five boroughs.