City of Matthews RFPPrepared by Conundrum Peak

Karen, Becca, Jake, Stu

Average total costs of flooding is estimated to rise to $1.5 Bn a year by 2040 if left unchecked. Matthews must improve its long term resilience

*Assuming total loss of at risk property

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Predicted Cost of No Mitigation

Nuisance Flood in Millions Big Flood Cost in Millions Flood Insurance Total

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Stakeholder Perspective:Matthews has 4 proposed infrastructure options for improving the city’s resilience, 1) Elevating all buildings above FEMA base flood elevation, 2) building a berm spanning the coastline, 3) creating a living shoreline, and 4) creating combination solution. However, the initial budget of $500m is gone. Matthews must find an innovative solution for funding this initiative.

Conundrum peak believes that Matthews can fully fund the project, reduce the financial impact of tidal flooding by 40-45%, & create recurring, sustainable revenue sources for the city

Matthews can reduce financial impact of flooding by 40-45%

Matthews should construct a 1 mile berm, add 2 miles of additional wetlands, refit streets with permeable pavement, and add additional infrastructure

Diminish rising annual costs

Execute on combination of Natural & Structural Elements

Matthews can increase tourism and recreation opportunities, maintain local beaches, create safer roads, and decrease in-town noise levels

Create streams of new social value

Create new habitats for natural wildlife, reverse beach erosion, trap harmful pollutants, slow tidal energy, and flooding occurrences

Reverse negative environmental trends

Implement big data and predictive analytic tools that prevent growth of flood insurance rates by accurately predict risk profiling

Incentivize digital business model innovation

Evaluating Infrastructure Solutions

Option 1: Elevating all buildings above FEMA base flood elevation

Financial Social Environmental- $2.3 Bn in construction

costs

- Does not avoid business interruption

+ Avoids $525 M in damages in the event of a 100-year storm

+ No maintenance Cost

- Does not avoid business interruption

- Heavy short term interruption from mass construction

● No long term environmental impact.

● Does not reverse current trends

Option 2: constructing a berm spanning the 3 mile coastline

Financial Social Environmental

+ $7.9m in construction costs

+ $1.5m avoided in business interruption

+ Avoids $426.5 M in damages in the event of a 100-year storm

- Obstructs views

- Obstructs beach access

+ Preserves beach

- Cut off tidal marshes from the ocean

- Habitat disruption for native plants and animals

+ Slows beach erosion

- Traps runoff inland and increases chances of adjacent flooding

Option 3: Create a living shoreline

Adjust costs for wetland

Financial Social Environmental

- $480M in construction costs (3 sq miles)

+ Avoids some business interruption

+ Avoids $301 M in damages in the event of a 100-year storm

- $0.5 M yearly maintenance

- Wetland Banking payback range $300m - $1.25b

- Loss of beach

- Decrease of beach tourism

+ Increased tourism for wetlands

+ Increased of wetland recreation opportunities

+ Reverse erosion

+ Expand natural habitats

+ Counteract wetland losses

+ Build up natural shoreline and mitigate future flooding

http://www.ecosystemmarketplace.com/pages/dynamic/web.page.php?section=biodiversity_market&page_name=uswet_market

Option 4: Utilize structural & Natural Elements

Financial Social Environmental

- $324 M to construct * $320 M Wetands (2 sq miles) * $2.6 M Berm (1 mile) * $1.1 M Perm. Pavement

+ $1.5 M avoided in business interruption

+ Avoids $400 M in damages in the event of a 100-year storm

+ $2 M yearly maintenance

+ Wetland Banking payback range $200m - $836m

Wetlands:- Minimal loss of beach

+ Increased tourism

Berm:- Obstructs views

- Obstructs beach access

+ Slows beach erosion Permeable Pavement:

+ Attractive

+ Safer in wet conditions

+ Quieter than roads

Wetlands:+ Reverse erosion

+ Create habitats

+ CO2 Mitigation

+ Build up natural shoreline and mitigate future flooding

Berm:- Disrupt habitats

Permeable Pavement:+ Traps harmful pollutants

http://www.ecosystemmarketplace.com/pages/dynamic/web.page.php?section=biodiversity_market&page_name=uswet_market

The combination solution proves to be the most fiscally responsible option while providing the most social benefit and reversing negative environmental trends

Financial Social Environmental

Elevate Buildings ✖ ✖ -

Construct Physical Barrier ✓ ✖ ✖

Create a Living Shoreline ✓ - ✓

Utilize Structural & Natural Elements ✓ ✓ ✓

In addition to implementing a a combination solution, we suggest an additional 7 mile boardwalk and trail system to maximize social impact

• Boardwalk costs are flexible, ranging from $8m -$10m dependent on materials quality.

• The boardwalk brings accessibility to the beach, city, and wetlands

• Brings total cost of the project to $332m – $334m

Project Timeline

0 Years● Receive funds● Berm and boardwalk

construction begins● Wetland preparation

& planting● Permeable pavement

construction begins

2-3 years● Permeable

Pavement, Berm Completed

● Boardwalk construction continues

● Wetland construction begins

3-6 Year ● Boardwalk

Completed ● Wetland

construction continues

6-10 Years● Wetland

Completed

http://cascadiaprairieoak.org/wp-content/uploads/2014/12/Wetland-Prairie-Guide-FINAL-8_25_14-1.pdf

Analyzing infrastructure funding scenarios

Wetland funding scenarios $320 Million

• Allow private investors to develop wetlands and sell credits: Revenues between $200m - $836m

• Reduces risk as well as capital needed

• Sales can be split into parcels

Public Private Partnerships

• Could be used in stages to build wetlands

• Wetland credit sales to fund future rounds

• Would significantly increase the implementation timeline

Municipal Bonds

• Much too small to establish significant wetlands

Grants

http://www.dat.state.md.us/sdatweb/taxrate.htmlhttp://www.ecosystemmarketplace.com/pages/dynamic/web.page.php?section=biodiversity_market&page_name=uswet_market

A B C

• Small enough to be handled by tax base

• Covers $2.6M berm costs.• High flood mitigation for small

investment

Municipal Bonds

• There are many non-point source pollution grants and Chesapeake Bay preservation funds that could help fund permeable pavement projects.

• Confident we can cover $1.1 M needed for permeable pavement. Up to $2 m available.

Grants

Berm and permeable pavement funding scenarios $3.7 Million

A A

http://dnr.maryland.gov/watersheds/pubs/planninguserguide/tools/Tool4FundingResources.pdf

• Can be directly voted on by the community

• Bond can easily be supported by property tax base of $42 M

Municipal Bonds

• Scale of the project is suitable for private donation

• Citizens will directly enjoy the benefits

• Similar projects such as the Boise River Park have targets to receive $6.3M in private funding. Timeline could span 10+ years

Private Donations

Boardwalk funding scenarios$8 million

http://www.dat.state.md.us/sdatweb/taxrate.htmlhttp://www.ecosystemmarketplace.com/pages/dynamic/web.page.php?section=biodiversity_market&page_name=uswet_market

A B

Digital Innovation models

Comparables:● The Climate Corporation uses IoT devices and

applications to monitor and accurately predict crop yields. Data is for developing risk profile for climate insurance, allows for claim filing when yield losses are predicted. Adjusters deployed based on advanced forecasting.

● CSC ClimatEdge offers probabilistic climate analytics to general insurance providers allowing them to make business decisions based on climate risks. Current application is for tornado monitoring but flood applications are being developed.

● Marcell device monitors temperature, humidity, resistivity, and moisture. Alerts homeowners of incidents of property damage such as broken water mains.

The insurance industry is currently transforming from digital innovation. IoT devices allow for more accurate damage prediction, immediate claim filing, & increased confidence in risk profiling.

http://innovationtrail.org/post/home-monitoring-device-aims-prevent-property-damagehttp://climate.com/company/press/releases/over-50-million-acres-of-climate-basic-on-farms-across-the-u-s/http://www.csc.com/innovation/insights/109257-weather_and_flood_data_services_csc_climatedge

Predictive analytics provides a compelling use case for NFIP providers. FICO has outlined the following use cases:

Benefits:• Improves margins by selecting

and pricing risks

• Focus limited resources on exceptional cases

• Differentiate insurance services through faster response times

• Lower loss ratio to help mitigate risks

• Drive down insurance rates

Outcomes• Precisely assess risks

presented by commercial insurance clients

• Automated underwriting powered by predictive analytics

• Better understand the sources of drivers of risk

• Demonstrate to reinsurers clear ability to consistently and accurately rate book of business

http://www.fico.com/en/wp-content/secure_upload Predictive_Models_Commercial_Insurance_Underwriting_2116PS.pdf

Predictive analytics create a virtuous cycle which leads to long term sustainable behavior

Collect Real-Time data from NOAA & NWS as

well as IoT devices

Enable predictive analytics for flood related damages

Insurance providers actively manage risk

profile

Insurance pricing becomes more dynamic

and decreases for Matthews

Citizens can monitor risk profile and change

behavior

Citizens will be more ready to implement infrastructure solutions that impact their personal risk profile

Social impact bond model is ideal for incentivizing private innovation for public projects

• Pay for Success bonds currently used for social impact projects, but potential to expand to environmental issues

• Metric-based maturity-No upfront cost to the town-Payment only once benefits have

been realized in the form of lower insurance

• $3m bond is ample for funding private IoT business modelshttp://www.whitehouse.gov/omb/factsheet/paying-for-success

To conclude, it is not too late for Matthews to implement an achievable and sustainable infrastructure project to improve flood resilience.

Matthews can reduce financial impact of flooding by 40-45%

Matthews should construct a 1 mile berm, add 2 miles of additional wetlands, refit streets with permeable pavement, and add additional infrastructure

Diminish rising annual costs

Execute on combination of Natural & Structural Elements

Matthews can increase tourism and recreation opportunities, maintain local beaches, create safer roads, and decrease in-town noise levels

Create streams of new social value

Create new habitats for natural wildlife, reverse beach erosion, trap harmful pollutants, slow tidal energy, and flooding occurrences

Reverse negative environmental trends

Implement big data and predictive analytic tools that prevent growth of flood insurance rates by accurately predict risk profiling

Incentivize digital business model innovation

Appendix