Executive Summary

The landscape for municipal climate resilience funding has fundamentally shifted. Since January 2025, executive orders have redirected federal priorities away from proactive climate mitigation, FEMA has lost approximately one-third of its full-time workforce, and signature programs like BRIC have been cancelled mid-cycle—returning $882 million in previously allocated funds from FY2020-2023 awards. Yet the need for resilience investment has never been greater: 98.6% of U.S. cities reported facing significant climate hazards in 2024, up from 83% the previous year according to CDP's annual cities report, and annual disaster costs have exceeded $30 billion over the past five years per NOAA's tracking.

This guide provides municipal leaders with a strategic framework for navigating this new reality—building climate adaptation capacity that doesn't depend on federal largesse. We examine which federal funding streams remain viable, highlight successful state and local financing innovations, and offer a decision framework for building diversified, self-sustaining resilience portfolios that reduce dependency on unpredictable federal support.

Part I: The Federal Funding Landscape—What's Changed and What Remains

Understanding Obligated vs. Expended: A Critical Distinction

Federal climate funding exists along a spectrum of security. Understanding where programs fall on this spectrum is essential for municipal planning:

• Expended funds: Money already disbursed to recipients—generally secure

• Obligated funds: Legally committed but not yet disbursed—vulnerable to rescission or delay

• Appropriated but unobligated: Available in budget but not committed—highest risk

• Future appropriations: Dependent on Congressional action and executive priorities—speculative

For guidance on integrating climate risk into infrastructure planning, municipalities must first understand which funding sources can be relied upon.

Program Status Assessment (January 2026)

High Security: Funds Largely Expended

Moderate Risk: Programs Operational but Facing Headwinds

High Risk: Suspended or Cancelled

What the January 2025 Executive Order Means for Municipalities

The January 24, 2025 executive order fundamentally reframes the federal role in disaster management, stating that "state, regional, and municipal governments should bear most disaster recovery and risk reduction costs." This represents a philosophical shift from proactive federal investment in resilience to a reactive, recovery-focused posture.

For municipal planners, the implications are clear:

1. Federal grant programs face existential uncertainty

2. Mid-cycle disruptions are now a real possibility

3. Building federal-dependent resilience strategies carries execution risk

4. Self-sustaining local funding mechanisms offer greater reliability

Conducting a thorough climate risk assessment is essential before pursuing any funding strategy.

Part II: State and Local Innovation—Models That Work

Despite federal retrenchment, municipalities across the country are demonstrating that effective resilience financing is possible through strategic innovation. Three models deserve particular attention.

Colorado: Building Statewide Capacity Infrastructure

Colorado has developed perhaps the most comprehensive state-level support system for municipal climate resilience, centered on three interconnected programs:

Regional Grant Navigators (RGN) The Governor's Office funds 13 grant navigators embedded within Councils of Government statewide. These navigators provide no-cost services including grant writing and review, funding research, match identification, and application coordination. Results have been substantial: over $70 million in grants awarded for wildfire prevention and extreme heat response, plus $13 million for air quality and transportation electrification from EPA, DOT, USDA, and USFS sources.

IIJA Local Match Program Recognizing that the 20%+ match requirements common in federal grants create barriers for smaller communities, Colorado established a $10 million state fund specifically for meeting federal match requirements. This removes one of the most significant obstacles facing under-resourced jurisdictions.

Local IMPACT Accelerator Grant Program Using $50 million from the federal Climate Pollution Reduction Grant implementation award, Colorado created a program supporting local policy adoption beyond state requirements. The first round (January 2026) awarded $21.6 million to 17 projects with awards averaging $2 million. Notably, low-income communities and Tribal governments qualify for 0% local match requirements, while others require just 5%.

Projects funded include Fort Collins' building energy performance standards and Winter Park's thermal energy network with net-zero bus stops and EV infrastructure, demonstrating the program's focus on emissions reduction with community co-benefits.

Key Takeaway: Colorado's model shows how states can serve as force multipliers, reducing federal dependency while helping communities access funds that do remain available. Effective stakeholder engagement at the state level made these programs possible.

Bay Area: Regional Cooperation for Large-Scale Resilience

The San Francisco Bay Area demonstrates a different approach: multi-jurisdictional cooperation for financing large-scale infrastructure that no single municipality could fund alone.

BART Seismic Improvements (Measure AA) In 2004, voters in Contra Costa, San Francisco, and Alameda counties approved a $980 million general obligation bond for BART's $1.5 billion systemwide seismic improvements. Completed in 2024, the project combined the bond proceeds with state and federal support, local tax measures, and private partnerships.

The Measure AA model illustrates a critical principle: essential lifeline infrastructure requires financing mechanisms capable of mobilizing billions, not millions, achievable only through regional cooperation. This represents a successful public-private partnership approach.

San Francisco Earthquake Safety Bonds San Francisco has continued this approach independently, with voters approving Earthquake Safety and Emergency Response bonds in 2010, 2014, and 2020. These measures funded fire and police station upgrades, emergency firefighting water systems, and public safety facilities.

Current Challenges The Bay Area has not been immune to federal funding disruptions. Over $270 million in resilience and adaptation funding has evaporated since January 2025 according to SPUR analysis. San José's $25 million HMGP application for low-income tenant seismic retrofit grants, supporting the city's mandatory soft-story retrofit ordinance, remains on hold until at least April 2026.

Key Takeaway: Regional financing structures enable projects at the scale necessary for meaningful resilience while distributing costs across broader tax bases. For comprehensive guidance, see our coastal resilience and flood mitigation guide.

Local Infrastructure Hub: Technical Capacity as Equalizer

Established in 2022 to help cities and towns access IIJA funds, the Local Infrastructure Hub (a partnership with Cornell Tech's Urban Tech Hub and Bloomberg Philanthropies) provides technical assistance to communities that lack dedicated grant staff.

The Hub serves communities ranging from Clarkston, Georgia to Lake City, South Carolina to Allentown, Pennsylvania, providing peer learning networks, competitive application development support, and capacity building that extends beyond any single grant cycle.

In Jacksonville, Florida, the Hub supported a University of Florida digital twin project modeling wastewater flows and flood-prone areas, creating evidence-based planning tools that improve the city's competitiveness for future funding while generating immediate operational value.

Critically, the Local Infrastructure Hub continues operations despite federal funding terminations, demonstrating the value of philanthropic and institutional investment in municipal capacity.

Key Takeaway: Technical capacity, not just funding, determines which communities can successfully compete for resilience resources. Investments in capacity building generate returns across multiple funding cycles. Our guide on vulnerability assessment and equity mapping provides frameworks for prioritizing investments.

Part III: Building Your Resilience Finance Portfolio

Successful municipal resilience financing in 2026 requires portfolio diversification. No single funding source offers sufficient security or scale. The following instruments should be evaluated for inclusion in every municipal resilience finance strategy.

State Revolving Funds: The Underutilized Workhorse

State Revolving Funds represent one of the most reliable, and underutilized, sources for municipal climate resilience investment.

Program Structure

• Clean Water SRF (established 1987): Over $175 billion in assistance to date according to EPA

• Drinking Water SRF (established 1996): Similar structure for drinking water infrastructure

• States receive federal capitalization grants plus required state match, then issue loans to localities

• Loan repayments revolve back into the fund, creating sustainable financing

Climate Resilience Applications SRF eligibility increasingly includes climate adaptation:

• Stormwater management and green infrastructure

• Watershed protection and restoration

• Climate resiliency projects for water/wastewater systems

• Nature-based solutions for flood mitigation

Massachusetts' SRF explicitly addresses climate resiliency alongside traditional infrastructure needs. The Obama Administration's 2013 Climate Action Plan identified SRFs as key climate preparedness tools, and Hurricane Sandy response included additional SRF capitalization grants for water infrastructure fortification.

For implementing nature-based approaches, see our guide on nature-based solutions strategy for municipalities.

Equity Considerations A 2022 study published in Environmental Science & Policy examining Clean Water SRF distribution found that while lower-median-income municipalities were more likely to receive assistance, smaller municipalities and those with larger populations of color were less likely to receive aid. Technical capacity barriers—not knowing where to begin or how to evaluate and prioritize projects—create access gaps that capacity-building investments can address.

STORM RLF: A Different Kind of Federal Program

The Safeguarding Tomorrow Revolving Loan Fund (STORM RLF) deserves special attention as a federal program designed specifically for hazard mitigation with features that address common barriers.

Program Design

• Authorized under Section 205 of the STORM Act (2021)

• $500 million appropriated through FY2026

• Capitalization grants to states, tribes, territories, and DC to establish revolving loan funds

• Local governments access funds through low-interest loans for hazard mitigation

Key Advantages

• No benefit-cost analysis required (unlike most FEMA programs)

• Eligible uses include zoning changes, land use planning, and building code enforcement—not just physical construction

• States determine project prioritization criteria, providing flexibility for local needs

• At least 40% of loans must serve disadvantaged communities

Current Status FY2023 saw eight states receive $50 million in combined capitalization grants. The program was three times oversubscribed, demonstrating significant demand. However, a February 2025 GAO report found guidance to be "incomplete, unclear, and inconsistent," with one awardee declining their grant due to uncertainty about close-out reporting requirements.

Maine's September 2025 STORM RLF application notes that "changes under the new federal administration may further delay award," projecting a 10-18 month timeline—evidence that even operational programs face administrative headwinds.

Municipal Bonds: A Resilient Market Segment

Despite a 32% decline in the global green bond market tracked by Climate Bonds Initiative, municipal green and resilience bond issuance showed a 30% increase—demonstrating continued investor appetite for transparent, impact-oriented municipal debt.

Market Context

• Municipal bond primary issuance expected to exceed $500 billion annually over the next decade per SIFMA

• Deferred infrastructure needs driving issuance

• Climate risk increasingly material to municipal creditworthiness

Climate Risk and Bond Markets A January 2026 Nature Cities analysis warns of potential "climate-debt doom loops" where climate impacts degrade municipal tax bases, increasing borrowing costs precisely when resilience investments are most needed. Insurance retreat in Florida, Louisiana, and California threatens property values underlying municipal revenues.

Florida's State Board of Administration filed for at least $1.5 billion in municipal bonds for the Florida Hurricane Catastrophe Fund in January 2026—illustrating how climate impacts are already driving substantial bond issuance.

Strategic Implication Municipalities that proactively invest in resilience may achieve better credit ratings and borrowing costs than those that defer action. The business case for resilience bonds extends beyond project-level returns to overall fiscal health.

PACE Financing: Property-Level Resilience Investment

Property Assessed Clean Energy (PACE) financing allows property owners to fund efficiency, renewable energy, and resilience improvements through property tax assessments, with costs repaid over 15-30 years.

Commercial PACE (C-PACE)

• Operating in 40 states plus DC as of 2026

• Enables building upgrades that reduce climate vulnerability

• Assessment stays with property, facilitating investment in commercial buildings

Residential PACE (R-PACE)

• More limited availability due to concerns about consumer protection

• Where available, enables homeowner resilience investments

• Hurricane-resistant features, backup power, flood mitigation eligible in some programs

Strategic Application PACE is most valuable as a complement to municipal programs—enabling property-level investments that public infrastructure alone cannot address. A comprehensive resilience strategy combines public infrastructure investment with mechanisms that enable private property owners to harden their own buildings.

Local Revenue Mechanisms: Self-Sustaining Resilience

The most control—and reliability—comes from locally-generated revenue dedicated to resilience. Several models have proven effective:

Voter-Approved Property Tax Levies Ann Arbor, Michigan passed a dedicated property tax levy for resilience and clean energy after years of public engagement, demonstrating that communities will support climate investment when the case is made effectively.

Utility-Based Fees Tulsa, Oklahoma implemented a stormwater fee based on impervious surface area, distributing costs across businesses, civic institutions, and households according to their contribution to runoff—a risk-sharing model that generates dedicated revenue while creating incentives for green infrastructure.

Savings Reinvestment Funds Pittsburgh's Green Initiatives Trust Fund (established 2008) deposits energy cost savings versus a 2003 baseline back into the fund, which then finances additional efficiency and renewable projects. This "revolving savings" model creates self-perpetuating funding for continued improvement.

Tax Increment Financing (TIF) Where state law permits, TIF captures increased property tax revenue from development to finance infrastructure improvements. The model works best for resilience investments that directly enable or protect development, with revenue streams tied to project success.

Part IV: Decision Framework—Matching Sources to Needs

Not every funding source suits every project. The following framework helps match project characteristics to appropriate financing mechanisms.

By Project Timeline

Immediate (0-12 months)

• Existing SRF applications for water/wastewater resilience

• Utility fee adjustments (administrative action)

• Emergency preparedness spending from existing budgets

Near-Term (1-3 years)

• STORM RLF applications (account for 10-18 month timelines)

• Voter-approved bonds and levies (election cycle dependent)

• TIF districts for development-linked resilience

Long-Term (3+ years)

• Major bond programs requiring regional coordination

• State-level advocacy for SRF expansion

• Capacity building for future federal opportunities

By Project Type

Physical Infrastructure

• SRF (water/wastewater systems)

• Municipal bonds (large-scale, multi-year)

• STORM RLF (hazard mitigation construction)

• TIF (development-enabling infrastructure)

Policy and Planning

• STORM RLF (explicitly includes zoning, land use, code enforcement)

• State capacity programs (Colorado IMPACT Accelerator model)

• Local general funds (planning staff, ordinance development)

Property-Level Improvements

• PACE financing (commercial and residential where available)

• Utility rebate programs

• Incentive structures tied to code compliance

Capacity Building

• Philanthropic partnerships (Local Infrastructure Hub model)

• State technical assistance programs

• Regional consortium membership

By Community Resources

Well-Resourced Communities

• Full range of options available

• Focus on portfolio diversification and speed

• Opportunity to pilot innovative mechanisms

Resource-Constrained Communities

• Prioritize state technical assistance and grant navigation support

• Target programs with reduced match requirements (Colorado 0% for disadvantaged communities)

• Build toward voter-approved revenue as trust develops

• Join regional partnerships for shared capacity

Part V: Action Steps for Municipal Leaders

Immediate Actions (Next 30 Days)

1. Audit current federal funding exposure: Identify all active federal grants, their obligation/expenditure status, and vulnerability to disruption. Prioritize accelerating expenditure of obligated funds.

2. Assess SRF eligibility: Contact your state's Clean Water and Drinking Water SRF administrators to understand eligibility for climate resilience projects within your water infrastructure portfolio.

3. Evaluate STORM RLF fit: If your state has received STORM RLF capitalization, inquire about application timelines and eligible project types. If not, identify neighboring states that have and explore regional partnerships.

4. Document capacity gaps: Catalog specific technical assistance needs—grant writing, project management, benefit-cost analysis, financial structuring—to target support efficiently.

Near-Term Actions (Next 90 Days)

5. Build state-level relationships: Engage with your Governor's office, state resilience coordinator, and relevant agencies about technical assistance programs and match fund availability.

6. Explore regional partnerships: Identify neighboring jurisdictions facing similar resilience challenges and explore shared financing mechanisms, joint applications, or regional bond measures.

7. Assess voter appetite: Commission or review polling on community support for dedicated resilience funding. Begin public education on costs of inaction versus investment.

8. Evaluate PACE feasibility: If your state has PACE-enabling legislation, assess program implementation requirements and potential uptake in your commercial building stock.

Strategic Actions (Next 12 Months)

9. Develop diversified finance strategy: Create a formal resilience finance plan that combines multiple funding sources, reducing dependency on any single stream. Our climate resilience planning guide for municipalities provides a comprehensive framework.

10. Invest in capacity: Whether through state programs, philanthropic partnerships, or direct hiring, build the technical capacity to successfully compete for available resources. Review our 10 steps for stakeholder engagement in climate risk for engagement strategies.

11. Document and share success: Track outcomes from resilience investments to build the case for continued funding and inform peer communities.

Conclusion: Resilience as Municipal Strategy

The shift in federal climate funding represents a genuine challenge—but also an opportunity to build more sustainable, self-reliant resilience finance systems. Communities that diversify funding sources, invest in technical capacity, and pursue regional cooperation will be better positioned regardless of federal policy direction.

The math is straightforward: cities face over $62 billion in identified resilience project needs according to CDP's analysis, requiring approximately $40 billion in investment. Federal support, even at previous levels, was never sufficient to meet this need. The current disruption accelerates a transition that was already necessary.

The models exist. Colorado demonstrates statewide capacity infrastructure. The Bay Area shows regional cooperation at scale. The Local Infrastructure Hub proves that technical assistance multiplies community capability. SRFs offer reliable, revolving capital. Local revenue mechanisms provide self-determination.

What's required is strategic action: assessing your community's specific needs and resources, building the relationships and capacity to access available funding, and constructing a diversified portfolio that can weather continued federal uncertainty.

The communities that act now—while others wait for federal clarity that may not come—will emerge more resilient in every sense of the word. For comprehensive frameworks, explore our climate resilience service area and resilient communities approach.

Council Fire helps municipalities, regional authorities, and state agencies develop and implement resilience finance strategies that reduce risk and create lasting value. Our expertise in stakeholder engagement, strategic planning, and climate adaptation positions us as a trusted partner for communities navigating this challenging landscape. Contact us to discuss how we can support your resilience goals.

Sources and Further Reading

Federal Program Information

• FEMA Safeguarding Tomorrow RLF Program: fema.gov/grants/mitigation/storm-rlf

• GAO Report on STORM RLF (February 2025): gao.gov/products/gao-25-107331

• EPA State Revolving Funds: epa.gov/cwsrf

• EPA CWSRF Dashboard: epa.gov/cwsrf/dashboard

• NOAA Billion-Dollar Disasters: ncei.noaa.gov/access/billions

State and Local Models

• Colorado Regional Grant Navigators: resilientcolorado.org

• Colorado IIJA Match Fund: cdola.colorado.gov

• Local Infrastructure Hub: localinfrastructure.org

• SPUR Financing Climate Adaptation Series: spur.org

• PACE Nation Program Directory: pacenation.org

Market and Policy Analysis

• CDP Cities Report 2024: cdp.net/en/cities/cities-scores

• Climate Bonds Initiative Market Report: climatebonds.net

• SIFMA Municipal Bond Statistics: sifma.org

• Brookings Institution State/Municipal Resilience Analysis: brookings.edu

• World Resources Institute Adaptation Finance: wri.org

Academic Research

• SRF Distribution Equity Study (2022): Environmental Science & Policy

• Nature Cities Climate-Debt Analysis: nature.com/natcities

Council Fire Resources

Guides for Municipalities:

• Climate Resilience Planning Guide

• Financing Resilience: Funding Models and Green Finance

• Public-Private Partnerships for Community Resilience

• The Resilience Funding Gap: How Cities Can Build Long-Term Climate Finance Strategies

• Why Local Governments Must Lead the Climate Fight

• Climate Resilience Plan for Municipalities

• Coastal Resilience and Flood Mitigation Guide

• Heat Resilience and Urban Greening

• Vulnerability Assessment and Equity Mapping

• Integrating Climate Risk into Infrastructure Planning

• Nature-Based Solutions Strategy

• 10 Steps for Stakeholder Engagement in Climate Risk

Strategic Insights:

• Climate Resilience & Adaptation: A Strategic Framework

• Stakeholder Engagement for Sustainability

• Holistic Climate Risk Assessments: Beyond Financial Metrics

Definitions:

• Climate Resilience

• Climate Adaptation

• Climate Risk Assessment

• Green Infrastructure

• Nature-Based Solutions

• Public-Private Partnerships

• Stakeholder Engagement