By Katya Spear, Mayors Innovation Project
In an era defined by a “collision of crises”—aging infrastructure, climate volatility, and the disappearance of federal safety nets—city leaders are facing a stark financial reality. The old playbook of incremental budgeting and relying on federal bailouts is no longer sufficient.
MIP’s 2026 Winter Meeting hosted a panel focused on the question, “How do you fund a bold future when the present is unpredictable?” The consensus? Cities that demonstrate risk informed capital planning and asset management signals stability to investors, insurers, businesses, and developers.
Here are the key takeaways from the session on how cities are turning uncertainty into an asset.
The Mindset Shift: From “Heroism” to Systems
For too long, city resilience has been defined by heroic, last-minute efforts—sandbagging riverbanks or scrambling for emergency funds. Mayor Peter Donovan of Mount Vernon, WA, argued that while this response is valiant, it is not a strategy.
Mount Vernon shifted its approach by integrating flood protection into a downtown master plan, creating a permanent floodwall that doubles as a year-round public gathering space. The proof of concept arrived in December 2025, when a major flood devastated surrounding communities, but Mount Vernon stayed dry and open for business. As Mayor Donovan said, “since then, FEMA can revise its maps and remove downtown from the 100 year flood plain, 225 buildings were saved along with hundreds of thousands of dollars in insurance premiums for those property owners, and confidence returned to investment.” The lesson: Investments in physical resilience are investments in economic continuity.
Matt Posner of the Resiliency Company shared that local governments’ approach to financing resilience is often similarly stuck in the past, too often vacillating between massive borrowing and tax increases that leave residents to foot the bill. Instead, Posner said, municipalities and their partners must engage local actors – business, healthcare, financial institutions, and philanthropy – to share risk.
Breaking the “Budget Game” Cycle
A major barrier to funding resilience is the traditional municipal budgeting process. Speaker Shayne Kavanagh from the Government Finance Officers Association described the “budget games” department heads play—inflating requests or “spending it to keep it”—which stifles innovation. Kavanagh recommended moving toward Priority-Based Budgeting (PBB) instead of simply adding 2% to last year’s numbers. In Q&A, one mayor raised concerns about how processes like this can sometimes make staff feel that deprioritized departments are undervalued. In response, Kavanagh stressed that leadership must frame PBB not as a competition for resources, but as a collaborative effort to “row in the same direction” by setting shared, cross-departmental goals and giving staff the autonomy to figure out how to meet them.
Rethinking Assets
One of the session’s most robust discussions centered on the hidden value of public assets. MIP Director Joel Rogers and Kavanagh urged cities to inventory municipal property – and to calculate their market value – to find hidden revenue.
While parking structures are often liabilities, where maintenance costs frequently outpace inflation, they can (sometimes) be transformed. Annapolis is converting its City Dock—formerly a “parking lot on the water”—into a raised public park with underground stormwater controls and communal space. Through a Public-Private Partnership (P3), Annapolis secured a $23 million up-front concession payment based on projected future revenue and millions in bond money to fund the project.
- Annapolis also entered a 20-year lease for a solar park on a landfill in a deal where the developer paid to plan, design, and construct it. The project generates revenue per kilowatt-hour while offsetting tons of CO2, proving that sustainability can be a revenue driver rather than a cost center.
- Posner encouraged cities to think about how they can “bake in” more resilience in routine infrastructure efforts that are already underway. A few examples: updating building codes, to wetland restoration, to wildfire warning sensors, to providing grants and incentives for fortified roofs.
What’s new and next
Jackie Guild highlighted the power of their region’s new multi-jurisdictional Resilience Authority of Annapolis and Anne Arundel County. This body can bypass the slow bureaucracy of public procurement and apply for grants that cities might not be eligible for (such as brownfield remediation grants for properties the city already owns).
Perhaps the most urgent takeaway was that investors are already pricing in climate risk – and rating agencies are likely to follow. In Q&A, a mayor noted that credit rating agencies like S&P are already asking specific questions about a city’s resilience projects during rating reviews.
Furthermore, the insurance industry is moving toward “adaptation finance.” Just as banks won’t underwrite homes that can’t be insured, bond markets favor communities that proactively manage risk. The days of treating resilience as an “extra” expense are over. By treating resilience as a balance sheet item, cities can lower their cost of borrowing and attract “ahead of the curve” investors. The cities that will thrive in the next decade are those that de-silo their operations, engage local economic actors to share risk, and view every capital project through the lens of long-term adaptability.