California’s teacher pension fund wants to pay for a $300 million office tower on the Sacramento River with green bonds, a type of investment used to finance projects that meet environmental sustainability standards.

CalSTRS is issuing $281 million worth of the bonds to finance the expansion of its West Sacramento headquarters, according to bond documents.

The $246 billion California State Teachers’ Retirement System is adding a 10-story tower next to its 17-story headquarters on Fourth Street. The fund’s board approved spending up to $300 million on the project in November 2018 to accommodate future growth in its workforce.

The zero net energy building must be finished by July 6, 2022 to avoid extra fees, according to bond documents. The building will be fixed with solar panels and will use much less water than similarly sized buildings due to efficient design, according to planning documents.

The green bonds meet standards set by the Climate Bonds Initiative, an international nonprofit focused on climate change, according to the bond documents.

The global green bond market emerged about a decade ago and grew to $167 billion by 2018, according to the Climate Bonds Initiative.

Green bonds are certified by a couple different organizations. CalSTRS will have to report information annually to keep its certification, but the certification has no regulatory mechanisms. The bonds are tax-free like other municipal bonds.

The CalSTRS building bonds are available in $5,000 increments through the California Infrastructure and Economic Development Bank.

The 510,000-square foot building will include five levels of office space on top of five levels of parking, according to bond documents. The bottom floor will include a childcare center and a cafe, according to the documents. CalSTRS contracted with Redwood City-based DPR Construction for the building.

CalSTRS moved into its current headquarters in 2009. A 2014 study projected the fund would need more space in the future.

The fund has about 64 percent of the assets it needs to cover all its current and future liabilities. Some members were skeptical of the need to build a new headquarters so soon, but the board eventually decided to move forward.