Improving Infrastructure

While I continue to demur with what I see as a facile interpretation of the report card on U. S. infrastructure produced annually by the American Society of Civil Engineers, I do think that Suneel Kamlani is onto something in his plan for improving U. S. infrastructure at Bloomberg View:

One promising solution is for states or regional economic zones to lead the way by creating their own infrastructure banks, modelled on successful development banks in other countries. The Northeast has taken the first step, with Massachusetts filing bills in January to establish a state infrastructure bank and examine a regional one. This model could be easily replicated across the U.S. to accelerate investment and economic activity.

How would it work? Taking the Northeast as an example, states from Massachusetts to Maryland could create a jointly owned entity capable of financing critical projects, including those that cross borders. Each state would contribute part of the initial equity, which could then be leveraged with private debt to invest in revenue-producing projects. The equity could be boosted through annual contributions from state transportation budgets — or from other sources — with every new dollar having a multiplier effect.

The federal government could even kick into those “banks”. As Mr. Kamlani notes, the plan has several benefits: projects could be funded on a portfolio basis, because of the greater diversity of their operations these “banks” might be attractive investment opportunities for pension funds, sovereign wealth funds, etc., and it’s a model that has been shown to work.

Best of all from my standpoint it would allow attention to be paid to projects that might not seem significant to an administrator sitting in Washington, DC but might be of obvious importance to somebody in Hanover, Delaware.