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Public-Private Infrastructure Financing Solutions

Nov 19, 2014

Infrastructure is the backbone of the nation’s industries, a driver of job creation and crucial for growth. Though reliance on infrastructure is constant, from roads and bridges to ports and power lines, much of the nation’s infrastructure is aging and in dire need of maintenance and upgrading. The need for the work is obvious. Paying for it is the challenge.

Governments at local, state, and national levels are evaluating new projects, and investors are aggressively seeking opportunities that provide solid returns in exchange for the assumption of manageable risks. Attempts to marry investors’ capital to infrastructure projects have been hampered by inadequate policy frameworks and institutional structures at all levels of government.

According to a Milken Institute Financial Innovations Lab® convened in early 2014, solutions exist that can help create effective public-private partnerships to fund work on infrastructure. Among the infrastructure financing solutions explored in detail in the Lab report:

  • Establishing an infrastructure exchange network
  • Creating a national infrastructure council
  • Chartering a national infrastructure bank that can move capital into projects

Lab participants agreed that a federal “I-bank” should have a primary mission of attracting capital from the private sector to stretch the decreasing amount of federal dollars spent on infrastructure projects. The government clearly cannot do it alone, and thus the I-bank should focus on leveraging public-sector capital to attract private investment to supplement current budget levels.