In order to maintain a vigorous and competitive edge in the region we need to invest in our decaying infrastructure and modernize our roads, bridges and trains. But how will we pay for it?
Traditional funding resources have been drastically reduced due to the economic downturn and the preoccupation with debt reduction. This has created the need for innovative opportunities to help leverage federal and state monies. By leveraging private capital, infrastructure investment banks can enhance the financing streams for projects.
To date, efforts to create a national infrastructure bank have stalled due to DC gridlock. The President’s American Jobs Act included $140 billion in immediate infrastructure investments and a National Infrastructure Bank (NIB) intended to modernize roads, rail, airports and schools while putting hundreds of thousands of workers back on the job.
According to the White House this is how it would work:
1) Congress would appropriate an initial $10 billion in startup money to capitalize the bank.
2) The new bank would identify transportation, energy, and water infrastructure projects that lack funding, offer a clear benefit for taxpayers, and are worth at least $100 million or $25 million for rural projects.
3) Loans made by the bank would then be matched by private sector investments or money from local governments -- so that the infrastructure bank provides half or less than half the total funding.
4) Each project would generate its own revenues to help ensure repayment of the loan.
5) Decisions would be made by a seven-person board of governors -- of whom, no more than four could be from the same political party -- and a CEO chosen by the President.
Congressional Republicans who at one time supported the various components of the bill blocked its passage.
New York has taken a different approach and Governor Cuomo and state legislators across party lines passed a tax reform package that includes the creation of a $1 billion dollar state infrastructure fund initiated with pension funds, private investors and the Port Authority to repair our state’s bridges and roads. The fund, which is partially financed by 700 million in capital investments, will move up some state projects that were scheduled to begin in 2013 to start construction in 2012. It's important that going forward projects ensure prevailing rate, apprenticeship and other established labor protections.
Infrastructure Bank Could Rebuild LI by Marty Glennon, Newsday (March 3, 2011) (presents concept of a regional bank)
The U.S. Needs an Infrastructure Bank, The Wall Street Journal (Jan. 15, 2010)