What Value Does An Infrastructure Bank Provide?

As the concept of infrastructure banks gets increasingly bandied about (see Emanuel, Rahm and Obama, Barack), Aaron M. Renn examines what exactly they do for us that we can’t already do.

April 24, 2012, 11:00 AM PDT

By Jonathan Nettler @nettsj


In these times of raging public debts and low revenues, infrastructure banks have been talked about as a path to facilitate significant improvements to our failing infrastructure, a path not provided by other funding tools. Renn looks at the logic behind such funding mechanisms and whether they are, in fact, too good to be true.

He bases his analysis on five supposed areas of value associated with infrastructure banks:

  1. They might raise funds in a debt constrained environment
  2. They might be a vehicle for pools of private funds to be invested in infrastructure
  3. They might limit public risk
  4. They might promote rational prioritization of investments
  5. They might circumvent costly public contracting rules

"Unfortunately, infrastructure banks are often presented as if they are "free money" to the public. I believe this greatly misrepresents the reality. Any money invested by the bank has to be paid back. An infrastructure bank seems to be just another fancy name for borrowing money. We should probably evaluate it just like we do debt."

Sunday, April 22, 2012 in Urbanophile

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