Virginia Secretary of Transportation Sean Connaughton announced today the publication of a report titled State Infrastructure Banks: A Virginia Perspective. The report, authored by Dr. Jonathan Gifford of the George Mason University School of Public Policy, outlines the utility of state infrastructure banks (SIBs) and examines case studies on how states have used SIBs to leverage billions of dollars in investment for their transportation networks.
About the report, Connaughton said, “The Commonwealth’s transportation agencies are facing significant challenges, chief among them is the lack of funds necessary to adequately expand our transportation infrastructure to meet increasing demand. This report outlines how a successfully implemented state infrastructure bank can have a major impact on funding transportation improvements. Creating a Virginia Transportation Infrastructure Bank can help to address some of our challenges.”
The report discusses the three primary financing mechanisms associated with SIBs – direct loans, leveraged loans and credit enhancement – and the potential benefits of creating a SIB in the Commonwealth. These benefits include reducing the cost of projects by providing a source of credit for a project with rates and repayment terms that may be better than available elsewhere in the market; providing the Commonwealth with a mechanism for supporting projects that is independent of federal or other external influences; and accelerating project delivery by reducing the time and uncertainty associated with raising capital in the commercial markets or from federal or other programs within the traditional infrastructure financing system.
Speaking about the report, Commonwealth Transportation Commissioner Gregory Whirley said, “The Commonwealth must look for innovative ways to fund our transportation network. Maintaining the status quo is simply no longer an option. Other states such as South Carolina, Florida and Minnesota have used state infrastructure banks for years to fund infrastructure construction. A state infrastructure bank in Virginia will help leverage the public and private sector investment necessary to address many of Virginia’s transportation challenges.”
The report can be found at http://ssrn.com/abstract=1714466