A state-level public–private infrastructure cooperative (iCoop) is proposed as an effective means of financing public–private partnership (PPP) transportation projects. iCoop is an independent state-level infrastructure bank dedicated to financing PPP projects and is operated like a banking cooperative with guaranteed minimum returns to its investors. Its ownership is founded on a public–private partnership, and its initial capitalization draws on the state’s noncapital contribution in the form of PPP participation guarantees, private capital contributions from local and global investors, and its own bank deposits. iCoop’s business model eliminates the state’s need for PPP “subsidies” resulting from toll revenue shortfalls and converts them into additional debt capacity with returns for reinvestment. iCoop helps to lower the overall PPP financing costs and reduce perceived risks associated with greenfield construction financing. iCoop is also designed explicitly to mitigate key political risks underlying PPP projects. Through iCoop, the state can effectively increase its infrastructure debt capacity without jeopardizing its current debt limit and do so with no direct capital contributions. For global investors, iCoop provides a new vehicle to access a portfolio of infrastructure assets, thereby offering them the opportunity to further diversify their risks. iCoop gives a face to the much-talked about infrastructure bank idea with a sound business rationale and a clear implementation strategy.
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