When it comes to financing infrastructure in the current economic environment, US state and local governments would benefit from more options.  And private-sector investors are very interested in finding more value-added ways to invest in the sector.

But innovative capitalization options might not fit easily within the public-sector’s current framework of fiscal constraints.  A partnership structure provides open-ended flexibility, but for many assets a full P3 involves too much complexity, transfer of control and cost to be a practical solution. Simple non-profit SPV structures can be effective in expanding the public-sector’s framework, but current versions are limited to traditional financing.

The answer in many cases might be found in the middle — an SPV structure designed to include innovative capitalization options on an unbundled basis, with the capability to develop, evaluate and manage those options.  Here’s an overview of how I think that might work:   Capitalization Management Trust.