Financing Kidron/Wadi El Nar Revitalization: A Bridge to Development
This report describes the contours of a potential financing plan for sewage infrastructure in the Kidron Valley—one of the region’s most culturally, historically, and environmentally pivotal resources for economic development. In 2010, the Kidron Basin Working Group proposed the Kidron Basin Master Plan, a comprehensive, integrated infrastructure and economic/community development plan for the redevelopment of the Kidron Basin from the Old City to the Dead Sea – crossing between Israel and Palestinian areas. One of the main elements of the master plan and preconditions for sustainable development is infrastructure finance to clean-up the sewage flowing through the Kidron Valley.
This financing plan is based on discussions with stakeholders and leadership throughout the region and on the market conditions for project financing in the region. The proposed model suggests the creation of a special purpose vehicle (SPV), to provide the sewage collection and treatment services on a contract basis with the Israeli and Palestinian Water Authorities, using a combination of bonds, private and social equity, and subordinated debt through the capital markets, international development financial loans and guarantees, and philanthropic impact investments. This project-financing model is feasible based on the proposed capital structure, terms, and estimated market conditions. Further, the new infrastructure will enable and support the growth of tourism and tourism-related revenues in the greater Jerusalem region serving economic development goals of both Israeli and Palestinian communities. New businesses and the expansion of existing businesses will provide incremental value-added taxes, real estate taxes, improvement taxes, use fees, and license fees, which broaden the case for financial and fiscal feasibility for the project