Businesses in the North still trying to recover from last summer's Second Lebanon War one year later will receive a much needed boost from an innovative financing program to be introduced today by the US-based Milken Institute, which already has received tens of millions of dollars to fund the project. "While we have already raised some of the funds needed for the project, we still are looking to raise a significant amount as northern Israel's economy will continue to suffer without the completion of long-delayed infrastructure and business-development projects," said Glenn Yago, director of Capital Studies and head of the Israel Center at the Milken Institute. "To help pay for these, business and government leaders in Israel must use alternative-financing methods that have proven successful in the US and elsewhere," he added. Following the conclusion of the war last summer, the Milken Institute, a non-profit, independent think tank whose mission is to improve the lives and economic conditions of diverse populations around the world, held two financial innovation labs in the US to address recovery in northern Israel, which brought together representatives from the banking, investment, legal, philanthropic and government sectors. A third meeting was held in late October at which the findings of the labs were presented to members of the Confrontation Line Forum, an organization of mayors, administrators and representatives of kibbutz industries, businesses and various other public, private and non-profit organizations in northern Israel. According to the report issued from the financial innovation labs, participants identified three key areas in which the institute should focus its concentration on helping the North to rebuild, with the first being the development of a Northern Israel Recovery and Redevelopment Bond Authority for infrastructure and public-private projects. "Although the US has long issued bonds for infrastructure and regional development (typically called municipal or revenue bonds), the practice is fairly new in Israel," said the report. Typically, the bonds, which may be taxable of tax-exempt, are issued by governments, local and regional authorities and non-profit organizations, to access financing for social services, such as housing and infrastructure. Additionally, municipal bonds can also be used for public-private partnership or for private commercial and industrial development. "The use of such bonds can attract investment from philanthropies, other governments, private investors and public-private partnerships," said the report, which also suggested the possibility of issuing private activity bonds - a bond used in public-private partnerships in which the government does not necessarily pledge its credit, but issues a security for qualified projects whose public purpose benefits a private entity. "The potential use of such bonds would result in an influx of capital to repair and develop northern Israel's failing water, transportation, communications, education, energy and environmental infrastructures, and accelerate much-needed economic development projects," noted the report. The second recommendation made in the Milken report is the expansion the Koret Israel Economic Development Funds (KIEDF) for small business development. KIEDF, through its revolving loan fund, has put philanthropic funds to work by providing loans to small- and medium-sized businesses that previously had difficulty getting financing from banks. According to Carl Kaplan, managing director of KIEDF, the organization has been nominated by the Jewish Agency and the non-profit group Tzafona, to manage some $24 million raised by the UJC's Israel Emergency Fund, which he hopes to leverage into $200m., all of which will be given to northern businesses. "Right now, we are in process of concluding arrangements with the banks to arrange the loans," Kaplan told The Jerusalem Post. The last financing idea put forward by the innovation labs is the development of a northern Israel small-business collateralized loan obligation. Kaplan explained that by pooling KIEDF and other small business loans and using them as collateral, a newly created security can lower the cost of capital and make more loans available that can be directed to companies in the North. "We want to package the loans and government money together, thereby freeing up more credit and the guarantees on the loan," said Kaplan. While Yago said he was "disappointed" that the projects have not moved faster due to bureaucratic tie-ups, he did say that many politicians, including Industry, Trade and Labor Minister Eli Yishai, have expressed interest in getting the project off of the ground. "Right now unemployment in the North is 30 percent higher than in other parts of the country and there has been no tangible improvement in the level of negative immigration from northern communities, and therefore this project is a call to action to accelerate infrastructure in many northern towns, some of which are still classified as development communities," he said. While public and private funding can help better integrate northern Israel into the country's general economy, creating new economic opportunities goes beyond putting money into people's pockets. "Israel's economic independence and broad based prosperity is vital to sustainable national and regional security," said Mindy Silverstein, director of the Milken Institute. "The Milken Institute, as a non-partisan, non-political organization, can work with everyone and all sides in helping to achieve this," she added. Today's announcement is part of the week-long series of presentations that the Milken Institute's Israel center has coordinated in which it is evaluating the achievements of its various projects currently being undertaken in the country.