March 7, 2012
It's all about infrastructure...
The 3rd Annual Mayors’ Think Tank at MIPIM was held today Wednesday March 7th. More than 100 Mayors, Deputy Mayors, and other City leaders attended from more than 30 countries. For the first time, the largest group of Mayors came from Canada, with Russia and UK not far behind. From Sao Paulo and Moscow through to Manchester, Barcelona, Lisbon, Montreal, Toronto, Copenhagen, Stuttgart, and Berlin, a large number of major cities were present.
The Think Tank is a conversation between the leaders, focussed on table based discussions in small groups. It is a confidential meeting, with no media present, where Mayors and city leaders can exchange insights and experiences, away from the cameras.
The theme of this year’s Think Tank was infrastructure. Six tables debate different dimensions of the issue: including the social return on investment, the role of utilities, how to finance infrastructure, making transport options available, combining ambitious projects with ageing infrastructure, and working out who pays for new connectivity.
The first observation is that the Mayors regard Infrastructure as a special dimension of city success. It is the key common ingredient in quality of life, sustainability, and competitiveness. For cities in Europe and North America that are competing with faster growing economies, infrastructure deficits are the major drag on exploiting their advantages of quality of life, advanced entrepreneurship, and sustainability. Without infrastructure growth and renewal Europe and N America cannot play their new niche roles in a global economy in which they are becoming less powerful.
Infrastructure is also a special ingredient because it requires something different to make it work. Most infrastructure in locally based but is regulated or overseen by national rules and regulations. There are local imperatives but they work within national frameworks, so infrastructure is a issue on which Mayors have to make the case for what their cities need. At the same time as being both local and national, infrastructure often straddles the public and private provision, and has important dynamics between owners and users. Different ministries of Government oversee different parts of the infrastructure so systems integration is a major issue. This requires local leadership and effective co-ordination.
Conclusions from the 2012 Mayors’ Think Tank are now available!
There are many different means now to finance infrastructure:
- Transfer payments from higher tiers of Government
- Local taxation
- Debt financing
- Institutional and Sovereign Investment
- PPPs with tolls and user charges
- ‘Value capture’ tools such as TIF, Levies, and land value shares
- Joint ventures including property/ capital partnerships
Whilst there is some successful experience amongst the cities of using each of these tools, Cities vary enormously on what is allowed or permitted within their own constitutions. These differences produce competitive advantages for some and disadvantages for others. Cities that are growing want to use value capture techniques more often because they need to meet demand with up front investment. Cities each of these models as having some merits but the Mayors stress the need for more cities to have more choices about how they finance infrastructure. Each approach will work well for some investments rather than others.
Detailed conclusions on each theme will be presented in the MIPIM Mayors Think Tank White Paper later in the year.
The overall conclusions from today’s meeting were:
- Active city leadership is required to demonstrate the ambition to use infrastructure to manage and shape future growth, to integrate systems of infrastructure and local level and to secure good pubic outcomes for citizens. City leaders have to co-ordinate and integrate different systems if the citizen is to benefit.
- Flexibility in financing tools, regulatory frameworks, and land uses will be essential if infrastructure is going to move from being a dormant to an active asset.
- A long term approach is needed if the right financial tools are to be adopted and if ambition is going to meet with resources and implementation capability.
- Continued local innovation by cities in all aspects of local infrastructure is essential to drive reforms in markets, and to win greater freedom for manoeuvre. The Mayors think tank heard many examples of innovation from the cities present.