LOCAL FINANCE MECHANISMS
In 2015, the Future Cities Collaborative embarked on a program to help local governments in New South Wales learn new and innovative financing mechanisms so they could better provide the services and infrastructure their communities required.
The US-Australian City Exchange on Local Finance Mechanisms, presented by the Future Cities Collaborative, an initiative of the United States Studies Centre at the University of Sydney, with the support of NSW Trade and Investment and AECOM, examined local and state-level funding and financing tools being used to support economic development programs and projects.The City Exchange explored how these tools are used in the United States, and how they may be adapted to the Australian context.
Attending the City Exchange was 2015 Future Cities Program participants Newcastle City Council and Penrith City Council; also joining the City Exchange were representatives from previous Future Cities Programs - Blacktown, Liverpool, and Canada Bay City Councils. Representatives from the Western Sydney Business Chamber and Urban GrowthNSW also participated, illustrating the breadth of partnerships the exchange will foster and deepen.
The 2015 Exchange was supported by AECOM, which will also be the primary liaison agency for American participants. AECOM’s teams in the United States will bring together experts in local infrastructure planning, financing, and implementation at each project site.
The seven-day City Exchange explored funding and finance mechanisms used to support public transport and economic development initiatives in Los Angeles, Phoenix, Dallas and Chicago. The mission also examined private-sector participation in urban revitalisation projects and programs, such as business improvement districts (BIDs), sports stadia and convention facilities, and housing affordability projects.
AECOM hosted the City Exchange group in each of the cities visited and their local infrastructure planning, funding and financing, and implementation leaders were able to demonstrate how innovative funding and financing methods are being used to plan, implement and sustain investment in each particular city.
AECOM’s involvement in the design and implementation of the projects examined, provided delegates with access to in-depth technical knowledge and unparalleled access to the city representatives responsible for making each project a reality.
Similarities between US and Australian state and municipal structures allowed City Exchange delegates and City representatives to share ideas and solutions to common urban challenges.
The City Exchange delegates examined case studies and participated in workshops in each host city as summarised below.
To find out what our participants learned on each day of the Exchange, explore the links below:
- City Exchange Pre-departure session
- Welcome to Los Angeles
- Day 1: LA Transit-Oriented Development and Business Improvement District Funding Models
- Day 2: Phoenix
- Day 3: University of Phoenix Stadium and City of Glendale
- Day 4: Dallas Transit Oriented Development and Civic and Arts Districts
- Day 5: Chicago - Special Services Areas and Innovation
- Day 6: Chicago Dialogue and Wrap Up
Following the City Exchange, the Future Cities Collaborative and AECOM worked closely to produce Funding Australia’s Future: City Exchange on Local Funding and Financing Mechanisms. Case studies showcase the different funding and financing tools examined during the mission, and the Report outlines several key observations and recommendations arising from the 2015 City Exchange.
The Key Observations and Recommendations are summaries below:
1. POSITIVE AND STRONG COMMUNITY SUPPORT: The case studies, in particular those in Dallas and Phoenix, illustrated that there is a general community expectation that governments constructing new urban infrastructure, or delivering new urban programs, do so with a view to enlarge the urban economy and to achieve widespread community benefits. This expectation is given explicit expression through community consultation by delivery agencies, followed by formal voter referenda on major long-term funding and delivery plans.
It is recommended that New South Wales state and local government agencies make wider use of formal and informal voter referenda on major infrastructure investment and delivery programs to encourage stakeholder engagement and commitment.
2. APPROPRIATE INSTITUTIONAL AND GOVERNANCE STRUCTURES: As illustrated in the Los Angeles and Dallas case studies, state, metropolitan, regional and local government agencies and delivery authorities are tailored and aligned to the projects and programs that they are required to carry out. Federal and state agencies prepare, implement and refine legislation, policies and programs for regional and local agencies to plan and implement. The priorities are reinforced through federal and state funding and financing incentives, including loans, grants and credit enhancement programs. Regional and local government agencies have a mandate to plan, fund, procure and deliver infrastructure and urban renewal programs. In all case studies, there is a strong connection between an agency’s responsibilities and its ability to raise revenue. Where transport networks and renewal programs cross jurisdictional boundaries, as was the cases with Los Angeles, Phoenix and Dallas transit agencies, representative boards and authorities are created to achieve cross-border consensus.
It is recommended that the NSW Government develop a regional governance structure for metropolitan Sydney which is comprised of, local government elected officials, state agency representatives and experts to undertake long term integrated land use, infrastructure and transit planning.
It is recommended that a Sydney metropolitan commission or similar vehicle be established to provide vision and guidance on development for the next 20- 40 years. The commission would facilitate a strategic and holistic approach to development and consist of political, non-political and expert representation, with the remit to guide the metropolitan development, conduct public outreach and gain public mandates for the long-term direction.
3. URBAN RENEWAL: All city case studies illustrated that successful urban renewal is not ad hoc but derives from stable funding sources, commercially-attractive incentives, and supportive legislative programs at all tiers of government. Governments have an important role to play in providing confidence to commercial markets, leadership for new initiatives, and proactive engagement with the private sector to deliver policy goals. Additionally, as illustrated in Los Angeles, when considering notionally ‘spare land’, it is essential to develop a whole-of- government perspective on urban renewal, rather than only reflecting agency interests in decisions concerning re-use.
Tools: It is recommended that NSW government agencies, including Treasury, Department of Planning and Environment, and the Office of Local Government, adapt and/or development legislation to introduce the innovative funding and finance reforms needed to meet rising infrastructure funding gaps. Reforms to the present tax system should be designed to support greater autonomy and better decision-making at the most appropriate level of government, as recommended in Re:think – tax discussion paper by the Australian Government the Treasury.
Asset Leverage: It is recommended that the NSW government grant the proposed Sydney metropolitan commission the authority to declare non-core land assets under state agency ownership and engage UrbanGrowth NSW to embark on the redevelopment consistent within agreed state growth strategies.
Urban renewal incentives: It is recommended that the NSW government create credit enhancement and tax incentive mechanisms similar to New Markets Tax Credits illustrated in the Los Angeles cases, backed by funds received from the leasing of “poles and wires”, to encourage innovative urban renewal projects by the private sector.
4. LONG TERM INSTITUTIONAL AND FUNDING SUPPORT: The success of urban programs depends upon sustained, coordinated and patient support by multiple public agencies, particularly for complex urban projects and programs. Conversely, inter-agency rivalries or turf battles can quickly kill worthy projects.
It is recommended that the NSW government introduce a recurring, voter-approved funding base for the long-term metropolitan transport plan with a minimum tenure of 20 years. This could take the form of a land tax or a fixed per cent of sales tax revenue, hypothecated to support long term funding and financing of major transport infrastructure. The funding plan would be aligned with the long term metropolitan transport plan and changes to an approved funding plan would be subject to voter approval.
It is recommended that the NSW government assign a metropolitan development agency the role of catalyser of transit oriented development. This would provide a provide a seamless transformation of complex redevelopment sites rather than having multiple organisations or agencies with a variety of missions involved in the delivery of these key revitalisation projects.
5. COMMERCIAL REVITALISATION STRATEGIES AND LOCAL EMPOWERMENT: As illustrated in “Old Pasadena”, Los Angeles and Chicago, commercial districts are sustained and/or revitalised by empowering local communities and governments to self-organise and self-fund under innovative governance arrangements, such as the Business Improvement District (BID) model. Under the BID model, businesses leaders and local government agencies within an area set local fees for the provisions of additional services and improvements within a defined precinct. As in the case of Pasadena, these precincts are often focused around regaining lost economic activity while maintaining the unique characteristics or historical aspects of traditional commercial centres.
The success of BIDs are also derived from their organisational capacity and the expectation by the community and property owners to innovate in terms of streetscapes, security and retail management.
It is recommended that the NSW government introduce model legislation for local governments to establish BIDs to empower local business and community groups to revitalise traditional commercial centres.
6. LOCAL ECONOMIC DEVELOPMENT: The activity of economic development groups, such as the Downtown Phoenix Partnership and others, illustrate that economic development tools can be crafted to meet the needs of any community. Communities have land and other assets including the power to re-zone and provide infrastructure as leverage points for revitalisation.
It is recommended that NSW State and local governments apply a regionally integrated land use planning approach that stimulates job growth, housing diversity, sports/entertainment and community amenity.
It is recommended that local government examine ways to leverage existing knowledge-based employment centres and new anchors, such as universities, healthcare facilities, and research centres, to stimulate economic development within communities.
The 2015 Future Cities Program Graduation Lunch and was an opportunity to launch the Local Finance Mechanims Report, Funding Australia's Future, and also an opportunity for each city to present their findings and outline the journey, progress, and transformations made. The launch was attended by NSW Minister for Planning, Rob Stokes MP, who spoke at length on the importance of planning for people and having innovative and determined Mayors leading Councils towards good planning and good governance.
Watch the videos from the Minister and each city below.