Financing Public Spaces: The New Urban Agenda and the Role of the Private Sector
Alex Papadovassilakis argues that cities must put communities’ participation at the centre of public-private partnerships.
In October, during the third UN-Habitat Conference on Housing and Sustainable Urban Development in Quito, UN member states adopted the New Urban Agenda. Though non-binding, the agenda is a comprehensive and ambitious programme designed to tackle rapidly evolving urban security issues stemming from mass rural-urban migration, conflicts of various natures and pronounced social inequalities.
Paralleling UN Sustainable Development Goal (SDG) 11.7, the New Urban Agenda frequently promotes the construction of ‘safe, inclusive, accessible, green and quality public spaces’. Creating safe and inclusive spaces is critical to urban liveability, as it provides citizens with areas to meet and share experiences, reconcile tensions between divided groups, reduce physical barriers between unequal communities and create important opportunities for economic mobility.
Yet the maintenance and construction of public space ‒ including streets, sidewalks, cycling lanes, squares, gardens, parks, libraries, schools and cultural centres ‒ is expensive. Although the New Urban Agenda recognizes the necessity to mobilise resources for its implementation, it does not contain any provisions outlining concrete financing mechanisms. Instead, the implied onus for mobilising resources is on national and municipal governments, through the expansion of their potential revenue base, including taxation.
Funding issues
Many cities, however, are characterised by a large informal sector and weak public administration. For these cities, a lack of a solid tax base means financing the construction and maintenance of public spaces can be a difficult or near-impossible task. Often, municipal bodies with minimal political power and experience ‒ void of financial resources ‒ are simply not in a position to manage projects for improving urban public spaces.
In Quito, building innovative partnerships with the private sector ‒ including Public-Private Partnerships (PPPs) ‒ was discussed as a potential means of improving the quality of public space interventions. Indeed, in both the Global North and South, many states and municipalities are turning to PPPs and private sector investment to finance development projects, including in the realm of public space. While it is a potentially innovative means of financing, privatisation typically carries the risk of negative effects, such as social exclusion and unequal access. With the increased involvement of the private sector, it is necessary to fully consider the implications for urban space.
Opportunities and pitfalls
Examples of PPPs and private sector financing in urban public space development projects, which have yielded positive results, include the redevelopment of parks and squares and improvements to public buildings such as libraries, hospitals and schools. Supporters of private sector involvement point to the possibility of circumventing fragmented and bureaucratic state and municipal departments, which may follow narrow mandates and fail to coordinate between themselves when managing public spaces. In such instances, private sector cooperation could offer more efficient managerial approaches, spanning various sectors and bypassing bureaucratic hurdles. Importantly, private sector involvement does not necessarily mean the privatisation of public space; the aim is often to foster a secure environment where both public and private institutions can operate.
For example, private sector companies are often involved in comprehensive multi-sector urban redevelopment plans. In U.S. cities Chattanooga (Tennessee) and Cleveland (Ohio), partnerships with state and private entities have generated significant funds to renovate areas which stimulate vital economic activity and citizen mobility, including waterfronts and green spaces. In both cases, PPPs have allowed for risk diversification in multi-million dollar investments. In Chattanooga, public-private investment in downtown space renovation, totalling more than US$100 million, has promoted a cycle of reinvestment in the community over several years. By 2005, the liveability status of the city was among the highest in the U.S., boosting the local economy and benefitting local city businesses by providing an attractive environment for further investment. In Cleveland, joint investments from state entities and the business community in waterfront redevelopment has significantly enhanced this key economic area, attracting people and jobs to the city and improving the investment climate for businesses. In Durham (North Carolina), a public-private development organisation ‒ Downtown Durham Inc. ‒ coordinated a 20-year, US$1 billion urban revitalisation project, with heavy investment from private partners. Importantly, various community stakeholders were invited to set preferences for development and suggest means of improving urban liveability, resulting in the construction of pedestrian-friendly streets, attractive spaces and social outlets. The plan also included an accountability mechanism to ensure the implementation of the community’s recommendations in urban developments.
Cities can also take advantage of private sector philanthropy. Recently, a British multinational alcoholic beverages company ‒ Diageo ‒ donated a former whisky bottling plant site to a town centre redevelopment project in Kilmarnock, Scotland ‒ dubbed the HALO park project. The company also plans to donate £2 million (US$ 2.4 million) to the project, on the condition that the council matches the figure, to transform an area in industrial decline into an urban park with cultural, leisure and commercial centres. Following the initial donation, the project will primarily be funded by private investors, led by local developers, the Klin Group, who recognise that creating prosperous and safe public urban spaces around their investments can increase the overall value of their developments.
These examples show that, even in situations where there is no clear return on investment, there are strong incentives for private sector actors to finance public space projects. Joint ventures between multiple businesses and public sector actors can diversify investment risk, allowing important funds to be mobilised for redeveloping areas which stimulate economic activity. Improvements to such urban spaces can potentially boost the local economy and increase consumer spending power. The latter point could lead to market expansion for products and subsequently provide more lucrative investment opportunities for companies involved in renovation, constituting a further incentive for state and private actors to work together towards this goal. Indeed, safe public spaces are a prerequisite for an investment-friendly business environment.
Moreover, the renovation of public space can fuel economic mobility and improve the quality of life for local communities, including a firm’s employees. There are many positive CSR opportunities for a company wishing to maintain a reputation for sustainability, especially if it is able to show tangible results in the renovation of inclusive and quality urban public spaces. Maintaining fruitful multi-stakeholder partnerships between the private sector and local stakeholders can also increase consumer trust and linkages between a particular enterprise and the community, leading to a better understanding of local market dynamics and consumer preferences.
The common factor linking private sector involvement in urban space interventions which have generated positive results is that planning took place in a transparent and accountable political and economic environment. The cities mentioned also possess strong state administrative capacities, and the projects formed part of a holistic and comprehensive urban development plan ‒ or vision ‒ shared and designed by various stakeholders in a city.
However, the results of private sector involvement in public space work are far from exclusively positive. Particularly in Latin America, private urban development projects have benefitted citizens in higher socioeconomic strata, but simultaneously fragmented public spaces through privatisation. Too frequently, discussions on urban development fail to consult all relevant stakeholders in a particular community, decreasing an intervention's overall success and legitimacy. In Mexico, for example, shopping malls and global supermarkets have been constructed with little thought for pedestrianised environments. Across Latin America, a vast amount of available public space has been sold to private developers, who have created residential areas for middle and upper class citizens surrounded by walls. Not only do such developments further segregate populations and entrench existing social inequalities, they can also deprive the urban poor from the little public space that was previously available to them. Informal public space is often linked to identity, and constitutes a vital area for trading, maintaining an income, socialising and protection for members of poor and marginalised communities.
Furthermore, private sector involvement in public space can have adverse outcomes in terms of securitisation and social cohesion. In cities such as Beirut, public space constitutes a factor in the city’s ongoing socio-ethnic conflicts. Private sector investment is organised along sectarian lines (i.e. Sunni investors invest in predominantly Sunni areas; Shia in predominantly Shia, Maronite in Maronite, etc.). The sectarian dimension of public space privatization decreases its accessibility, as a clear and exclusive sense of belonging is associated between a religious groups and a particular space. This brand of privatisation has created an environment where the promotion of reconciliation and integration between separate communities is virtually impossible. Additionally, space in Beirut is associated with a security threat. Consequently, private security forces are frequently contracted to guard public areas. Such initiatives further decrease access to inclusive and pleasant public spaces in the city.
Summing up
The results of private sector involvement in financing public urban spaces are a mixed bag, contingent on several factors. On one hand, forging transparent and accountable partnerships between private, state and urban community actors can help finance inclusive public space projects, reducing the strain on state resources. Importantly, private sector actors do not necessarily need the incentive of a direct return on investment, as they can profit from potential positive externalities generated from creating quality public spaces. These benefits include a secure business environment, improved economic mobility, greater consumer spending power and higher property values, amongst others. Joint ventures between several companies and state actors also reduce investment risk, easing concerns about potential losses.
Conversely, private sector developments, failing to consult local actors prior to and during development, may lead to the creation of public spaces which solely benefit upper and middle citizens. Particularly in cities where public spaces are insecure, privatisation often goes hand in hand with exclusive securitisation practices, reducing available spaces and often contributing further to social and ethnic divisions. In such situations, social cohesion becomes fragmented and citizens cannot benefit from having shared spaces for recreation and reconciliation.
Although individual cities possess radically different characteristics, the involvement of the private sector in public space investments seemingly functions best in cities with strong regulations on private sector activity. Various actors – at the city, national and international level – must therefore collaborate to promote and create regulations which can safeguard against unequal access and securitisation. In addition, public-private initiatives must not exclude local communities from discussions on urban space development, as urban citizens often identify with public space and will defend it. Pushing through unwanted projects can further polarise urban environments and cement inequalities. Inclusive discussions between private sector actors, municipal representatives, community groups and minorities can promote the involvement of local businesses in urban planning, to make sure that community interests are at the heart in construction of public space.
Engaging the community can eradicate distrustful sentiments and feelings of economic exclusion which persist between the urban poor and wealthier citizens. In such a situation a city can reap the possible benefits of private sector involvement in funding public space developments.
Alex Papadovassilakis is a researcher at the Geneva Centre for Security Policy, within the Geopolitics and Global Futures Programme. Previously, he co-authored two papers on the confluence of urban safety and peacebuilding practices, as a member of the Geneva Peacebuilding Platform’s Technical Working Group on Urban Safety and Peacebuilding. He recently graduated from the Graduate Institute of International and Development Studies, Geneva, with a master’s in Development Studies.
Photo credit: Alan Stanton via Foter.com / CC BY-SA
