Page 9 - A U4SSC deliverable - Guidelines on tools and mechanisms to finance Smart Sustainable Cities projects

The second chapter of the Guidelines outlines who the potential investors for SSC projects are
and what they are looking for. There are many potential investors, all with different characteristics,
objectives and approaches. All want to gain from their investment, both financially – through
return on investment, and reputationally – through environmental, social and governance (ESG)
impacts. The chapter also outlines the ECE's people-first public private partnership (later referred
to as PPPP) model. To attract investors, urban development projects need to be well-defined from
the beginning. Understanding the actual condition of the assets of the project allows a proper
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financing structure to be designed. Without it, no project can be developed. Once the financing
structure is in place, markets facilitate the realization of ESG impacts alongside financial returns.
Returns can be provided from charges collected from toll roads, a share of the savings generated
by the project, revenue from a subscription payment, etc. Planning these returns is called “revenue
modelling”. In these cases, ESG impacts can act as a catalyst for a healthier, longer-term cash flow
by developing the real assets as part of a thriving, stronger environment and society.

The third chapter offers ten practical recommendations on how to develop a list of investable
projects for sustainable urban development.

A list or a “pipeline” of urban development projects should reflect a coherent strategy for achieving
an objective for a given city or region. The recommendations invite stakeholders from all sectors
(public, private, academia and civil society) to adopt a common development language based
on the SDGs. City governments can then identify what changes are needed in the city to ensure
it develops sustainably, how much money is required to implement these changes, and what
proportion of the money required has yet to be generated. The process is complemented by a
vision of the future of a sustainable city and a list of the projects needed in order to achieve this.

Once the vision is developed, it is suggested to group projects under four sectors: mobility, utilities,
social infrastructure and real estate, and to estimate the cash flow those projects will generate. Cash
flow can be positive or negative. The Guidelines suggest balancing cash-positive and -negative
projects, to ensure positive inflow of external investment.

It is recommended to take the traditional city “master plan” to the next level. While, generally,
cities have spatial master plans, the social, economic and environmental dimensions are often
overlooked. It is suggested to develop a multi-layered master plan which will help generate positive
economic, social, and environmental impacts for the city. How to create this plan is explained in
detail.

Cities should examine existing operational frameworks to remove barriers for investors and lenders
to enter the market. This can be done through ensuring that legislation is revised, where necessary,
to enable new partners to collaborate on urban development projects. It also means that existing
laws should be clear and their enforcement mechanisms reliable. Urban development dialogues
that feed into this revision should be organized in a round-table manner and involve decision-
makers from multiple levels, multiple sectors, and transdisciplinary teams. It is also recommended to
translate urban development policies into investment programmes and city projects (top-down flow

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