Need help paying for smart city projects? More resources you can use
by Jesse Berst, Smart Cities Council
Disheartening as it is, many cities simply don't have pockets deep enough to pay for needed improvements, enhancements and expanded services that citizens demand and growing populations require. That's why we periodically share resources and strategies to help you stretch your dollars through efficiencies, grants and loans and other opportunities to help cities cover the costs of getting smarter. The resources described here aren't all 'new,' but you'll likely find some options you can use — and possibly some you may not have thought of.
We've shared information about financing and technology resources available from the federal government as well as private industry and others for smart city initiatives ranging from transportation to policing and beyond.
For example, Cisco works with cities to meet their technology needs, but over the past couple of years also has been working with financial institutions to help smooth the way for cities that need funding assistance.
Examples of financing opportunities
As Arvind Satyam, Cisco's managing director of business development for smart and connected communities explained, "Over the course of the last two years we've been working with financiers and banks and pension funds and they said 'This is a really interesting business.'
It's an economic model that makes sense, when you can do multiple things. If you can deploy a network where an urban operator comes in and manages and starts modernizing lighting, sharing data on traffic, sharing data on environment noise, and other things, you start having one network with multiple capacities, and net new revenue for the city in the case of parking and other data models." And, he added, now that technologies are more mature and proven investors are more willing to participate.
Research by Siemens Financial Services (SFS) noted that a growing number of cities globally are beginning their smart city transformations through a series of smaller, less costly projects. It outlined what it considers SmartStart investments that can successfully tap into private sector financing opportunities. Among the top early stage projects identified are building controls (to increase energy efficiency and reduce costs), improved medical technology for improved health outcomes, online self-service for citizens and vehicle routing (such as waste collection and school transportation). The SFS research indicates there is $32.6 billion available in the U.S. alone in potential private sector investment for these types of projects.
Help for European cities and communities
The European Innovation Partnership on Smart Cities and communities, an initiative of the European Commission, has compiled a list of funding resources available for local governments, medium-sized and large companies. The listing is now in draft form, but will be finalized as soon as commitments are verified.
The Asia Development Bank offers guidance and support for Asian local governments in several areas, including financing options, risk assessment and project selection.
The World Bank's City Creditworthiness Initiative
Cities in developing countries stand to benefit from smart city initiatives but as the World Bank found "Recent estimates show that less than 20% of the largest 500 cities in developing countries are deemed creditworthy in their local context, severely restricting their capacity to finance investments in public infrastructure." The agency also says traditional funding sources from central governments and international aid organizations won't come close to meeting those cities' needs for improved transport, solid waste management, education and sanitation.
The agency's Creditworthiness Initiative focuses on extensive hands-on support and programs to help city leaders learn to strengthen their financial performance, develop the policy guidelines needed to borrow, select climate-smart projects and partner with private sector investors.
Jesse Berst is the chairman of the Smart Cities Council, which helps cities use technology to become more livable, workable and sustainable. Register to attend the Council’s Smart Cities Week Silicon Valley, May 8-10 in Santa Clara, CA.