Falling revenues due to the COVID-19 pandemic has placed municipalities under significant financial strain – the economic toll challenging the ability of municipalities to meet the basic needs of their communities and businesses. Given this challenging context, how are cities funding and financing recovery?
From as early as March 2020, a survey of Chief Resilience Officers across the global network revealed that cities were already facing gaps in funding, data, and municipal staff capacity while working on recovery plans. In San Francisco, Miami Beach and New York City reductions in tax revenue and increased demands for emergency services, housing and other immediate needs meant delays to climate-related projects like sea walls were inevitable – a shift that “threatens to tackle one crisis at the expense of another”. In one African city, the financial sustainability of the metropolitan government was identified as the key factor in the recovery – critical service delivery failure would compromise the city’s ability to meet the needs of its most vulnerable citizens. In Europe, cities are mulling the balance they need to strike between ‘a high speed dash to rebuild the economy’ and finding a way to influence that in the context of the climate crisis. In Wellington, New Zealand, the City Council is forecasting a reduction in revenue of almost USD$50 million until the end of the June 2021.
“We are all going to be borrowing for stimulus and investment. That money is the money we would have borrowed for climate action. Therefore, we only have one shot to do both – recovery and climate resilience.” CRO, North American City
The macro economic impacts of COVID-19 are extremely uncertain, but what is clear is that local economies and local businesses will play a central role in recovery. In planning for recovery from COVID-19, cities across the network are consistent in prioritising efforts to enhance social equity and local economies. Small and medium-sized enterprises (SMEs) represent around 80-90% of business in many national economies and are deeply integrated in local communities economically and socially. In Wellington, the City is ramping up its #LoveLocal program to encourage residents to buy from local and regional businesses. The city has also launched a USD$ 5million Tipu Toa: Build Back Better / City Recovery Fund to boost economic recovery targeting the creative and innovative sector, and a nation wide construction program is targeting a construction led revival. In Cape Town, the City is proposing new property rating categories to enable lower or no rates to be charged for not for profits organizations and other charitable property owners, including organisations offering shelter for street people, early childhood development and youth.
Especially early in the response and early recovery, cities have been leveraging partnership with philanthropies and utilizing donation to rapidly deploy resources to individuals and community-based organizations impacted by the COVID-19 outbreak. In Oakland, Mayor Libby Schaaf announced the launch of the Oakland COVID-19 Relief Fund, an emergency fund to serve Oakland’s most vulnerable residents and first responders during the pandemic. In Louisville, the One Louisville: COVID-19 Response Fund supported non-profit organizations and individuals with over $10 million in grants. In Jakarta, the government established Jakarta Large-Scale Social Collaboration Platform, a map based online platform listing neighbourhoods’ Covid-19 situation and needs so that potential donors can directly help those most affected by the COVID-19 outbreak.
The City of Barcelona is looking ahead and keep their sustainable agenda on track. The city has created “Barcelona, Get Sustainable Fund”, a public-private fund of 100 M € in order to boost the production of local renewable energy and to refurbish buildings in ways that reduce energy costs. The goal is for the existing energy savings to payback the initial investment without the need for further rounds.
In Medellin, Colombia, the City created an integrated programme of support to vulnerable people that combined contributions from civil society and business. This approach included: Creating a single point of donation for all resources (human, in kind and financial), combining private and civil society donations to create a substantial, long-term resource; using big data including population age, location, data on links to existing social support to capture voluntary work undertaken, needs of individuals, and areas served; and linked data to a centralised donation system, enabling an economic committee comprised of local government, businesses, voluntary sector and charity sector to jointly decide financial allocations to support voluntary organisations.
Practice: Hear more how Barcelona plan boosting local economy, keeping the green agenda on track and the public private fund for green energy from Cities on the Frontline #16 Digital and Green Recovery
How to: Planning for the economic recovery from COVID-19: A sustainability checklist for policymakers. Policymakers should prioritize job creation and boosting economic activity in the short term, while recognizing the potential for further disruptions due to the virus. In the long-run, policymakers should focus on projects that prioritize long-term growth potential, resilience to future shocks, and a sustainable growth trajectory.
How to: LOCAL GOVERNMENT FINANCE Guidance Note for Immediate Action As local governments face deep financial difficulties resulting from the COVID-19 crisis, it is incumbent for central governments to provide payments to local governments for use of local government assets while providing intergovernmental transfers to ensure continuing operation. Local governments can also engage in subnational borrowing and philanthropic finance where appropriate.
Lesson: Here’s How Coronavirus Could Raise Cities’ Risk for Climate Disasters . The economic toll of COVID-19 has caused delays in climate change mitigation projects in many cities. One example of this is the diversion of funds from building a sea wall in Miami Beach to coronavirus recovery efforts.
Opinion: World Bank: Thinking ahead: For a sustainable recovery from COVID-19 The COVID-19 Crisis has created an opportunity for large scale public investment in order to recover from the pandemic induced recession. These investments can be tailored to decarbonizing the economy through investments in green projects and the creation of fuel or carbon taxes.
Practice: Cities for a resilient recovery: Emerging data : How Chief Resilience Officers are embedding resilience in recovery efforts