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 (CROs) across R-Cities’ global network revealed that cities were already facing gaps in funding, data, and municipal staff capacity while working on recovery plans. In the US, 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 the words of one CRO. 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 steer their rebuild in a direction that meets the challenges of the climate crisis.
“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 macroeconomic 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 prioritizing 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, New Zealand, the city is ramping up its #LoveLocal program to encourage residents to buy from local and regional businesses. The city has also launched a $5 million USD Tipu Toa: Build Back Better / City Recovery Fund to boost economic recovery targeting the creative and innovative sector, and a nationwide construction program is targeting a construction-led revival. In Cape Town, South Africa, the city is proposing new property rating categories to enable lower or no rates to be charged for non-profit organizations and other charitable property owners, including organizations offering shelter for street people, early childhood development and youth activities.
Jakarta’s Large-Scale Social Collaboration Platform
Especially early in the response and early recovery, cities have been leveraging partnerships with philanthropical organizations and utilizing donations to rapidly deploy resources to individuals and community-based organizations impacted by the Covid-19 outbreak. In Oakland, US, 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, US, the One Louisville: Covid-19 Response Fund supported non-profit organizations and individuals with over $10 million USD in grants. In Jakarta, Indonesia, the government established the Jakarta Large-Scale Social Collaboration Platform, a map-based online platform listing neighborhoods’ Covid-19 situation and needs so that potential donors can directly help those most affected by the Covid-19 outbreak.
The city of Barcelona, Spain, is looking ahead to keep their sustainable agenda on track. The city has created the Barcelona, Get Sustainable Fund, a public-private fund of EUR 100 million 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 pay back the initial investment without the need for further rounds.
In Medellin, Colombia, the city created an integrated program 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 data, including population age, location, and links to existing social support to capture voluntary work undertaken, the needs of individuals, and areas served; and linked data to a centralized donation system, enabling an economic committee comprised of local government, business, and the charity sector to jointly decide financial allocations to support voluntary organizations.
Practice: Hear more about how Barcelona plans to boost its 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 on 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.