'New funding models required' for smart cities

Written by Colin Marrs on 31 May 2017 in News
News

Report highlights challenges for public sector in encouraging private investment into smart city technologies.

Private sector appetite to invest in smart city technology - Photo credit: Fotolia

City governments should consider launching focused municipal bonds to fund smart city infrastructure, according to a new report.

A study by consultancy Deloitte’s Center for Government Insights, said that the public sector needs to capture an appetite for investment from the private sector.

Focused mainly on US case studies, the report said that investing in smart cities programs requires creative thinking that departs from traditional models of infrastructure finance.

“As a first step, this includes supporting policies such as fiscal incentives (including tax abatements), PPPs, and qualified infrastructure bonds specifically focused on smart city requirements,” the report said.

In addition, performance-based approaches for revenue sharing should be built into delivery models for smart city systems, according to the authors.

This would see “the public procurer of services and the private-sector investors share in the value of efficiency gains in service delivery, advertising-generated income, and revenue from value-added analytics services”.

A third factor crucial to the success of funding smart city projects is active collaboration between central and local government, Deloitte said.

“This includes the potential to fund special-purpose vehicles and align on potential innovation districts within major metropolitan areas (even military bases),” the report said.

Emerging case studies show that the private sector is willing to invest in pilot projects as an up-front investment or loss leader, “but will expect to participate in longer-term upside and downstream implementation opportunities,” the report went on.

Key challenges to new funding models include the nature of existing procurement rules and the legal or regulatory framework adjustments that are required to assure any conflicts of interest are managed in a manner appropriate to the new model of risk allocation; the flexibility, interoperability, and longevity of new smart city systems, (both in terms of technology platform and across departments and agencies); and a movement to managed, cloud-based services and the associated privacy and cybersecurity risk management requirements.

Share this page

Tags

CONTRIBUTIONS FROM READERS

Please login to post a comment or register for a free account.

Comments

Vasco Gonçalves (not verified)

Submitted on 8 June, 2017 - 08:51
This is what EVA Smart City, which will be built in the European Union (EU) or the European Economic Area ( EEA ), has in plans. A special fund will be created for this purpose. These investors, i.e. common people and private businesses, also have a priority to buy or to lease premises in that city (see my articles on LinkedIn: http://bit.ly/2hXsmcS ).

Related Articles

Can the GDS innovation strategy deliver a lasting legacy for government?
14 August 2019

Government's new Innovation Strategy set out ambitious proposals to update processes, eliminate ageing kit, and embrace emerging technologies. PublicTechnology caught up with...

Lanarkshire trials video GP consultations
22 August 2019

Patients in Scotland given option of virtual appointments via PC or mobile device

Related Sponsored Articles

The age of virtualisation
17 September 2019

After more than 20 years of stability, networks are going through a period of dramatic transformation. BT looks beyond the hype at the real benefits of virtualisation.

Digital Transformation: Connecting and protecting with perfect predictability
10 September 2019

How can you stay ahead in the fast-paced world of digital technology? BT describes how it's a matter of focus... 

How to stay ahead of a changing threat landscape
3 September 2019

The security threat landscape is confusing and changing rapidly – there’s so much out there, how do you understand where the true risks are? BT offers insight from their own experience

The cyber security skills challenge: Hiring for tomorrow
27 August 2019

Organisations must alter their approach to cyber security recruitment in order to combat the global shortage of security professionals, writes BT