Investment in infrastructure three pillars of city resilience

LAND VALUE CAPTURE
INVESTMENT IN INFRASTRUCTURE
THREE PILLARS OF CITY RESILIENCE

• Investment needs for cities extend beyond the reach of public finances
• Projections show that investments of $4.1 to $4.3 trillion in urban infrastructure are needed every year
• An incremental 9 to 27 percent ($0.4 trillion to $1.1 trillion) needed to be climate resilient
• Capital does not flow easily to meet this demand due to lack of knowledge and support from financial services

Infrastructure
Physical resilience across sectors
Finance
Financial resilience and capital market engagement
Governance & Systems
Institutional resilience and reform
INVESTMENT IN INFRASTRUCTURE
PRIVATE SECTOR INVESTMENT IN INFRASTRUCTURE HAS THREE OVERLAPPING MODALITIES

• Direct lending to a responsible jurisdiction
• Variety of borrowing mechanisms that can complement each other
• Full control and financial risk born by public entity

Debt

• Public entity transfers some or most of financing (including but not limited to equity project financing), construction and/or operating responsibilities (and risks) to a private partner

Concession

• Infrastructure financing is part of a broader development effort
• Reduces impact on government balance sheet
• Facilitates creation of private economic value in benefiting location

Land Value Capture (LVC)
INVESTMENT IN INFRASTRUCTURE
LVC is a financial policy mechanism that helps governments to:

• Finance public investment in infrastructure to reduce physical vulnerabilities due to floods, environmental degradation, etc, thereby unlocking land values that are then captured by the city
• Secure (or reimburse) upfront infrastructure funding by recouping real estate value gains generated by infrastructure upgrades
• Levy direct beneficiaries of public improvements, which would otherwise benefit from such improvements as “windfall gains”
• Unlock additional funding in conditions of limited access to traditional sources of public sector financing
• Promote infrastructure cost-sharing with win-win outcomes to public and private stakeholders
• Incentivize wider policy measures that increase land value, e.g. reduction of local risks