Group1 - National Treasury€¢...

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Group 1 EFFECTIVE PREPARATION AND GOVERNANCE OF BANKABLE URBAN INVESTMENT PROJECTS

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Page 1: Group1 - National Treasury€¢ Maturity’in’decision’making’–quick’butresponsible’to’ensure’’all’pillars’of’supply’ chain’are’covered’(fairness,’equity,’transparency’and’accountability’

Group  1  

EFFECTIVE  PREPARATION  AND  GOVERNANCE  OF  BANKABLE  URBAN  INVESTMENT  PROJECTS  

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Report  back:  Main  points  raised  in  Group  1  

Main  outcomes  of  the  discussion:  •  Different  projects  types  generate  different  cashflows,  which  determine  how  they  

can  be  funded  •  Different  projects  generate  different  returns  •  Public  and  private  sector  partners  bring  different  skills:  to  project  preparaQon  and  

delivery  –  Public  sector  is  beRer  at  high-­‐level  planning  and  early  project  stages    

(in  line  with  policy)  –  Private  sector  is  beRer  at  detailed  design.  They  must  also  share  risk.  

•  SOEs  control  a  lot  of  strategic  land  

Urban  Investment  Partnership  Conference    |    Johannesburg,  South  Africa   2  

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Report  back:  Main  points  raised  in  Group  1  

•  “InsQtuQonal  risk”  in  ciQes  is  a  big  constraint  for  investors    –  Guarantee  provision  of  bulk  –  Project  should  be  part  of  a  larger  plan  

•  Discussed  why  some  IPSA  projects  have  been  rejected  –  Some  projects  weren’t  revenue  generaQng  –  Some  municipaliQes  aren’t  credit  worthy  

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Report  back:  Main  points  raised  in  Group  1  

Next  steps:  •  Need  to  define  projects  beRer  and  explain  type  of  return  •  Projects  can  then  be  matched  to  potenQal  investors  •  Define  the  phase  of  the  project  •  Improve  internal  capacity  in  ciQes  

–  Need  pla_orms  with  all  internal  role  players  to  discuss  and  evaluate  projects  •  Key  Info:  

–  Land,  infrastructure,  yield  –  Need  insQtuQonal  commitment  to  take  project  forward  

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Group  2  

POLICY  AND  REGULATORY  ENVIRONMENT  FOR  PUBLIC-­‐PRIVATE  COLLABORATION  ON  URBAN  INVESTMENT  

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Report  back:  Main  points  raised  in  Group  2  

Context  •  General  consensus  that  there  is  no  need  for  drasQc  reforms  of  the  legislaQon  •  However,  the  following  were  noted:  

–  differenQaQon  between  city,  provincial  and  naQonal  regulaQon  issues  as  it  relates  to  powers  and  funcQons  for  each  

Ci<es  •  Bylaws  –  plan  approvals,  consistency  and  best  pracQces  •  SPLUMA  –  delay  in  implementaQon  •  Challenges  around  densificaQon  and  zoning    •  Red  tape  requires  reducQons    •  FragmentaQon  –  silo  mentality  •  Lack  of  balance  between  social,  economic  and  rehabilitaQon  •  Services  –  cost  effecQveness    and  sustainability  issues  

Urban  Investment  Partnership  Conference    |    Johannesburg,  South  Africa   6  

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Report  back:  Main  points  raised  in  Group  2  

Na<onal  •  WULA,  EIA  and  PPP’s  •  Causing  major  constraints  to  development  •  ConflicQng  naQonal  policies  •  DemarcaQon  challenges  •  In  the  past  the  relaQonship  between  COGTA  and  NT  departments  was  constrained  

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Report  back:  Main  points  raised  in  Group  2  

Next  steps:  •  Investor  friendly  -­‐  ensure  certainty  and  consistency  and  create  an  enabling  

environment    •  WULA.  EIA,  PPPS,  SPLUMA,  service  provision  –  Qmeframes  sQpulated  –  regulaQon  

and  soluQon  driven  •  Maturity  in  decision  making  –  quick  but  responsible  to  ensure    all  pillars  of  supply  

chain  are  covered  (fairness,  equity,  transparency  and  accountability  •  Devolve  further  responsibiliQes  to  ciQes  –  differenQated  approach  •  Focus  on  outcomes  not  outputs  •  CatalyQc  projects  need  to  be  defined  and  respond  to  developers  and  have  a  clear  

approach  •  Review  exisQng  regulaQons  vs.  land  base  financing  tools  •  ConQnue  to  strengthen  the  relaQonship  between  COGTA,  NT  and  other  sector  

departments  

Urban  Investment  Partnership  Conference    |    Johannesburg,  South  Africa   8  

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Group  3  

DEEPENING  THE  SUITE  OF  FUNDING  INSTRUMENTS:  BONDS,  LOANS  AND  LAND-­‐BASED  FINANCING  

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Report  back:  Main  points  raised  in  Group  3  

Main  outcomes  of  the  discussion:  •  There  seems  to  be  a  need  for  new  instruments  •  Balance  sheet  versus  project  financing  •  ImplicaQons  of  Basel  iii  and  the  different  investor  regulatory  requirements.  •  Many  funders  do  not  have  the  capacity  to  diagnose  the  specific  risk  •  Government  and  DFI  incenQves  need  to  be  beRer  managed  

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Page 11: Group1 - National Treasury€¢ Maturity’in’decision’making’–quick’butresponsible’to’ensure’’all’pillars’of’supply’ chain’are’covered’(fairness,’equity,’transparency’and’accountability’

Report  back:  Main  points  raised  in  Group  3  

Next  steps:  •  Set  up  a  task  team  of  people  that  could    

–  Create  blended  finance  soluQons/instruments,  –  Pooling  mechanisms,    –  Leverage  financing  based  on  the  future  cash  flows  of  improved  property  rates  

   

Urban  Investment  Partnership  Conference    |    Johannesburg,  South  Africa   11  

Page 12: Group1 - National Treasury€¢ Maturity’in’decision’making’–quick’butresponsible’to’ensure’’all’pillars’of’supply’ chain’are’covered’(fairness,’equity,’transparency’and’accountability’

Group  4  

EXPANDING  OPPORTUNITIES  FOR  PRIVATE  FINANCE  IN  URBAN  DEVELOPMENT  PROGRAMMES  

Page 13: Group1 - National Treasury€¢ Maturity’in’decision’making’–quick’butresponsible’to’ensure’’all’pillars’of’supply’ chain’are’covered’(fairness,’equity,’transparency’and’accountability’

Report  back:  Main  points  raised  in  Group  4  

Pre-­‐condi<ons  to  engage  with  private  sector  •  Capacity,  governance  issues,  and  poliQcal  will  

 Role  of  DFIs  (esp  DBSA)  playing  enabling  role  and  subsidized  funding  •  On-­‐balance  sheet  vs  project-­‐specific  funding?  And  associated  experQse  •  Clarity  over  instruments  that  are  offered  (esp  given  other  roles  of  city  officials)  

What  does  the  private  sector  want?  How  to  build  trust?  •  Planning  and  project  preparaQon,  need  a  clear  pipeline  of  projects  and  what’s  

required  of  each  

Urban  Investment  Partnership  Conference    |    Johannesburg,  South  Africa   13  

Page 14: Group1 - National Treasury€¢ Maturity’in’decision’making’–quick’butresponsible’to’ensure’’all’pillars’of’supply’ chain’are’covered’(fairness,’equity,’transparency’and’accountability’

Report  back:  Main  points  raised  in  Group  4  

Role  of  public  sector;  project  plan  underpinned  by  council  resoluQon  to  ensure  stability  and  transparency  •  Regulatory  environment;  i.e.  AG  creates  risk-­‐averse  behaviours  •  Learning  from  successes  and  piloted  iniQaQves  (eg  TIFs)  

Urban  Investment  Partnership  Conference    |    Johannesburg,  South  Africa   14  

Page 15: Group1 - National Treasury€¢ Maturity’in’decision’making’–quick’butresponsible’to’ensure’’all’pillars’of’supply’ chain’are’covered’(fairness,’equity,’transparency’and’accountability’

Report  back:  Main  points  raised  in  Group  4  

Next  steps:  •  CiQes  to  develop  LT  plans  beyond  council  terms,  share  with  private  sector  to  build  

trust  and  relaQonships,  need  a  cross  metro  pla_orm  to  help  share  these  •  Provide  dedicated  city-­‐specific  capacity  in  DFIs  (similar  to  CSP’s  coordinators)  •  Bring  in  internaQonal  capacity  who  have  gone  through  same  issues  and  assign  to  

ciQes  •  Create  a  pla_orm  to  channel  discussion  between  public/private  and  share  lessons  

from  exisQng  projects;  insQtuQonal  representaQon  so  each  financier  doesn’t  have  to  tackle  each  metro  separately  (willingness  from  private  sector,  but  how  to  incorporate?)  

•  Map  relaQonships  throughout  life-­‐cycle  of  project  

Urban  Investment  Partnership  Conference    |    Johannesburg,  South  Africa   15  


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