Tools for Decision-Making: Projecting Economic and Fiscal ...
Transcript of Tools for Decision-Making: Projecting Economic and Fiscal ...
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South Africa National Treasury Cities’ Support Program (CSP)
Training Session and National Forum
Leveraging Real Estate Value to Catalyze Urban (re)Development
Tools for Decision-Making: Projecting Economic and Fiscal Impacts
R.McGaffin
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“…bankable from a private and public sectors…”
How do we assess this?
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Conceptual Thinking to Project Decision-making – Cost/Benefit Approach
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Decision
Undertake the Project
Resources Allocated to Project
Decision
Resources Allocated to Alternative Project
Undertake Alternative Project
Decision Project Benefit = X
Value of Project Output
Project Opportunity Cost = Y
If X>Y, recommend project
(Campbell et al, 2007)
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Conceptual Thinking to Project Decision-making – Portfolio Management Approach
Asset Management:
• How the project will contribute to the overall financial and socio-economic objectives
• Including deciding on:
• Which project type (TOD), where, which specific project
Property Management:
• Design and management of the project so that it fits the asset management objective
Facilities Management
• Relationship between the requirements of the users of space and building fit and operation (management)
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Conceptual Thinking to Project Decision-making
What are the desired OUTCOMES to address what ISSUES/PROBLEMS?
Categories of Issues:
• Technical – Is it technically feasible
• Financial – Is it financially viable
• Socio-economically viable e.g. job creation
• Politically – how does it fit with the political mandate, priority & timeframe?
“Feasibilities” need to be done for all four from all role-players perspectives – public (different spheres & departments) and private.
Focus on Financial and Socio-economic
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Conceptual Thinking to Project Decision-making
DIRECT (Primary)
INDIRECT (Secondary)
INDUCED (Tertiary)
However to forecast impacts, need data and evidence
Therefore need to review and assess previous projects – Role of M&E – provide accurate and realistic data to forecast impact
Some examples of financial and socio-economic impact undertaken in South Africa
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NDHS
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NDHS
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Direct Indirect InducedCaptialExpenditureonProductionCapitalExpenditureonJobCreationOperationalExpenditureonProductionOperationalExpenditureonJobCreation
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NDHS
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CAHF Housing Asset Study
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Social Housing Foundation
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Social Housing Foundation
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Social Housing Foundation
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CTICC
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Urban LandMark CBA – State/Household/Developer
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Urban LandMark CBA – State/Household/Developer
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Urban LandMark CBA – State/Household/Developer
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V&A Economic Impact
• Contribution to GGP (Gross Geographic Product)
• Job creation – Direct – Construction and Operation
– Indirect – from the multiplier effect
• Enterprise Development
• Infrastructure to other sectors
• Property Rates • Direct
• Indirect – 23% increase in property
Value 1.5km radius of the V&A –
R245 million
in values additional rates.
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Impact of JDA Investment
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Impact of JDA Investment
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SAPOA Impact of Commercial Property on the Economy
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Area of intervention
…is the project intervening in the
production and consumption of
activities (economic – business activities
(skills development,
informal trading support etc.)
OR
…are we intervening in the production &
Consumption built environment
(land, zoning, infrastructure, tax breaks [UDZs] etc.
What is the outcome? How do we measure it?
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EconomicSystemConsump on
produc on
GrowthDynamicEndogenous-Exogenous
UserLoca onRequirements
PropertyMarket
CapitalSubMarket SpaceSubMarket
DevelopmentSubMarket LandSubMarket
Compe onforSpace
BuiltEnvironment
Builten
vironmentin
fluen
ceseconomicp
erfo
rmance
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Possible Assessment Categories
Economic:
• GDP – What is the multiplier?
– Different sectors have different multipliers
• Fixed capital formation
• Job creation • Temporary/permanent
• What type of jobs? Blue-collar, service-orientated
• Different sectors create different types of jobs
• How do these match the labour market – do we know what our labour market looks like
• Do we understand the value-chains of these sectors and what are the entry points for the different parts of the labour market? [Old] CT EGS?
• SMME development
• Skills development
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Possible Assessment Categories
Financial:
• Tax base
• Operating costs
• Project return
• Level of private sector leverage
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Possible Assessment Categories
Social:
• Provision of decent housing
• Access to services
• Increased tenure
• Improved health
• Improved education
• Reduction in crime
• Life-cycle costs of ownership
• Decrease in transport costs/time
• Affordability – give lower incomes a fighting chance
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Key Issues/Discussion Points
• How often is this done?
• Do we use consistent methodologies?
• Do we have the necessary data?
• Do we use the study outputs to make better decisions re future projects?
• What is our position with respect to spatial targeting? Are the conditions right for a place to respond to an intervention?
• Do we target an outcome or a driver of change?
• Do we know who we are targeting? Market segment.
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Key Issues/Discussion Points
Other inputs, ideas, ways of doing it, experiences……Domingo, Valerie, Neil…?
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