Every city has pockets of underused and underutilized land or distressed and decaying urban areas. These pockets of underused land weaken the city’s image, livability, and productivity. They are usually the result of changes in the urban growth and productivity patterns. We have documented eight cities in this volume, which have faced major challenges of this kind.
To tackle the issues of decline and urban decay, these cities and others around the world have designed complex processes of urban regeneration. Rarely are urban regeneration projects implemented solely by the public sector. The need for massive financial resources is one factor. However, even if the government could provide the necessary resources for regenerating urban land, the buy in from the community and business sector is needed to ensure the sustainability of regeneration efforts. Consequently, participation of the private sector is a determining factor in success of regeneration of underutilized urban land.
To this end, this volume builds on the experience of eight case studies from around the globe, which successfully used their land assets and regulatory powers to leverage and incentivize private participation in urban regeneration. The cases vary in the institutional land political context, policy and regulatory tools used, and the extent of community participation and governance structure. What they have in common is significant private sector participation in the regeneration and rehabilitation of decaying urban areas.
To help identify the sequence of actions needed for a regeneration process, this guidebook identifies four distinct phases: scoping, planning, financing, and implementation. Each phase includes a set of unique tools that local governments can use to systematically design a regeneration process. In addition to the four phases, the guidebook will also define three major assets that the city can use for urban regeneration; these are land, community, and the environment. Tools for managing each asset will be presented (see right).
The Four Phases
Envisioning Change: The Scoping Phase
A transformational urban regeneration process, either for the city as a whole or for a specific land parcel—starts with a scoping exercise. Scoping is a process, which provides decision makers with a strategic assessment to identify and promote regeneration. Scoping provides an analytical foundation and engagement process that the city leaders can use to generate choices and to debate and decide on the best course of action. A sound scoping process supplies city leaders with analytical tools to confront issues facing the city that are vital to its future, and to make strategic decisions on the direction they want their city to pursue. Scoping is both forward looking and backward looking. It is forward looking by analyzing what is required for the city and regeneration area to be successful in the future and backward looking in understanding the city’s history and the unique “DNA” of the city that are precedent for prudent action and can be capitalized on.
Designing a Web of Actions and Institutions: The Planning Phase
While scoping phase provides an analytical foundation and an overarching rationale and narrative for the regeneration project, the planning framework establishes the long-term vision and context. It is vital to sustaining the regeneration vision through the inevitable changes and unforeseen challenges of market and political cycles. However, it is equally important not to create an overly strict planning structure, which rigidly regulates the outcomes as it discourages private investment. An effective planning framework will balance vision, planning principles and facilitates negotiation amongst the public, private and community sectors.
A sound planning framework couples an inspiring vision with a clear regulatory process. This will provide the private sector with the assurance to invest and take risk, and assures communities that public goals will be achieved and not subordinated purely to the dictates of the market. Using the findings in the scoping section, the planning phase of a regeneration process starts with laying out the foundation on how to prepare for the planning process. The planning phase must detail all the vital elements or assets of the regeneration project, including land, community, and the environmental issues.
Incentivizing Private Funding: The Financing Phase
Whether an urban regeneration initiative is public sector or private sector led affects the types of financing tools that may be accessible to its lead sponsor. Large-scale urban regeneration projects are complex and require immense resources to be planned and implemented properly. Therefore very few cities have the resources to finance all the costs of such large initiatives outright. The partnership with the private sector is not only necessary to share the costs but it is also needed to share the risks and technical capacities. Typically, therefore, cities deploy a combination of internal and external funding sources, policy and regulatory tools, and strategic partnerships with the private sector, among other strategies for financing their urban regeneration vision.
Many factors affect the methods used for financing urban regeneration initiatives. The most important factor is the national legal and institutional context with respect to the amount of control a city has over its fiscal management, specifically its ability to raise and allocate revenue. For example, a city’s ability and creditworthiness to access municipal bond markets is a determining issues. Another important factor is the city’s capacity to use innovative financing techniques, such as tax increment financing or development rights transfers to support specific real estate and economic development strategies. Based on the case studies in this volume, there are two distinctive groups of instruments to be used for financing urban regeneration: financial tools and regulatory tools. Financial tools involve direct financing assistance for a regeneration project such as various value capture methods (impact fees, special assessments, exactions). Regulatory instruments are essential in leveraging a city’s regulatory powers to incentivize private sector participation. An example of this type of tools is tax-based and non-tax-based incentives, zoning, land-use regulations, and development rights transfers.
Evolution from Ideas to Action: The Implementation Phase
Implementation phase entails translating the vision for long-term change into the financial, contractual and institutional relationship between the public and private sectors. This phase includes structuring sound institutions and an organizational structure that is viable and sustainable and can exist through multiple political administrations. It also involves developing sound contracts to translate the vision into a tangible partnership between public and private sectors.
Political leadership may be the most important factor in the implementation phase. As regeneration is a long term, transformative process of change that entails disruption and risk, political leadership is essential to managing the change process so that all stakeholders feel engaged in the process, understand its importance to the future of the city and have genuine outlets to participate. The longitudinal test of political leadership is whether the vision is sustained through changes in political and economic cycles and results not in community division but greater cohesion.
Another major indicator of success in the implementation phase is to clearly map out the life of the project and the expected project cycle and phases as best as possible, accounting for uncertainties. Up next is the phasing and breakdown of a large project into manageable components. The handover process must account for the complex set of interdependencies between the large scale investments and construction projects, such as major infrastructure (utilities, transport, park systems, brownfield cleanup), and the microdelivery of commercial and residential projects that need to establish a “sense of place” and feel complete even though the ultimate build-out of the regeneration project will progress over a longer period. One last important component of implementation arrangement is determining the optimum institutional structure for project delivery and assigning the powers and tools to various entities. This affects the structure of contracts, handover, and sustainability of the project.