Scotland is staking its reputation for being a nation canny with its cash by taking the lead with a new financial instrument designed to help local authorities weather the crisis-induced funding drought. Edinburgh will be the first city in Britain to trial Tax Increment Financing (TIF), the funding mechanism imported from America to save mothballed regeneration schemes.
With the private sector wary of large, long-term investments and pressures on the public purse, cities are hunting for new sources of funding for long term projects vital to their future economic viability. London, Paris and New York know if they don’t find the cash to pay for better roads, railways and smarter city centres, they will fall behind cities like Shanghai, already a beacon for foreign investment and creative minds.
All sorts of different mechanisms exist, from the Urban Transformation companies in Italy (see box) to selling construction rights above previously allowed building heights in Sao Paolo. In the UK, great hopes are pinned on TIF, which allows local authorities to fund projects by borrowing against future tax revenues expected to be generated by the proposed scheme. English cities will have to wait to until changes to legislation which aren’t required in Scotland.
To see the full article, and another I wrote on the Barcelona Economic Triangle, click here:If you want to read the full magazine, it is available here: MIPIM Preview magazine. (I'm on p. 32 and pp 60-66)
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