Searching for the financing message in Habitat III’s ‘millennium challenge’

Did last week’s Mexico City meeting yield answers on how to pay for the New Urban Agenda? ‘Just general ideas,’ one participant said.

An exceptionally clear day in a city once known for its smog. Did that clarity permeate the recent Mexico City-hosted event on financing sustainable urbanization? (Greg Scruggs)

MEXICO CITY — The panoramic view from the 19th floor extended as far as the snow-capped volcanoes 70 km away on an exceptionally clear day in a city once known for its smog. In every direction, one could follow the seemingly endless sprawl that houses the 20 million-plus who live in this city built on the ruins of a pre-Hispanic empire, the archaeological imprint of which was laid out neatly below.

Here at the Centro Cultural Universitario Tlatelolco, on the edge of the Plaza de las Tres Culturas, where the country’s indigenous, Spanish and Mexican heritage sit side by side, it was clear that financing urban development is a challenge with millennial implications.

That is certainly how the issue has been framed by the organizers of Habitat III, the every-20-years conference on housing and urban development that will take place in October. For months, the conference’s leadership has pointed to the Mexico City meeting — which took place over three days last week — as the crux of the eventual success or failure of the New Urban Agenda, as the conference’s outcome strategy will be called.

[See: Who pays for what? Habitat III ‘finally’ turns to financing New Urban Agenda]

Indeed, the Habitat III organizers have gone so far as to label the Mexico City meeting “Financing Urban Development: The Millennium Challenge”.

“A lot of people will get completely stymied by just understanding the size of the challenge,” said George McCarthy, president of the Lincoln Institute of Land Policy. But he thinks that fear misses the broader trends afoot.

McCarthy cited the example of Lima, Peru, after a conference speaker had announced that the city needs USD 50 billion to invest in new infrastructure. “What are the chances that Lima will come up with [the money]?” he asked. “I bet you they will. It can be done. And it has been done, for millennia — we’ve been urbanizing for a long time.”

The scope of financing urban development only underscores its complexity, and touting the issue as the “millennium challenge” could have seemed like a tall order for a three-day meeting to resolve.

[See: 5 big ideas from the Habitat III meeting on financing urban development]

Nevertheless, the topic presents a huge opportunity for cities. The world is full of Limas, with municipal governments in both developed and developing countries clamouring for more resources to deal with growth and shrinkage, as well as more freedom to capture and use those resources.

Now, city leaders and advocates for sustainable urban development hope that Habitat III will prove the right bully pulpit to convince national governments to loosen the reins. But first, they will need to come up with the right message — a task at which many participants felt the Mexico City sessions only partially succeeded.

Devil in the devolution

One potential message could be found in the movement toward devolution, a process that was underway in the Mexican capital even as last week’s meeting took place. While Mexico City has long been subservient to the national government as a “federal district”, in January a major change took place: The federal district became, officially, Ciudad de México, with autonomous powers more like that of a state.

“Alternative messages were not delivered to the powers that be at the Mexico City meeting, which was under-attended by representatives of national governments and the private sector.”

It is too soon to tell if Mexico City’s newfound independence is a success story, but historically the relationship between national and local government has felt like a high-stakes game of tug of war: One pushes, the other pulls.

[See: Decentralization would boost development, leaders told in Addis]

So should Habitat III hitch its wagon to the cause of devolution — of urging that greater powers and responsibilities be vested in authorities lower down? If the conference does so, and if it takes on all of the antagonism that the push for devolution entails, Habitat III is doomed to fail, warned Yunus Arikan, global policy adviser for ICLEI — Local Governments for Sustainability, a cities network. “The buzzword for the New Urban Agenda is not decentralization, it’s multi-level partnerships,” he said in Mexico City.

Arikan cited the example of Superstorm Sandy, the hurricane that struck New York City in 2012, causing widespread damage to vital infrastructure, homes and businesses. In the storm’s immediate aftermath, billions of dollars in federal funds were quickly disbursed to local and state bodies, which took on key parts in the response. Since then, the national government has continued to play a role through the U. S. Department of Housing and Urban Development, which funded a climate-adaptation design competition for affected areas of the New York City metropolitan area.

[See: Climate finance receives keen attention in Habitat III funding talks]

This example is a case study of what Joaquim Oliveira Martins at the Organization for Economic Cooperation and Development, a grouping of industrialized democracies, believes to be an obvious truth. “Public investment is, in fact, subnational investment,” he said.

And that, he noted, should be reflected in the legislation that governs how cities operate vis-à-vis their national counterparts. These “rules of the game” should be structured to create an “enabling environment”, to borrow oft-repeated terms, that will promote efficiency when it comes to public investment.

Getting to scale

But how to convince national governments that this approach is in their best interests? That’s easy, Arikan says — they’ve already agreed to it.

“The buzzword for the New Urban Agenda is not decentralization, it’s multi-level partnerships.”

Yunus Arikan
ICLEI — Local Governments for Sustainability

Last year was a historic one for the United Nations, with the successful adoption of both the Sustainable Development Goals (SDGs) and the Paris Agreement on climate change. Money from foreign aid, development banks, global philanthropy and multinational corporations is now expected to flow into the implementation of these agreements, and “partnerships” has indeed become the new U. N. buzzword.

Meanwhile, both of these documents, signed onto by heads of state, acknowledge a role for those down the chain of command. The SDGs, after all, have Goal 11, the “urban SDG, that focuses on cities and human settlements, and the Paris Agreement’s preamble calls for “recognizing engagement of all level of government” in efforts at tackling climate change.

[See: All of Citiscope’s reporting on the urban SDG]

A key question for Habitat III, said Arikan, is “how do we build these achievements in other forums into our own agenda, saying that the New Urban Agenda is the delivery of all these goals?”

If advocates for sustainable urbanization can make the case that financing their projects will help the world meet its commitments on these new frameworks, then they may have found key partners ready to do the hard work of nurturing sustainable development and fighting climate change.

[See: The New Urban Agenda will pay for itself]

Still, how that hard work gets done at a global scale remains, to some extent, anyone’s guess. “We’re going to have a spectacular New Urban Agenda, but I am concerned about how we are going to finance it,” said Elkin Velazquez, director of UN-Habitat’s regional office for Latin America and the Caribbean.

Did the Mexico City meeting yield answers to that concern? “Just general ideas,” he said.

That sentiment was a common one, as several attendees noted the competent pilot projects on display but lamented the lack of a comprehensive vision. “The most important question for a public decision maker is how do we go to scale,” Velazquez said. “Pilots are inspiring and promising, but the question is how do we go to scale.”

Moreover, what is needed at scale varies greatly between the developed and developing worlds. “It’s difficult to speak of global financing,” cautioned Cities Alliance’s Anaclaudia Rossbach. “There are countries that still have a very large infrastructure deficit. We need massive investments at a large scale, quickly.”

Alternate visions

There’s another reason for the current lack of comprehensive strategy: Some of the visions being promoted in the run-up to Habitat III are impossible to fully reconcile.

“When we hear the official vision, it’s that urbanization is inevitable. We don’t believe it’s inevitable. We don’t believe it’s the only viable way of living on the planet, nor the only desirable way.”

Lorena Zarate
Habitat International Coalition

The mainstream consensus along the road to Habitat III is that the planet will become increasingly urban and that countries must plan for that eventuality. Yet advocates for alternatives to neoliberal economic development also came to Mexico City to promote the “solidarity economy”, the informal sector and alternatives to private property.

“The problem [of urbanization] is not well formulated,” said Lorena Zarate of the Habitat International Coalition (HIC), a global network of advocacy groups. “Urbanization is not just about building infrastructure but improving what’s already there.”

[See: A Needed Cornerstone for Habitat III: The Right to the City]

Up to half of buildings in the cities of the developing world were self-built by residents, she noted. Indeed, that constitutes an important form of financing urban development in itself — one that depends on sweat equity and individual-scale financing contributions.

“We need to improve the city that’s already been built. They’ve already put in a ton of resources, including monetary,” Zarate said, referring to urban residents. She noted that supporting this form of urban development is still possible in rapidly urbanizing Africa and Asia — though there, too, doing so would run contrary to much of official policy.

For example, Prabha Khosla, a Toronto-based consultant on urban gender issues, said that Indian Prime Minister Narendra Modi’s 100 Smart Cities programme has hijacked funds that would be better spent elsewhere. Calling the plan a “very elite project”, she questioned whether the effort was siphoning money from dedicated pots for poverty alleviation and low-income housing.

“Who is shaping those kinds of priorities for the urban future?” she asked. “I really feel that there is a corporate push that is telling us that this is our future.”

[See: Habitat III urged to prioritize ‘social regulation’ of real-estate markets]

This perceived collusion between multinational corporations and city governments has caused the dissenters to question the very underpinnings of Habitat III as presented by the United Nations. “When we hear the official vision, it’s that urbanization is inevitable,” Zarate said. “We don’t believe it’s inevitable. We don’t believe it’s the only viable way of living on the planet, nor the only desirable way.”

Habitat conferences have historically been a potent forum for provocative ideas, not just about cities but about the nature of land, housing and human settlement. Today, however, many feel that perspective is increasingly marginal in the run-up to Habitat III.

[See: Fractured continuity: Moving from Habitat II to Habitat III]

Nevertheless, groups continue to raise that banner, including Techo, a Latin American housing NGO that won a UN-Habitat Scroll of Honour in 2009 for its work. “We must complement private property with other, more social forms like cooperatives and communal land titles,” asserted Techo’s operations director, Luis Bonilla.

Alternative forms of land ownership would thus ensure more equitable outcomes from public investment, in his opinion. “We are not calling for redistribution of income but redistribution of social productivity, the social production of habitat,” Bonilla said, using a term, particularly common in Latin America, that refers to the collective community determination of living conditions. HIC has called for this principle to be central to the “New Habitat Agenda”, its proposed alternative to the New Urban Agenda.

Echo chamber

Ultimately, these alternative messages were not delivered to the powers that be at last week’s Mexico City meeting, which was under-attended by representatives of national governments and the private sector. Cities and their support networks were heavily represented, as were the urban departments of universities and multilateral organizations. But those calling the shots were conspicuously absent from the podiums.

“We’re going to have a spectacular New Urban Agenda, but I am concerned about how we are going to finance it.”

Elkin Velazquez
Director, UN-Habitat’s regional office for Latin America and the Caribbean

There were exceptions. Those national governments that did show up included Mexico as well as Habitat III’s champions within the United Nations — conference host country Ecuador and France, who together co-chair the Habitat III Bureau, a 10-country committee overseeing the Habitat process.

Cities, however, are clearly watching this process. The Global Fund for Cities Development (known by its French acronym FMDV) is one of the city players that came to Mexico City. “Local authorities should be market makers, as well. They should jointly influence the market players,” said the fund’s Geoffrey Makhubo. “How do you do that? We are going to find policy solutions and write policy documents for Quito.”

[See: Cities must be part of defining the New Urban Agenda]

But there is little time left to write those policy documents. There are just two months to go until the Bureau and the Habitat III Secretariat release the New Urban Agenda’s first draft, at which point national governments will begin formal debate on these issues — and it is those governments that will ultimately decide on the details of the new agenda.

If the financing question does not have a clear message by the time that debate begins, observers worry that the prospects for successful implementation of the New Urban Agenda will be as murky as a smoggy day in Mexico City.

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