2016, Year of Big Urban Platforms: Do They Matter?

Published: Sunday, January 17th, 2016 by Lenora

2016 year ahead feature-post-350Emerging loud and clear from the high level commitments at the inspiring and historic outcomes COP21 climate talks in Paris in December was a focus on the critical role of the private sector, markets and financial innovation. Green bonds were the talk of Paris, as were public private partnerships and sustainable business, finance and investment themes.

As luck would have it, a range of influential urban dialogues in 2016 would seem to present excellent opportunities to recruit more corporate and financial institutions, as well as small and medium enterprises (SMEs), to develop sustainable, inclusive, resilient and livable cities.

Yet, the meaningful engagement of private sector partners varies widely from superficial to shadowy at these events. For many social justice-focused urban campaigners, minimal private sector participation is as it should be. As their argument goes, money corrupts efforts at urban equity, business is for wealthier segments of society and real estate developers don’t build for lower income segments. Some urban practitioners simply don’t understand because, for all the talk about social enterprise and impact investment, there is still scant evidence of it in urban development.

This private sector exclusion approach is widespread and somewhat understandable, but it sets up missed opportunities. Corporate sponsors at the Rio Olympics, for example, will probably tread carefully in Brazil. On top of the long-running Lava-Jato (Car Wash) scandal in Brazil, cozy connections between real estate developers and city officials in Rio help make the case that urban development practitioners can’t work with brazenly plutocratic developers.

When all is said and done, the Olympics will likely play up the most distorted connections between cities and business. These are the lessons that rally citizens against market solutions. Even if favelas are now chic for tourist stays, the citizen sector will certainly mobilize on some level to protest uprooted communities and Olympian expenditures diverted from social programs.

On the other hand, all things urban will hit a crescendo in Quito in October at Habitat III or the UN Conference on Housing and Urban Development (see Cityscope’s excellent summary). Concretely, Habitat III is tasked with producing The New Urban Agenda. The reach of this agenda stretches beyond physical infrastructure to poverty alleviation, security, equity, culture and beyond. (see Cityscope again for best explanations.)

The decisions to be made at Habitat III have been percolating for 20 years and will hopefully galvanize more people-centered cities on the ground. Past World Urban Forums suggest that UN-Habitat will mobilize a few mega-corporate names to participate in Habitat III. The organization will earn some sponsorship funds and garner some much-appreciated corporate volunteers along the way.

Yet, corporates seemed to participate at past World Urban Forums mostly for public relations. More lamentably than the Olympics, market-driven housing solutions, public-private partnerships and innovative financing rarely appear as more than symbolic bullet points in a future agenda. A few companies, like utilities and materials companies, will show off new water technology or an aspirational lighting project in the exhibition hall. A high-level panel or two will enable corporates to frame philanthropic projects as transformative business when, in general, these projects are small compared to the daily footprint of business activity.

Habitat III needs to better engage real estate investors, developers and homebuilders globally, as well as to tap into the rapid growth of the sustainable, responsible and impact investment movements. These players rarely attend nor do they find many productive conversations at the event when they do. Ayala Land, the Philippines biggest developer, is a notable exception as the firm is both a global sustainability leader and one that has more than one product that serves lower and moderate income households.

Many smaller developers are having an impact locally but don’t join this urban conclave. At World Urban Forum 7, Developing Smart Cities hosted another presentation that featured two Colombian social housing developers (Amarilo and FMSD) and micro-house startup Domogeo.  Elsewhere, real estate investment trusts (REITs) are either growing rapidly or close to being launched in most major developing economies. South Africa, for instance, now is home to both an investment fund and a REIT that invests in affordable housing to rent and buy. Colombian homebuilders have been successfully developing business models for lower and moderate income buyer as well.

As a final example, the India Smart Cities Challenge has aimed for more balance. In this training-plus-competition, the private sector, especially in tech, with real estate developers, investors and consultants were engaged early in the planning phases. Winning proposals must show citizen engagement, an urban vision, a development project for a specific area, a broader plan for “pan-city” solutions that help everyone and clarity on financial implementation. Affordable housing is a key element of the challenge, but so are sustainable, meaning also replicable and financeable, urban solutions for all, especially vulnerable citizens.

This way of thinking about private sector activity and financing “smart” urban development makes imminent sense. Neither governments nor private citizens have the resources to independently build either “the cities we want” or “the future we need” (to use the mottos of the World Urban Campaign and others). So, the private sector and markets should be integrated prudently and appropriately with a mind toward having the greatest impact.

In the end, of course, these massive urban forums matter, but they must be relevant to a wider range of actors than the coterie of aid agencies, NGOs and small dashes of global corporate presence that normally populate them. These are opportunities to learn, inform, mobilize, raise money, network and move action plans forward.

Habitat III could and should also be an opportunity for workshops that bring together governments, real estate developers and investors, as well as businesses and representatives of communities, because that’s who’s building our cities – and their future – right now. It’s disturbing that urban real estate developers, homebuilders, investors and bankers in the world’s fastest growing cities have only the slightest inkling, if at all, that events like Habitat III are happening this year, but there’s still time to fix that.

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