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Wednesday, 8 July 2009

Funding urban renewal

An interesting article in The Economist on how Britain plans to regenerate cities in face of funding constraints from the existing model of "developer contributions" (where developers contributed some money to help fund infrastructure). Many UK local authorities are now turning to copy the American model of tax-increment financing (TIF). The idea is to draw a boundary round an area, borrow to pay for basic infrastructure and repay the loan from the increase in property-tax revenues inside the redeveloped zone as private firms start building. The stumbling block is obviously where the local authorities "borrow" money from. If such an idea was developed in Zambia, it would certainly require Government lend these funds, although clever councils in urban areas might well be able to afford it. I have previously argued for "developer contributions" model, as I think it is still valid in the Zambian context. Would be interested to hear what others think, of the TIF as well as other possible alternative funding mechanisms for our urban local councils.

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