Financing Urban Development: The Joint Efforts of Governments and the Private Sector

As urban areas look forward to future development, the primary question that confronts leaders is how to finance immediate plans. The economy of urban areas has been shifting to service and technology industries. As a result, governmental leaders are being asked to consider and finance increasingly complex development projects that, although public in nature, have a highly private character. The public sector is beginning to use the concepts of risk and reward analysis and is prepared to make equity investments to stimulate the kind of investment it wants. Conversely, the private sector is beginning to learn how to deal effectively with state and local governments. Private developers are recognizing the critical role that public services play in the success of a project and increasingly are willing to pay the cost of such services directly. The cost and benefits to the community are becoming part of the calculus of development. The future of urban development finance rests on the willingness of developers and governments to recognize their joint dependencies. The benefits of well-conceived and well-executed development are great enough to be shared by both parties.