A thorough financing plan is needed to ensure that the previously identified measures and actions are economically sound and financially viable. This starts with identifying all the available funding and financing streams as well as assessing the ability of the organisations involved in your SUMP to access or capture them. It is important to compliment the scan of financing and funding sources with an organisational assessment
because the financial commitments and capacities of the different organisations vary, and they have different legal rights and responsibilities related to finance.
In identifying potential sources of financing and funding for mobility measures, a wide range of options should be assessed. Next to available sources - such as local budgets and taxes, national and EU subsidies, and existing revenue streams from ticket sales, parking fees, and other areas - also potentially new sources of funding should be assessed, such as bonds, land-value capture, development charges, and the private sector. It is important at this stage to also think about sources of funding for further detailed feasibility and market studies for larger investments.
Funding and Financing for SUMP implementation – what’s the difference?
Financing usually refers to the money that is needed from external sources for the initial investment at the start of the project, which ultimately needs to be paid back or returned. Financing instruments generally refer to debt or equity or a mix of these products. Taxpayers can also contribute indirectly to initial costs through investment grants and subsidies.
Funding a project generally refers to who pays for the asset over the long term. This can be direct users of services (tickets, parking fees, city center pricing), customers of mobility related services (advertising), or taxpayers through general state budgets or special transport-related taxes.
It is useful to remember that implementing a financially sustainable SUMP needs both financing and funding. The use of loans to finance public transport infrastructure, for example, can be limited by the capacity of sources of funding to repay such loans.
Aims
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Identify potential financing instruments and funding sources for all actions.
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Assess the financial viability of individual actions within measures to rule out non-viable actions and achieve cost-effective measure designs, while still considering how funding streams could reasonably evolve in the future.
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Assess the ability of different organisations involved in your SUMP to access the funding streams.
Tasks
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Assess the actions specified in the previous Activity
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8.1 against their financing needs and revenues in the short, medium, and long term, including operation, enforcement and maintenance, and identify any funding shortfalls (total cost of ownership).
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Estimate direct financial revenues from the actions,
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e.g. from public transport fares and subscriptions, concessions, lease of advertising space, fees for parking or other municipal services, and define the expected degree of cost recovery.
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Assess additional monetary value generated through the actions (e.g. increased value of land and real estate in the vicinity of new public transport stations) and potential mechanisms for value capturing.[Ref: 50]
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Identify financing instruments and funding sources for the selected actions. Assess all of the following options to identify the most suitable ones. Explore in particular options beyond the local budget.
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Local taxes: a special local transport tax for public transport paid by public or private enterprises, developers;
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Revenue funding: tickets, parking fees, city centre pricing, congestion charging, advertisements;
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Private sector involvement, e.g. through public- private partnership arrangements;
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Fundraising activities involving appropriate sponsors (but consider compatibility with marketing strategy);
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Local budgets: from different municipalities and different policy domains;
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National/regional subsidies and EU funding;
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External loans, municipal and green bonds.
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For measures that require external financing, identify the legally appropriate borrowing entity and assess the credit-worthiness.
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Identify sources of funding for further detailed feasibility and market studies for larger investments.
Activities beyond essential requirements
Timing and coordination
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Builds upon the actions of all measure packages as defined in Activity 8.1.
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Results will inform the final discussion of action in Activity 8.3 and feed into the development of financial plans in Activity 9.1.
Checklist
✔ Meaningful forecasts prepared for expenses, revenues, cash flows and other financial items.
✔ Financial analysis and assessment of possible funding sources carried out.
✔ Preliminary assessment available regarding which organisations need to acquire external financing.
✔ Results summarised for discussion on final selection of actions.
Pricing measures
Pricing measures such as fares, parking fees and road tolls form part of many measure packages. Changing cost structures for mobility options can both be a measure of demand management and generate local income. Some charging schemes, such as parking management, can be implemented relatively easily, others require more sophisticated technology and investments and may raise acceptability or privacy concerns (e.g. a congestion charging system based on vehicle registrations).
Before introducing demand management measures, it should be carefully considered whether the generated income should disappear into the general budget or better be ring-fenced for enhancing urban sustainable mobility options. The specific local and national regulations need to be closely analysed to assess the options.
Explaining that revenues will be used to increase the service level of public transport and to support alternatives to private car use generally enhances the acceptability of pricing measures. Ring-fencing additional income also makes public transport financing more resilient against competing budget demands from other public policy fields.
The European Commission offers a vast number of initiatives and programmes that can be used for (co-)financing sustainable mobility measures. European funding programmes will mostly contribute to investments, but rarely to operating costs of infrastructure and services. Among these are:
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European Structural and Investment Funds (ESIF), including the European Regional Development Fund (ERDF) with ‘Interreg’
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European Fund for Strategic Investments (EFSI)
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Connecting Europe Facility (CEF)
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LIFE Programme
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Horizon 2020/ Horizon Europe
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ELENA (part of Horizon 2020)
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Urban Innovative Actions
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URBACT
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Knowledge and Innovation Communities (KICs) on Climate and on Urban Mobility
An overview of current European funding sources for cities is available at https://ec.europa.eu/info/eu-regional-and-urban-development/topics/cities-and-urban-development/funding-cities_en
Further advice on European funding opportunities is provided by:
A selection of both European and other funding sources and financing instruments is described in the Topic Guide Funding and financing of sustainable urban mobility measures.
Major infrastructure projects in Sustainable Urban Mobility Planning
Ideally any investment to improve urban mobility should be based on the preferences established in the SUMP or in a preceding (robust) urban mobility strategy/plan. It is essential that the project is not defined as a result of single mode strategies (e.g. road or public transport in isolation), and that it is evaluated in the context of a wider set of interventions (both on the mobility/transport system and on the reference land use). In many cases large infrastructure projects have a very long preparation phase and are therefore pre-existent when a new comprehensive urban transport plan is launched – including having already set aside the budget for their construction. This is a frequent situation that many transport planners are confronted with in reality. Depending on the state of implementation of such predefined projects, the SUMP can then either take account of the new reality, verify the preceding options analysis – both at strategic and technological level - and conclude on the level of risk involved or investigate the project as one of the measures evaluated in the SUMP process. Such main pre-defined projects may have already undergone solid options analysis and/ or they entail “no risk” for other reasons (e.g. their development was foreseen in the context of a well-conceived land-use plan). The SUMP can then be developed in parallel and may contribute to fine-tuning scope and design of the project (see Good Practice Example on Bratislava below). The identification of complementary measures, including “soft” measures to limit private car usage such as parking fare policy etc., may furthermore enhance its viability. When the risk is considered high – e.g. when the first analyses carried out within the SUMP seem to indicate a non-viability of the project – and if it has not yet been procured or physically started, it is necessary to cease the further preparation of the project until the SUMP confirms the project or indicates any necessary adjustments. A SUMP process biased in favour of the pre-selected risky project would be fundamentally flawed. It would be in contradiction with the core objectives of a SUMP and in contradiction with the stipulations of these guidelines.
Source: EIB/JASPERS
