Rationale

The implementation of sustainable urban mobility actions requires a sound financial plan that defines how to finance the actions of the SUMP, including the detailed cost estimates that were prepared in Activity 7.2 and the financing and funding sources that were identified in Activity 8.2. With respect to the functional urban area of a city, funding and financing must come from different municipal, regional, national, private and multilateral sources. Ensuring the long-term sustainability of the SUMP measures requires strategically matching the funding needs of the measures with public budgets and a diversity of financing instruments, municipal loans, public utility loans, and, sometimes, private sector capital. Due to the long-time horizon of a SUMP, it is often useful to plan financing in phases, with sufficient detailing for first phase measures in order to attract funding and financing from public and private sources.

The proper phasing of projects is necessary to transition effectively to implementation and to ensure long-term financing sustainability. When thinking about the potential for raising private capital for initial investments, it is important to keep in mind that the cost of money, or the interest rate, that is typically paid by the private sector is higher than that paid by the public sector. This means that the private sector will require higher review streams (e.g. from more expensive ticket prices) to offset these costs. Successfully engaging the private sector also requires that the public sector convincingly and contractually takes on appropriate risks, particularly risks related to policy. The private sector also generally has a shorter investment time horizon than the public sector, and generally requires a faster return on investment.

Aims

• Create a financing plan for all SUMP measures, with indicative sources of funding and financing.

• Create a detailed financing plan for priority actions, that contains all projected expenditures, including taxes and contingencies, as well as revenues on an annual basis for the duration of the financing plan.

• Ensure the financial viability of actions, also beyond the initial funding period.

• Plan for contingencies to help achieve resilience against potential changes in income streams.

• Identify opportunities for private sector involvement.

• Agree on the distribution of costs and revenues among all involved organisations.

Tasks

• Coordinate with other municipalities, regional institutions (cost-sharing arrangements for cross- border public transport services) and the national level. Explore possibilities to jointly fund measures.

• Assess the potential of private sector investor involvement in either capital, investment, operations, or a combination of both.

• Prepare financial projections for first phase actions that include capital expenditure (up-front investment) as well as operation and maintenance costs and related revenue streams per year.

• Discuss measures with potential financing partners and funding sources to ensure that the selected measures are well prepared.

• Allocate financing and funding sources for all actions, including potential changes in revenue streams per year; Consider political commitment for the resolution of arising funding gaps.

• Agree cost recovery arrangements (ratios, modalities) for shared systems and services, such as. contribution to the operating costs of public transport services.

• Agree on the distribution of costs and revenues among municipalities, regional authorities, the national level, and public and private operators.

• Prepare a detailed financing plan by financier for first phase investment.

• Initiate access to technical assistance facilities, such as JASPERS/ ELENA, for complex measures that require follow-up studies to ensure viability and access to finance.

Timing and coordination

• After Activity 8.3, building on the agreed-upon actions with their responsibilities and timeline.

• Builds upon and deepens the estimated direct financial costs of actions and the identified funding sources (Activity 8.2).

Checklist

✔ Detailed financial plans prepared and agreed for actions requiring financing in the first phase of SUMP implementation.
✔ Commitment obtained from relevant public entities to allocate sufficient public budget to fill financing gaps acquired.
✔ If required, initial application for sources funding for feasibility, market or other studies to prepare project completed.
✔ Financial sustainability of projects ensured.
✔ Division of costs and benefits among relevant actors agreed.