Role of FinancingInstitutions in UrbanTransportGeorges Daridogdarido@worldbank.orgSr. Transport SpecialistJune 7, 2013
World Bank Group: a multilateral developmentinstitution with a mission of reducing povertyand promoting shared prosperity•...
Financing is necessary, but not a sufficientcondition for good projects At Rio+20 the development banks committed toUS$17...
World Bank’s Sustainable Transport StrategyA safe, clean, andaffordable means toaccess to jobs, markets,and other social o...
Typical Development Objectives for Urban TransportProjectsDescription Example Indicator(s)Mobility Amount and type of trav...
Four pillars of urban transport strategy inLatin America1. Establishing metropolitan transport coordination Forum for dis...
Project feasibility study should include acomprehensive analysis of viable alternatives• Vertical alignment Surface, elev...
Transport alternatives are typically evaluatedby cost-benefit analysis (with/without project)• Costs: Capital (up-front i...
Maximizing all potential revenues to achievelong-term financial sustainability• Conventional: Fares Advertisement Leasi...
Transport and land value capture• Large transport investments can significantly increase propertyvalues, but how can some ...
Sale or Transfer ofDevelopment RightsOUTORGA ONEROSA DODIREITO DE CONSTRUIRPublic AuthorityConstructionPotential (m²)Prope...
CEPAC, Certificates of Additional Construction Potential(Certificados de Potencial Adicional de Construção)• Tradable bond...
Urban Operation(for a predefined area)=• infrastructureinvestment+• value captureinstrument (CEPAC)+• urban/socialdevelopm...
Use of CEPAC revenues in São Paulo• CEPAC sales since 2004 have generated >US$1 Billion24%63%1% 0.2%12%CEPAC investments i...
CEPAC – advantages and disadvantages+ Improves revenue generating capacity of cities without taxation+ Tradable certificat...
MAPA DAS OPERAÇÕES URBANASAreas of Urban Intervention in Belo Horizontealong major transport corridors
In conclusion, the evolution of World Bank’slong-standing engagement in Brazil1. Decentralization of federal rail network2...
1992-1999: Decentralization of federal railnetwork to StatesPhotos credits: http://o-blogdotrem.blogspot.comSao Paulo 1993...
1999-present: Modernization + physical,operational and fare integrationPhotos credits: CPTM, Author
2001-present: Investing in network expansionand capacityActive Projects:Rio Supervia,Sao PauloLine 4 (Phase2), Line 5, and...
São Paulo Metro Line 4 (Phase 1)PPP Financial StructureGraphic: ADF andCODATU (2009)
Including Social and Cultural Aspects
Including Urban Development and Renewal
In the long-term, a better job-housing balance canmoderate transport demand and costly peaking
May not be enough to work on just supply issues, sotravel demand management is important• How to create incentives and win...
Point density plot of automobile trips in Sao PauloHistoric CenterAv. PaulistaFaria LimaPinheirosMorumbi/Av. BerriniArea a...
“Corporate Mobility” Demand Management Pilothttp://www.empresas-pela-mobilidade.com27
Thank you for your attentionGeorges Daridogdarido@worldbank.org
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Georges Darido - Banco Mundial - El Rol de las Entidades Finacieras en el Transporte Público Urbano

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III Congreso "Las Mejores Prácticas SIBRT en America Latina" - Belo Horizonte - 2013

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Georges Darido - Banco Mundial - El Rol de las Entidades Finacieras en el Transporte Público Urbano

  1. 1. Role of FinancingInstitutions in UrbanTransportGeorges Daridogdarido@worldbank.orgSr. Transport SpecialistJune 7, 2013
  2. 2. World Bank Group: a multilateral developmentinstitution with a mission of reducing povertyand promoting shared prosperity• Financing Investment loans, grants, and guarantees Available resources vary by country according toneeds and lending limits• Technical assistance Studies and analytical work Pilot projects to demonstrate concepts• The “Knowledge Bank” Build capacity Disseminate good practices• Convener and “honest broker” Align interests to promote reforms and innovation Independent advisor
  3. 3. Financing is necessary, but not a sufficientcondition for good projects At Rio+20 the development banks committed toUS$175B for sustainable transport over next decade But overall investment need is largero Backlog of transport investments in some cities is hugeo Assumes leveraging of counterpart funds Some cities and countries in Latin America do not lackfinancing to implement urban transport interventions(e.g. Brazil’s PACs) But lack good, ready projects or the capability toprepare them
  4. 4. World Bank’s Sustainable Transport StrategyA safe, clean, andaffordable means toaccess to jobs, markets,and other social oreconomic opportunities.• Supporting improvementand reforms of publictransportation systemand institutions• Focus on poor andvulnerable users, as wellas emerging issues withclimate change, energyefficiency, safety,gender, and accessibilityLima’sMetropolitanoBRT
  5. 5. Typical Development Objectives for Urban TransportProjectsDescription Example Indicator(s)Mobility Amount and type of travel (bothpassenger and freight)Number of trips by mode and change in total traveltime or costAccessibility Connectivity between desired originsand destinations; proximity or ability toreach desired goods, services andsocio-economic opportunitiesNumber of jobs within in a 1-hour radius, retailarea within a 10-minute walk of a stationQuality Characteristics of travel between originand destinationReliability (e.g., travel time variability, failures),comfort, convenience and equityEfficiency How resources are used and theenvironment impacted, including: Local and global emissions Energy consumption and efficiency Impact on land and water Emissions of NOx, SOx, CO, PM, or CO2 Quantity of fuel consumed per unit of mobilityor economic welfare created Amount of noise, runoff, sediments, dust, andother impacts to heath and welfareSafety The safety and security of the transportsystemMinimizing intentional and unintentional incidents,fatalities, injuries, property damageAffordability Economic and financial sustainabilityfrom various perspectives, including: Users (by income group) Government and general public Operators and others Travel expenditure in relation to income Implementation time and capital costs Operating, maintenance, and disposal costs Other social and economic impacts of theinvestment (e.g. poverty reduction)
  6. 6. Four pillars of urban transport strategy inLatin America1. Establishing metropolitan transport coordination Forum for discussion and concensus building Institutions for joint decision-making or budget to execute2. Integrated plans for transport, land use and air quality Alternative analysis Feasible projects (economic and financial)3. Mechanisms to ensure long-term financial sustainability Fare and subsidy policy Non-fare revenue opportunities Land value capture from TOD4. Progressive private sector participation, whenappropriate
  7. 7. Project feasibility study should include acomprehensive analysis of viable alternatives• Vertical alignment Surface, elevated, underground or mixed• Horizontal alignment Locate stations according to travel desire lines Minimize adverse impact• Technology Rail, bus, etc. Electric, diesel, CNG, etc.• There may be more than one viable alternative for agiven corridor
  8. 8. Transport alternatives are typically evaluatedby cost-benefit analysis (with/without project)• Costs: Capital (up-front investment costs) Operating (operational, maintenance, disposal costs)• Typical Benefits, but not all are quantifiable: Travel time saving: quantified using transport models and value of time Vehicle operating cost savings including fuel. Road safety benefit: sometimes quantified in terms of avoided injury,fatalities, and property damage using statistical values from local data. Air quality benefit: sometimes quantified to include the economic andhealth impact of reduced emissions of local pollutants. Greenhouse gas emission savings: sometimes quantified forevaluating the possibility of selling carbon credits. Other impacts of infrastructure spending on economic developmentand employment may be considered but difficult account.• Sensitivity analysis: scenarios to test the limits of the selected alternativein terms of costs increase, delays, variation in revenue or demand.
  9. 9. Maximizing all potential revenues to achievelong-term financial sustainability• Conventional: Fares Advertisement Leasing ofcommercialspace• Other–Value Capture: Sale ofdevelopmentrights Property/betterment taxes
  10. 10. Transport and land value capture• Large transport investments can significantly increase propertyvalues, but how can some of the surplus value be captured tocompensate for the public investment?• Benefits generated from: Increased mobility (reduced travel times or generalized costs) Increased accessibility (proximity to socio-economic opportunities) Reduced externalities (pollution, noise, etc.)10Folha de S. Paulo,23/March/2011
  11. 11. Sale or Transfer ofDevelopment RightsOUTORGA ONEROSA DODIREITO DE CONSTRUIRPublic AuthorityConstructionPotential (m²)Property OwnerUrban Development FUNDPayment for the Rightto Upzone/Densify ($)Public AuthorityProperty OwnerAREA INVESTMENTSContribution orCounterpartPayment ($)Public AuthorityReal Estate MarketAREA REDEVELOPMENTConstructionPotential (m²)Sale of CEPACs ($)Simple UOOPERAÇÃO URBANASIMPLIFICADAUO with CEPACOPERAÇÃO URBANACONSORCIADAConstructionPotential (m²)Types of Urban Operations (UO) in Brazil
  12. 12. CEPAC, Certificates of Additional Construction Potential(Certificados de Potencial Adicional de Construção)• Tradable bonds for new land development rights (additionalbuilding height, FAR, upzoning)• Compensates City for the cost of public infrastructure needed fornew development• Number of CEPACs determined by the City but capped by lawand regulated• Revenues to be used in pre-defined area (Urban Operation)• City issues a CEPAC Prospectus with boundaries and targetedprojects• Tried in a handful of municipalities in Brazil: Sao Paulo: many active and planned Urban Operations Rio de Janeiro: Porto Maravilha, auctioning of CEPACs Belo Horizonte: at least 2 urban operations planned12
  13. 13. Urban Operation(for a predefined area)=• infrastructureinvestment+• value captureinstrument (CEPAC)+• urban/socialdevelopment goals13
  14. 14. Use of CEPAC revenues in São Paulo• CEPAC sales since 2004 have generated >US$1 Billion24%63%1% 0.2%12%CEPAC investments in the ÁguaEspraiadaUrban OperationAffordable HousingTransportDrainage WorksGreen AreasAdministrative Costsand Other Expenses9%16%60%15%CEPAC Investments in the FariaLimaUrbanOperationAffordable housingUrban EquipmentsTransportAdministrative Costsand Other Expenses>US$300 million >US$700 millionMetro Faria Lima(Line 4)Agua Espraiada -Bridge
  15. 15. CEPAC – advantages and disadvantages+ Improves revenue generating capacity of cities without taxation+ Tradable certificate can capture market price+ Purchasers decide timing of development according to marketconditions- Chicken or Egg Problem: government must investment to generateinterest in CEPACs- Boundary problem: difficult to fund strategic investments beyond UOboundary or crossing jurisdictions- Complex: analysis of infrastructurecapacity/needs and considerablefinancial expertise is required- Secondary market for tradingcertificates takes time to develop- Economic cycle: viable incities/areas with boomingproperty markets15
  16. 16. MAPA DAS OPERAÇÕES URBANASAreas of Urban Intervention in Belo Horizontealong major transport corridors
  17. 17. In conclusion, the evolution of World Bank’slong-standing engagement in Brazil1. Decentralization of federal rail network2. Modernizing existing network and buildingnew institutions3. Expanding the networks by financing directly4. Advisory and technical assistance to:o Enhance the technical and financial viability ofpotential PPP projectso Accelerate planning and implementation processo Leverage private sector involvemento Balance long-term supply/demand
  18. 18. 1992-1999: Decentralization of federal railnetwork to StatesPhotos credits: http://o-blogdotrem.blogspot.comSao Paulo 1993 Today
  19. 19. 1999-present: Modernization + physical,operational and fare integrationPhotos credits: CPTM, Author
  20. 20. 2001-present: Investing in network expansionand capacityActive Projects:Rio Supervia,Sao PauloLine 4 (Phase2), Line 5, andTrains andSignalingProjects(Metro andCPTM)Metro Line 4 (Yellow)
  21. 21. São Paulo Metro Line 4 (Phase 1)PPP Financial StructureGraphic: ADF andCODATU (2009)
  22. 22. Including Social and Cultural Aspects
  23. 23. Including Urban Development and Renewal
  24. 24. In the long-term, a better job-housing balance canmoderate transport demand and costly peaking
  25. 25. May not be enough to work on just supply issues, sotravel demand management is important• How to create incentives and win-win through voluntary measures?
  26. 26. Point density plot of automobile trips in Sao PauloHistoric CenterAv. PaulistaFaria LimaPinheirosMorumbi/Av. BerriniArea around Berrini >53% of trips by SOV
  27. 27. “Corporate Mobility” Demand Management Pilothttp://www.empresas-pela-mobilidade.com27
  28. 28. Thank you for your attentionGeorges Daridogdarido@worldbank.org

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