Event June 25, 2018

CFF presents its work on financing cycling infrastructure in Rio de Janeiro

  • EVENT Velo-City 2018
  • LOCATION Rio de Janeiro
  • DATE June 12-15

The C40 Cities Finance Facility (CFF) was established to facilitate access to finance for climate change infrastructure projects, especially for those projects that would not normally qualify for alternative sources of financing. Although there are numerous financing and funding instruments available to cities when planning infrastructure projects, these are not always applicable to projects such as cycle lanes and bike-sharing systems. The CFF’s support to Bogotá’s Quinto Centenario cycle avenue aims to demonstrate how ambitious cycling infrastructure can access these more innovative sources of finance.

For this reason, the CFF was invited to present its experience and knowledge at two events in Rio de Janeiro. Aris Moro, Knowledge and Partnerships Manager for the C40 Cities Finance Facility, was one of the speakers in the ‘Unlocking Big Funds’ session at Velo-City, the world’s foremost cycling conference, held for the first time in Latin America. The event, on June 15th, was moderated by Carlosfelipe Pardo, Executive Director of Despacio, and included presentations by Simone Gallo, Head of Institutional Relations for Itaú Unibanco, and Jan Rickmeyer, Transport Policy Advisor at TUMI.

Aris’s presentation covered C40 and the CFF’s support to cycling and then outlined some of the financing and funding options available to cities when planning cycling infrastructure. Cycling infrastructure is, compared to other transport options such as highways, Bus Rapid Transit systems or metros, extremely cheap. Although this (in theory) allows for easier access to government revenues, it also means that cycling projects are often below the required minimum size for investment by a financier, while also not directly generating revenue that could be used for a loan repayment. Larger, more ambitious cycling projects such as entire networks have easier access to innovative sources of financing. Moreover, there exist a variety of funding instruments to cover the costs of developing cycling infrastructure, such as environmental charges, congestion charges, licence plates auctions, and dedicated taxes on parking, fuel or minicabs, which can also help improve a city’s creditworthiness.

  • Financing: Related to how governments (or private companies) that own infrastructure find the money to meet the upfront costs of building said infrastructure.
  • Funding: Related to how taxpayers, consumers or others ultimately pay for infrastructure, including paying back the finance from whichever source the government (or private owners) choose.
The Santander Cycle Hire system in London is operated by a private company but relies on user fees, a £7.5m a year sponsorship from Banco de Santander, and a £7m subsidy to cover operational expenses. Photo credit: Transport for London.

The CFF also presented insights on how to finance and fund public bike-sharing systems at the 4th Latin-American Meeting on Public Bike-Sharing Systems on June 10th. In a nutshell, the presentation argued that financing is dependent on the business model chosen by the project promoter, and funding has, in practice, relied on a mix of user fees, sponsorship and direct subsidies. It is crucial that any city planning a public bike-sharing system first defines the system’s objectives and the type of users it is targeting before establishing a preferred financing or funding instrument. Finally, with the rise of privately operated, dockless systems, cities must consider the opportunity cost of investing limited resources in public bike-sharing systems instead of cycle lanes.

An upcoming report on how the CFF has approached the issue of access to finance for the Quinto Centenario project, following on an initial case study about Bogotá’s enabling environment for cycling infrastructure, will address the question of financing directly.

Explainer: How to finance urban infrastructure?

Source www.c40cff.org 4.37 MB