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Funding and Financing Options for Sustainable Urban Mobility

This is a draft document intended for discussion at the 2019 SUMP Conference. The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Commission. The European Commission is not responsible for any use that may be made of the information contained herein.

1. Executive summary

This Topic Guide relates to Activity 8.2: Estimate costs and identify funding sources and Activity 9.2: Develop financial plans and agree cost sharing of the 3 rd phase of the SUMP cycle. It supports urban transport practitioners and other stakeholders identifying funding and financing options for the development of SUMPs, the implementation of measures, and the operation of transport services.

The transformation of urban mobility systems causes financial costs for the procurement and operation of innovative products and services and for the adaptation of existing infrastructure. While public budgets are limited, investments in infrastructure and transport services compete against other spending priorities, and private investors often are reluctant to invest into sustainable transport projects. Thus, cities need to seek additional funding and financing options and to develop business models to attract private sector investments in the development of the urban transport system. Moreover, financing schemes should cover the entire SUMP cycle, starting from planning, to project implementation and procurement up to the operation and maintenance of services and infrastructures.

This requires the blending of different revenue sources, including:

• project related revenue sources such as public transport fares and the lease of advertising space in buses;

• the extension of the local tax base, for example through the introduction of road user charges and parking fees or the use of value capture mechanisms;

• National, bilateral, and European grants;

• Debt financing through loans and other instruments such as issuing green bonds.

Finally, a prudential engagement of the private sector in infrastructure development and service provision can reduce the direct burden on public budgets while enhancing service quality (cf. Figure 1: Overview of funding and financing instruments).

The applicability of specific financing options critically depends on the national legislative environment. Many of the instruments and case examples presented here may not be transferred to other Member States due to the different distribution of responsibilities and powers between the political levels in the Member States. This report, however, can inspire the search for potential funding and financing sources and is therefore aimed not only at local and regional authorities but also at decision-makers at the national level. Still, whether a specific instrument can be used in a Member State needs to be assessed on a case-by-case base.