Urban populations are growing. It's a trend that's not expected to end anytime soon — and it's straining city services and budgets in many cities. We can see it in our congested streets, overburdened healthcare facilities and elsewhere. As a result, creative financing has become a hot topic in the smart cities environment: coming up with new ways or combinations of ways to stretch and supplement tight city budgets.
That's why we often publish stories about existing financing and funding resources that may not be well-known, as well as new innovations and options available through public-private partnerships and other sources. The story below outlines a new smart cities financing program announced this week by Council Global Lead Partner Cisco. We thought you would want to know about it. — Doug Peeples
Cisco is offering $1 billion in financing for cities to help them implement smart cities projects they may not otherwise be able to afford.
The program, City Infrastructure Financing Acceleration Program (CIFAP), is a partnership of Cisco Capital, private equity firm Digital Alpha and pension fund investors Whitehelm Capital and APG Asset Management.
"Funding is a major stumbling block for municipalities beginning their smart city transformation. With our partners, Cisco will bring the capital and expertise it takes to make smart city projects a reality. Digital Alpha, APG and Whitehelm Capital bring a fresh perspective on investment in an area that has previously been perceived as too new and, therefore, too difficult to finance," said Anil Menon, global president of Cisco's Smart+Connected Communities.
It's a situation cities often find themselves in: how to provide the services their growing numbers of citizens need and expect with a budget that isn't keeping pace with that growth. That's a major reason for the current focus on finding creative financing options and building public-private partnerships.
The mission of the program is to help cities put together the financing needed to pay for smart city technologies with little up front investment, according to Cisco's announcement.
The program is intended to help cities with a variety of smart city projects, ranging from reducing energy use to increasing mass transit ridership and revenues as well as traffic congestion reduction and parking initiatives and more.
The CIFAP website lists several financing options, including traditional loans and leases, consumption-based financing (paying for technology based on how much is used), financing for technology as a service and concession financing. Additional options for services operators include revenue sharing and equity financing.
Doug Peeples is a Portland, Oregon-based writer specializing in technology and energy. Follow @smartccouncil on Twitter.