3 creative ways to finance smart city projects

Source: TechRepublic on October 20, 2017

Financing can be a big issue for cities.

George Atalla, global sector leader at EY, explained how cities can use nontraditional methods to finance smart city projects.

There are two types of financing, he said. There is the financing of traditional types of infrastructure, and there is the financing of smart city projects. These traditional types can be financed through the city's funds or through their budget. However, smart cities initiatives become challenging to finance because there isn't a "physical, tangible asset to secure the loan," so cities must come up with alternative solutions, Atalla said.

He suggested three creative ways cities can fund their smart city projects:

1. Find ways to share in the savings

These types of alternative methods have to be built on some sort of sharing in the revenue or in the savings, that comes from implementing smart city initiatives.

2. Use tax incremental funding

The smart city project will increase the value of the properties where the project is being held, he said, which will increase the property value. And lead to a higher tax collection that can be shared, and used as a way to finance the project.

3. Social impact bonds