Approaches to financing the smart city infrastructure

April 19, 20261 Mins read183

Get on a smarter path: New partnership models for smart cities

Regardless of the technology application, a cross-cutting theme in smart city infrastructure investment is the re-allocation of risk and reward between the public and private sectors. Federal, state and local leaders will increasingly encounter new partnership models for front-end investment and revenue sharing, including pay-for-performance related to service improvements or access to services.

Even resource-constrained federal, state and local entities can participate in the emerging smart cities market with the oversight of their financial, accounting and infrastructure leaders. As in the case of the Smart Cities Challenge sponsored by the U.S. Department of Transportation (DoT), winning city Columbus, Ohio, received a $40 million DoT grant, along with $10 million in support from Vulcan Philanthropies. The private sector also stepped forward with $100 million in investment. Collectively, this investment will be used to transform how transportation is used in Columbus. One area of focus is ride-sharing that can better connect lower-income communities to their city, which can result in economic benefits, citizen inclusion and potentially better health outcomes.

By thinking outside the box and partnering in new ways, even resource-constrained federal, state and local governments can participate in smart city programmes. And as more municipalities pursue smart city strategies, valuable lessons and best practices will enable the success of future adopters.

Download our new report Funding and financing smart cities—from the Deloitte Centre for Government Insights, published in the Association of Government Accountants’ Journal of Government Financial Management—to learn more about smart cities in action and the innovative financing strategies behind them.

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