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| Official Newsletter of the Municipal Investment and Development Arena 2015 | March 2015 | No. 02 |
Conference conclusions Davor Inđić, Senior Banker, EBRD
The conference brought together those cities that are in open and constructive dialogue and who presented their biggest challenges to further development at the time the longest and deepest economic crisis. The exchange of experiences confirmed the need for regular and intensive connection cities in the region and beyond. In principle, we actually meet in 2016 in Budapest, and we should see this as a first encounter of cities in the tradition of an annual conference meeting.
<p.02> ROUND TABLE
<p.03> ROUNDTABLE TWO
<p.06> ROUNDTABLE THREE
Urban regeneration, Carina as an example
Effective management and development of urban areas
Development of major cities
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Municipal Investment & Development Arena 2015
Cities can become leaders of Development C ities, especially state capitals, all are important drivers of economic activity. The impact and reaches far beyond their administrative boundaries and often extends beyond national borders. Main cities are the most common model for other cities and regions so they can have a crucial effect on the entrepreneurial competitiveness and innovation. Therefore, it is important to encourage discussion about what central administration and other cities can do to create a framework for dynamic growth. Essential is constant dialogue with entrepreneurs and the management of communications with other stakeholders of public life, from state government to the public, to development solutions, meeting wider interests. These are some of the conclusions from the international conference ‘Municipal Investment & Development Arena 2015’ held in Zagreb on March 16 The conference was organised by Infoarena and the European Bank for Reconstruction and Development, with support from the City of Zagreb, a meeting of city governments, entrepreneurs, university professors, economic analysts, consultants and media representatives from Croatian, Hungary, Finland, Bulgaria, Slovenia and Kosovo. In his welcome speech, Tomislav Gavazzi, founder and owner of Infoarena, noted that the conference was organised for the better co-operation between the region and to encourage investment, leading to the development of the market, better infrastructure and better standards of living in towns and their surroundings. Gavazzi added that in South-East Europe 20 percent of the population live in cities, and the strength of the city’s economy is confirmed by data that they generates 50% of gross domestic product. GDP per capita in the cities of South-East Europe is €18,725, which exceeds the averages of the countries in which they are located. Davor Indic, Senior Banker at the European Bank for Reconstruction and Development, said the programme was designed for the conference, based on
the experience of co-operation between EBRD and cities in Southeast Europe. According to him, in the 20 years of cooperation ,any projects have been realized helping the bank to understand the needs of the area. EBRD in Croatia invested around €300 million, and the surrounding countries investment amount is in excess of€1 billion. Such funding has enabled the solution of specific problems, leaders and experts from the city administration and local government had the opportunity to acquire knowledge of the functioning of financial markets and the role of development banks. Particularly challenging have been the last seven years of crisis, stressed Indic. The pressure on local budgets grow, and citizens demand better services, at minimum cost. Local government is exposed to demands for reform and requirements for finding new models of development. EBRD is ready to provide financial and technical assistance, and conferences such as this are a great opportunity to see the needs of
cities and businesses, and to discuss how to quickly overcome the legacy of the crisis, said the Indic. An important impact of cities on their economic development was described and Sandra Švaljek, Deputy Mayor of the City of Zagreb. Her opinion is that the majority of development globally takes place in cities and they are the foundation for an innovative economy and society as a whole. Consider the numbers. While in 1950, one billion people lived in global cities; by 2050 according to estimates suggest that 6 billion will be citydweller. By 2010, towns will cover some 9 billion people but such development creates many challenges in protecting the environment, transport, and sustainable development. The conference held four panel discussions: on urban regeneration, attracting investment, the effective management and development of the city and local administration and the development of major cities.
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Round table:
Urban regeneration, Carina as an example
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he City of Zagreb and the State a cultural heritage, it imposes additional ing to Stern, “tear down a lot of walls” need to establish a joint company duties in the approach to construction. until they reached the finish line. Many to make all the necessary prepa- Stern said the proposal is based on the officers have performed their work comrations for the space of the former com- experience of participating in the con- mendablly, some were not interested. pany Carina, to offer investors suggested struction of the Arena, a large sports hall Others have interpreted the rules differDavor Stern, a city councillor, and de- in the southern part of the city. Although ently, and slowed the whole process. velop a deep entrepreneurial experience. built on the edge of town, Invest dealt Stern believes that the specialised mixed The former factory of Carina spreads with a number of administrative prob- city and state enterprise was a good soluover 130,000 m2 in the city centre, along lems. In parallel with the realization of tion. It would be acting in the so-called the railway line. It provides, in theory, a investment, they had to visit dozens of ‘horizontal development’ cleared the area very attractive opportunity to build agencies, ministries, authori- of property law problems, making it acfor mixed-use. ties and, accord- ceptable to investors. This should be done With approprias soon as possible, says Stern. Now, beate planning Many officers have performed cause of the crisis there are still not many and urban acinvestors, but when the situation gets their work commendablly, cess, the projbetter, and other European some were not interested. ect could attract cities will offer similar investors and projects, it’s good to be Others have interpreted the rules make an approready for competition, differently, and slowed priate profit and concluded Stern. the whole process enhance the city Mark Dabrović from centre, and new 3LHD architects prepublic facilities. In sented several examples the area of the factoof similar urban regeneration in ry area, protected as European cities. In Zurich, there is a
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procedures unifying project participants - investors, architects, designers installations, environmental experts, competent administrative and legal authorities - until future tenants or buyers of built space. Land, on which for decades was a workshop for the repair of rolling stock, may be contaminated, so it will need expensive repairs. It must be done as well as a traffic study as this area can not be seen in isolation from the surrounding areas of city traffic. And for Carina as for other urban areas to be restored, there are inquiries from interested investors, says Marovic, but need to know exactly who is doing what in the preparation of such projects. Sandra Švaljek, Deputy Mayor of the City of Zagreb, said that the city administration wants to help rebuild areas that were left empty by going industrial enterprises from the city centre. Once in Zagreb, the manufacturing industry employed about 100,000 people, while there are now barely 50,000. In Zagreb now thee are many possible investments open and complex enterprises Zagrepčanka, then Paromlin, Military Hospital in Wallachia and street space and the University Hospital at the southern edge of the city. The centre will soon announce a tender for investors in the rebuilding of the former Badel factory. Competition for urban design blocks on thi site was first announced at an international level. 250 proposals came in and architects from Portugal were selected for the work. Deputy Mayor pointed out that a large space for entrepreneurial activity exists in the energy reconstruction of
Sandra Švaljek
Deputy Mayor, Zagreb, Croatia
Filip Glavan
Project Leader, Boston Consulting Group
similar area of dense construction where there is room for a college with 400 students, with 1,800 apartments and a hotel. In Munich, the national park, apartments and office space housed the primary school. Oslo’s new business district, with 10,000 new jobs, was built on the site of the former shipyard. There is also a new opera house. Dabrović says that in Gredelj there could be the new building of the Croatian National Theatre, with offices and apartments. Factories that are not allowed to be demolished could become an indoor botanical garden, as well as in Madrid, as they can be converted
Cities accelerated development must be at the forefront of innovation. The challenge is greater in old towns like European cities, such as Amsterdam
into a combination of a shopping centre, markets and public spaces. In addition to property and legal issues and urban design, the renovation of old urban districts is hiding some hidden pitfalls, warns Stipan Marovic from consulting company STIMAR. Marovic deals specifically with urban-legal preparation of land for an easier realization of investment. Investors through all the
apartment buildings. Facade disrepair is often a complaint made by visitors in the centre and tourists will contribute to reconstruction and tourist attractiveness of Zagreb. City launches and energy reconstruction of sports facilities in the property.
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A large amount of real estate in cities is owned by the state. Mladen Pejnović, Head of the State Office for State Property Management (Duudi), said the agency run by investing significant effort to edit the legal status of real estate. This is to enable the activation of these properties in a variety of entrepreneurial projects. As examples, he cited the competition for the tourist zone in Kupari near Dubrovnik. Settling property relations and the preparation of the competition lasted two years. Pejnović considers that it is not too long for such a complex competition. First time investors will be offered an integrated project which will be a competition for the right to build tourist facilities, then the concession for the cultural heritage and the right to use the maritime domain. So far, in such cases published the separate competitions that slowed down, and sometimes increased the realization of the project. Pejnović recalled that Duud invited interested investors to suggest ways of using the 100 sites, and buildings and land owned by the state in preparing the new 100 such projects. Similarly like Kupari prepared and tenders for the location Musil in Pula, the Brijuni Riviera, islands of Vis and Lastovo. Each area has its own peculiarities. On Lošinj, explains Pejnović, with the right to build, a concession to the cultural and maritime domain, the competition will have to include the construction of a marina and airport. But investors will at least know in advance how to fulfil the tender conditions, announced Pejnović. The restructuring of large public companies has also created new challenges in asset management. Renata Drought, CEO of Railways Infrastructure described how that company inherited about 1,500 apartments and a large real estate portfolio in commercial buildings, office buildings and railway stations. Now this is a great burden for current operations, but can also be the basis for entrepreneurial activity. With the World Bank, a project management of real estate in which Croatian Railways Infrastructure has an interest in the property, as very attractive. As soon as possible it should balance the interests of all parties concerned, because it is in no-ones interest for areas that needs to be preserved, from further deteriorating. This will be more expensive to restore. Moderating this round table, Flora Turner, architecture theorist and editor of Oris magazine, said that the crisis and the current lack of investors gives time to rest
Doncho Barbalov
Deputy Mayor for finances, Sofia, Bulgaria
and good prepaSofia is moving in the energy ration of major reconstruction of public projects. One buildings, and the first is the should bear in mind that planturn of kindergartens and ning commerschools. They also invest in cial development video surveillance of public model is flexible, because the busispaces ness environment can change very quickly. With this round table there were several presentations of experiences in managing cities. ICT solutions for local govDončo Barbalov, deputy mayor of Sofia ernment, said the use of modern in charge of finance, described how the information technology systems can be Bulgarian capital tries to solve the prob- linked companies, city administration lem of disposal of solid wastes. The proj- and civic associations and communicatect worth €162 million partly co-financed ing with each other to seek appropriate with money from European funds. Sofia solutions to development challenges such also moving in the energy reconstruction as ageing population, climate change, of public buildings, and the first is the transport, security of energy supply. turn of kindergartens and schools. They Filip Glavan from the Boston Consulting invest in video surveillance of public Group, pointed to the explosion of urban spaces which has improved the security planning in developing countries. Cities situation. With public-private projects accelerated development must be at the are twofold experience, says Barbalov. forefront of innovation. The challenge is Because of the problems that have arisen greater in old towns like European citin the implementation of some projects ies, such as Amsterdam, which develops stalled with wide application of PPPs. multimedia platforms for adjustment of The city will re-launch such projects of- the current problems. In some countries, fer concessions for bike rental and users with enough free capital, apply a differabout twenty mineral springs, which oc- ent approach: cities like Masdar in the cur in Sofia. UAE or Songdo in South Korea are being Finland is well advanced in the imple- built from the ground up, from the empty mentation of ICT solutions in the man- wasteland, on the principle of sustainagement of cities. Harri Airaksinen, ability and designed the fund business Vice President of VTT, specialized in and environmental activities.
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Roundtable one:
How city government can attract investors W ithout technological development, investment in research and development and creation of innovative products, there is no greater success in increasingly demanding markets, said Sandra Švaljek, Deputy Mayor of Zagreb. Therefore, in Zagreb we encourage entrepreneurial infrastructure based on knowledge. In this part of the territory of the Fair there will be a new technology park. This innovative area should be associated with the university campus and institutes such as Ruder Boskovic. Many activities are directed at start-up companies where there are more and which are failing to connect with customers and investors from abroad. According to Sandra Švaljek Zagreb will help entrepreneurs and aid for internationalization of the business. Recently opened is the Blue office, a place for informing business owners of all types of help available to them. The City of Zagreb seeks to align transport links with its surroundings. It therefore established a joint company with the Za-
necting the Danube region, which is very valuable in the wider European context. In encouraging innovative entrepreneurship, Zagreb got involved and organizing conferences where foreign entrepreneurs and investors talk with local players. Such conferences, for example, Zagreb Connect, which was New business attended by representatives from opportunities in Croatia Israel, a will be created in the competitions country in water management, that leads t h e co-financed from European funds world in innovation, said Bruce Arena, the Office for Economy, greb County and Labour and EntrepreneurKrapina-Zagorje County, which ship of the City of Zagreb. The should make a programme of more effiCroatian capital city is constantly cient traffic connections with wider Za- on the radar of investors. When they begreb region. gin discussions on major projects, such Vesna Trnokop Tanta from the Zagreb of- as waste incinerators, investors place fice of Price Waterhouse Coopers, finds their proposals from around the world, that the development of cities are signifi- said Head. cantly affected by geo-strategic location Marketing and a good representation of and transport links. Croatian cities should, urban resources are important for attracttherefore, further exploit the excellent ing investors, said Andrej Lavric, director position of the Croatian Adriatic and con- of the real estate business in the company
HYDRA from Slovenia. Lavrič example highlights the Mayor of Brno who never misses a chance to attend to advertise the investment experience of a city. The results were there. New business opportunities in Croatia will be created in the competitions in water management, co-financed from European funds. Mojca Luksic, Project Manager of Croatian Waters, said that the problem for the realization of the competition is often a lack of skilled staff. Local water utilities are too small. Therefore, the procedure for merger of the 56 current should occur to create 21 larger company, with the capacity to implement large projects. For direct contact with potential investors in Zagreb. Harun Omerbašić, is advisor in the Office of the Mayor. He says that foreigners see that the so-called ‘brownfield zone’, ie, abandoned production facilities, make good investment opportunities, but do not want to waste time on legal issues that may arise in the implementation. That is why the city of Zagreb some court proceedings took on themselves, opening the way for investors. But entrepreneurial efficiency, the city seeks to harmonize and to the protection of cultural heritage and the public good, he said Omerbašić.
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Roundtable two:
Effective management and development of urban areas
Nataša Ćurić Martinčević Sense Consulting, Croatia
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Harri Airaksinen
Vice President, VTT, Finland
he key to managing any system are of high quality and competent people in the administration, believes Vladimir Ferdelji Zagreb city councillor. Current management in public administration and companies too is burdened by party staffing. Ferdelji on the other hand as a good example considers the recent election administration Zagreb Holding a public tender. The problem is also that mandates last for less than the time required for the implementation of a major project. Ferdelji suggests that for projects such as Zagreb on the Sava have a referendum (this is a plan for the construction of four hydroelectric power plants and regulation of the Sava which would create 350 hectares of new construction area). The decision would be binding on the administration irrespective of their political colour. Jadranka Veselić-Bruvo, the Office for
Vladimir Ferdelji
Jadranka Veselić Bruvo
Member of the Zagreb Assembly and president Head of the City Office for Strategic Planning of the Croatian Association of Managers and and Development, City of Zagreb, Croatia Entrepreneurs, Zagreb, Croatia
Strategic Planning and Development of the City of Zagreb, pointed out that Zagreb has a strategic plan for the development and implementation plans for a priority in certain periods. Implementation will depend on general economic conditions, but constantly discussing solutions that would meet the broader public interest. One of the major interventions in the future could be a lowering of the railway line underground. Continued development of the project is Terme in Blato, and is also planning intermodal terminal Sava, which would include various forms of ecological transportation (rail, bicycles, construction of a new pedestrian and cycling bridge, and the like). Background for design projects provide regular statistical reports. For example, Zagreb is a city of great daily migrations, the 800,000-strong population of 100,000 every day coming to town, of
which three-quarters of the job. Traffic solutions are therefore constantly topic of strategic discussions, said Jadranka Veselić-Bruvo. Strategic thinking is praised and guest from Finland Harri Airaksinen. Information collected by the city administration in Finland are often shared with entrepreneurs opening new possibilities for local commercial ventures. Neither in Finland is not ideal. And there is lively discussion of bureaucratic administrations, on too many public servants, on the need for faster reforms. Natasha Curic Martinovic from the company Sense Consulting, pointed out the opportunities that smaller cities opened using European funds. The wide range of operational programs for regional development, there are projects for cities of less than 10,000 inhabitants. They should be thoroughly studied, prepare and move in use.
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Roundtable three:
Development of major cities P
articipants in the panel discussion on the development of the capital cities each day face a great responsibility. The Vice Mayor of five European cities, Zagreb, Budapest, Sofia, Helsinki and Pristina, jointly managed with €7 billion and often in practice reveal that manage the capital of a great opportunity, but also a great burden. With these words, Davor Indic from EBRD announced the discussion on concluding the round table conference. The discussion showed that the tasks Administration capitals similar. Everywhere citizens demand better services for less money spent. No specific problems and fulfilment of these tasks can be very different. While in Helsinki for some time spend “sustainable public tenders” in which bidders must demonstrate that their business has many sophisticated elements, from environmental protection to other forms of soNew management cial responsisocial media. Quick and direct held fifty meetings with the initial bility, long in information via Facebook or 20 participants, now at large stands Pristina strugTwiter and citizens can congling with an firm that they are apprecithere and often 3000 inhabitants. In avalanche of ilated, and they can be mocooperation with the EBRD they will legal constructivated to participate and organize new public transport networks tion. In the last exchange ideas. 15 years built We should not forget to the 20,000 illegal communicate with othbuildings, which ers in the environment, for is strongly unexample, the state authorities, he dermined public are already added Gabor Bagdy, deputy mayor of space, said Dardan abroad and speak Budapest. Negotiating skills are necesSejdiu, Deputy May- or of Pristina. fluent German sary because there with the mayor in the The new management was able to stop and English. management part and 23 head of urban this negative wave and open communica- Kosovo and Finnish example shows the districts, ie, urban neighborhoods. Distion with citizens seeking acceptable so- importance of communication with citi- cussions with the State authorities also lutions. They held fifty meetings with the zens. While the administration of Pris- tend to be lively, even when they are in initial 20 participants, now at large stands tina was amused, urban problems have town and country representatives of the there and per 3000 inhabitants. In coop- escalated. In Helsinki, believe that their same political group. eration with the EBRD will organize a successes achieved by sharing informa- It is similar in Sofia. But the Bulgarian new public transport networks. With the tion with the public. If the information is capital, says Deputy Mayor Dončo Barbregulation of basic urban services (trans- open, two-way communication and the alov, I collect taxes that are funded. Is port, water supply, etc.) are required and citizens educated, you can achieve - all there a special service for it and at least solutions for the employment of many said Pekka Sauri, Deputy Mayor of Hel- in this segment can be quiet and leave young people. The average age of the sinki. Sandra Švaljek says it is in talks the implementation of projects to meet population of Kosovo is 27 years. The with the ‘dinosaurs’ became aware of the interests of both citizens and busiadvantage is that many mobile working how important communication through nesses.