Case Study extracted from Salat, Serge. 2021. Integrated Guidelines for Sustainable Neighbourhood Design. Urban Morphology and Complex Systems Institute 2021. © UMCSII.

Building modern, sustainable, and dependable urban infrastructure is vital for creating Green and Thriving Neighbourhoods. Neighbourhood investment promotes urban economic growth, creates new economic opportunities, and supports human capital investment. Implementation instruments are used by cities to articulate public and private interventions. Public-private partnerships (PPPs) can be used to provide more people with high-quality infrastructure services. PPPs can improve the efficiency and sustainability of public services such as energy, transportation, telecommunications, water, healthcare, and education when they are well designed and implemented in a balanced regulatory environment. PPPs can also help with risk distribution between the public and private. However, cities need implementation instruments to make projects ‘investor-ready’ and diminish risk for example by phasing. The reading provides practical examples in Sweden showing how implementation instruments and PPPs can be effectively used in urban development projects. 

Key partners and actors

The planning and design of Hammarby-Sjöstad was made easier because the City had acquired most of the land. The local authority took leadership at every stage from development of the master plan to construction, spurred on by the City’s sustainability programme. Since all planning applications in Stockholm are based on life-cycle cost analysis, it was easier for the development to justify higher initial investments in better performing building design and transportation infrastructure.

The first step in the planning process was the development of the strategic master plan, led by architect Jan Inghe-Hagström, at the Stockholm City Planning Bureau. The plan is divided into 12 sub-neighbourhoods, which are being developed in phases. 

To provide architectural diversity, and to inspire higher standards of design through competition, a consortium of developers and architects are then invited by the City. They develop each plot or building within the sub-neighbourhood, according to the design code. Over 30 different developers and more than 30 architects have been identified. Key developers are JM, Skanska, Family Housing, Swedish Housing, HSB, SKB and Borätt.

1. Implementation instruments in PPPs (Public Private Partnerships) 

PPPs are formal arrangements between public and private counterparties to share risks and rewards in the delivery of, for instance, public services and infrastructure.

A PPP is ‘a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance’ (PPP Knowledge Lab, 2015).

PPTs display the following key characteristics: 

• Cooperative project between the private and the public sector.

• On a long-term basis (can range from a few up to 30 or more years).

• For the provision of a public asset and/or public service.

• Sharing of risks, responsibilities, and rewards between the project partners.

PPPs can vary in several aspects (PPP Knowledge Lab, 2015): 

• PPPs vary depending on whether they concern the provision of new assets (greenfield investments) or the upgrade/management of existing ones (brownfield investment).

• Projects vary in degree of private involvement. At one end of the spectrum, the public actor takes full responsibility for the provision of the public asset or service; at the other end of the spectrum, the private actor takes full responsibility. A PPP will fall somewhere in between these extremes.

• PPPs vary in the functions transferred to the private party: those being either, design, build, finance, maintain or operate. 

• PPPs also vary depending on the remuneration mechanism: either ‘User-pays’ or ‘Government-pays’. 

• Finally, PPPs also vary depending on the level of ownership. This will also depend on the legal frameworks in place.

2. Case study: PPPs in eco-districts and buildings in Stockholm

Much of eco-districts' successful implementation in Stockholm has been a result of effective public-private alliances, between the city, private sector and research institutes such as the Royal Institute of Technology (KTH). The key partner has been the City itself. It has supplied strong leadership, direction and master planning, finance and platforms for partnership. This has given the private sector the confidence to invest, innovate and deliver solutions. The national government has also played a crucial role, particularly in providing finance for R&D, setting nationwide energy efficiency standards and encouraging knowledge-sharing alliances. Supportive actions undertaken by key stakeholders to implement eco-neighbourhoods in Sweden are as follows (LSE Cities, 2013). 

City Government

• Leadership and strategy. Driving new green solutions through leadership and master planning of Hammarby Sjöstad. Giving business the confidence to invest in 5-10-year research programmes through a long-term commitment to eco-districts.

• Finance. Public endowment with US$ 910–1,060 million for Hammarby Sjöstad from the City’s budget. Major costs included land decontamination and compensating existing on-site companies to clear the area. 

• Regulation. Owning the brownfield sites provides strong policy control over environmental and economic outcomes. Setting energy efficiency objectives of 55 kWh/m2 for all buildings on land designated by the City and working closely with partners to develop solutions for delivering on the target.

• Partnership assembly. Creating a platform at the Royal Seaport Innovation Centre where different companies can innovate.

National Government

• Finance. Contributing national financing for Hammarby Sjöstad and other eco-districts with the Local Investment Programme (LIP). Endowment of sustainable urban projects through a SEK340 million fund managed by the Delegation for Sustainable Cities. Supplying 50% of R&D project capital through VINNOVA (Sweden’s R&D funding agency) for some private sector green innovation projects at Royal Seaport. Leveraging 50% private sector finance. Supplying finance for Royal Seaport’s smart grid with the Swedish Government’s Energy Department.

• Regulation. Setting national energy efficiency standards of 90 kWh/m2 for non-electric heating with an obligation to comply.

• Partnership building. Providing a forum through the Delegation for Sustainable Cities where businesses can discuss solutions and innovation for green projects.

Business

• Finance. Matching 50% public investment from VINNOVA with 50% private capital for various R&D projects at Royal Seaport

• Partnership building. Actively participating in the city’s energy efficiency standards group, the Royal Seaport Innovation Centre, including the Smart Grid and ICT.

Research Institutes

• Partnership building. Providing R&D expertise for Hammarby Sjöstad and Royal Seaport. e.g. in construction, transport, energy, ICT.

3. Case study: From vision to implementation through PPPs in Hammarby Sjöstad[1]

The Hammarby Sjöstad scheme demonstrates the role of partnerships in implementing projects. Briefly, Hammarby was a heavily polluted industrial and port location in the past. By 2017, the regeneration project proposal aimed at housing more than 25,000 people in 11,000 flats. The goal was to build a neighbourhood that had half the environmental effect of typical 1990s developments, while fostering a vibrant and lively community through an integrated planning approach. 

The first step in planning was the strategic master plan, led by architect Jan Inghe-Hagström, at the Stockholm City Planning Bureau. The plan is divided into 12 sub-neighbourhoods built in phases. In a process called ‘parallel sketches’ the city selected three to four private sector architects/planners to draw up detailed proposals for a sub-neighbourhood. The city evaluated each of the schemes and combined the best features to create a master plan. The city planning and design team then prepared a design code for each sub-neighbourhood in partnership with the developers and architects. The agreement between the developer and the city included the design code. The local authority used the design code to grant planning permission. The code provided an overview of the layout, form, and structure of each block, with key landmarks, public spaces, and pedestrian routes.

To foster variety, and inspire higher standards of design through competition, a consortium of developers and architects were invited to design each plot or building inside the sub-neighbourhood, according to the code. More than 60 developers and 30 architects were involved in the process (Foletta, 2011). The project achieved a high level of diversity and complexity within a coherent master plan.

The city of Stockholm joined forces with twenty-five construction companies to construct the neighbourhood, with the latter contributing 80% of local cost. Other financing comes from two government agencies – the Swedish Rail Administration (rail transport) and the Swedish Road Administration (routing of the Southern Link ring road). Several features ensured an efficient development process with a good balance between planning and market.

Case studies in Sweden demonstrate that the involvement of cities as horizontal developers is pivotal in the success of projects. The city, its planning agency and its officials should play a key role in integrating the process. In European neighbourhoods such as Bo01 in Malmö, Hammarby Sjöstad in Stockholm, Kronsberg in Hannover, and Vauban in Freiburg, cities, as landowners, had legal responsibility and jurisdiction for project production. They created special development committees, usually with their planning agencies, which received planning leadership over projects. All were interdisciplinary, with representatives from internal departments, external consultants, citizen groups and utilities. Using their statutory authority, the cities charged the utilities – energy, water, sewage, and waste – to draw up an integrated strategy to meet the project objectives. Cities produced detailed design and engineering plans for public spaces: streets, parks, public transportation systems and all infrastructure – energy, water, storm water and waste. They divided the developments into small plots. These plots were then sold to several teams of architect developers. By maintaining uninterrupted monitoring of the projects, the cities included objectives, planning and inspection procedures in the land sales agreements.

Lessons Learnt 

Lessons learnt from case studies are that the crucial challenge is in transforming practices and methods. This requires leadership and commitment, innovative project management, financing strategies and active cooperation between public and private sectors. PPPs can be applied in many urban development projects. PPPs are powerful instruments to share risks, support the projects financially, provide opportunities to all parties and ensure the optimal implementation of new urban settlements. 

footnotes

[1] This section draws on Salat and Ollivier 2017.

References

Foletta, N. 2011. Hammarby Sjöstad, Stockholm, Sweden. ITDP Europe.

LSE Cities 2013. Going Green: How Cities Are Leading the Next Economy. 

https://lsecities.net/publications/reports/going-green-how-cities-are-leading-the-next-economy/ 

PPP Knowledge Lab. (2015). PPP Reference Guide. Retrieved January 30, 2022, from Pppknowledgelab.org website: https://pppknowledgelab.org/guide/sections/2-ppp-basics-what-and-why 

Salat, S., Ollivier, G. P. 2017. Transforming the urban space through transit-oriented development: the 3V approach (English). Washington, D.C.: World Bank Group.

http://documents.worldbank.org/curated/en/647351490648306084/Transforming-the-urban-space-through-transit-oriented-development-the-3V-approach 

World Bank (2019). Public-Private Partnerships – Overview. Retrieved January 30, 2022, from World Bank website: https://www.worldbank.org/en/topic/publicprivatepartnerships/overview#1