1. Regional Centre for Urban & Environmental Studies, Lucknow
Municipal Resource Mobilisation
for
Urban Infrastructure
including PPP
Madhusudan Sharma

2. • Legal Framework
• Resources required for Urban Infrastructure
• Resource Mobilisation Issues
• Conventional Sources of Revenue
• Non-Conventional Resources
Pooled Finance and Bonds
Land Value Capture Finance
PPP
Cost management

3. Legal Framework
• The Constitution of India
• State Municipal Act and Rules
• State PPP Act
• ULB Rules
• Central Finance Commission
• State Finance Commission
• GoI Guidelines for Pooled Finance
• GoI Guidelines for PPP
• State Policy for PPP

4. The Constitution of India
Article 243W – 12th Schedule – 18 Functions assigned to Municipalities
Article 243X
• Taxes, duties, tolls and fees as authorised by the State
• Assigned taxes, duties, tolls and fees levied and collected by the State
• Grants-in-aid from the Consolidated Fund of the State
Article 243Y
State Finance Commission to recommend for Municipalities:-
• Taxes duties, tolls and fees which may be assigned
• Allocation of the taxes, duties, tolls and fees leviable by the State
• Grants-in-aid from the Consolidated Fund of the State
• Measures needed to improve the financial position
Article 243Z
• State to make provisions with respect to the maintenance of accounts and
audit.

5. Punjab Municipal Corporation Act for Chandigarh
Section 90 (1) - Taxes by Municipal Corporation on:
• Land and buildings (including Water, Fire and General Tax)
• Advertisement other than in Newspapers
• Buildings along with application for sanction of Building plan
• Development tax on increase in urban land value caused by
execution of any development or improvement
Section 90 (2) - Taxes after prior approval of Govt:
• Profession, trade, callings and employment
• Any other Tax which the State has power to levy
Section 90 (6) - Assigned Revenue
• Stamp Duty
• Motor Vehicle Tax
• Electricity Duty
• Entertainment Duty and Tax

6. Resources required for Urban Infrastructure
Urban Infrastructure – Water supply, Sewer,
SWM, Drainage, Transport, Parks
Funds required for:
• Initial Capital Cost
• Replacements during project life
• Operations and Maintenance
• Debt service
• Asset Replacement

7. Conventional Sources of ULB Revenue
Own
• Taxes-Property, Advertisement etc.
• License Fee
• User Charges-Water, Sewer, SWM
• Rent from properties
• Sales
• Income from Investments
Others
• Assigned Revenue
• Grants

8. Non-Conventional Resources
• Pooled Finance and Bonds
• Public Private Partnership (PPP)
• Value Capture Finance (VCF)
• Citizen Participation
• Cost Recovery of services
• Cost Management

9. Value Capture Finance (VCF)
• Land value tax
• Land use conversion tax
• Land value increment tax
• Development permission charge – value/area
based
• Betterment charges / Impact Fee
• Transfer of Development Rights (TDR)
• Sale / Incentive FSI
• Tax Increment Financing (TIF)

10. Public-Private Partnership (PPP)
What is PPP?
• Long term contract
• Between Govt. or Govt. Agency and Private
party
• For a Public service
Why PPP?
• Service coverage and quality-Unmet Need
• Reasonable cost-Revenue opportunity
• Shared risks and returns

11. Private Sector
Contribution Options
• Finance
• Service Delivery
• Technology
Efficiency
• Risk management
• Cost optimization
• Revenue Collection

12. Public Sector
Gains
• Coverage
• Improved service delivery
• Cost savings
• Transfer of construction and operations risks
Obligations
• Policy clarity
• Political Will
• Social Equity and empowerment of consumers

13. PPP Models for Municipal Infra
Water supply
• Build-operate-transfer (BOT) - Concession agreement
• Performance-Based Management Contract for O & M
• Service management contract: Metering, Billing and Collection
Solid Waste Management
• Single Concession for collection, transportation, segregation, treatment and
disposal.
• Separate concessions for: 1 Collection and transportation 2. Segregation,
Treatment and disposal
Sewerage
• Construction of the sewerage network through EPC on a BOQ basis
• Construction and operation of STP through a hybrid annuity model based on
BOT by the same private operator.
Septage
• Single Concession for collection, transportation, treatment and disposal.
• Separate concessions for: 1 Collection and transportation 2 Treatment and
disposal

14. PPP Alerts
Project Development
• Clarity of purpose
• Realistic assessment of feasibility
• Value for money analysis
• Balanced risk sharing
• Measurable Service standards
• Performance linked payment
• Approvals and clearances
• Documentation-Standard
Transparency in selection
Monitoring and Regulation

15. Cost Management
• Works
• Establishment
• Administration
• Operation and Management
• Programmes
• Interest

16. Resource Mobilisation Issues
• Taxing powers
• Coverage
• Collection
• Rate revision
• Partial Capital cost funding with grants
• Debt service obligation
• Additional O & M cost
• Infrastructure cost and revenue mismatch
• Quality of Assets - life and maintenance costs
• Gaps in Recording and Monitoring System

17. Thanks