<B>London’s secret weapon</B>

Gildo Seisdedos. Director of the Urban Management Forum, Instituto de Empresa

5 September 2005

The process for selecting the host country for the Olympic Games is turning into a spectacle and soon cities are likely to bid for the privilege of hosting the selection ceremony with as much or even more enthusiasm as for the Games themselves.

Who chose Singapore as the venue for selecting London? Why couldn’t the next selection process take place in Madrid? Though I’m only joking, it is true that one week of grabbing headlines around the globe had an impact valued at millions of dollars on Singapore’s image and its economy. And that is no joke. Rather, it is an example of how the search for marketing tools can catapult cities into a new arena of international competition.

We talk about the intricacies of the selection process and of those two unfortunate votes that condemned Madrid to failure. We can speak of the fallout from the terrorist attacks, of the secret pact between New York and London and of the agreement between London and Madrid (?). Or we can feel comforted by the fact that the Parisians are undoubtedly more upset about losing than we are. But what we really ought to do is analyse the significance of our defeat and the lessons to be drawn from London's victory.

What does our failure mean? Although the municipal authorities have their fingers in more than one pie, it’s clear that hosting the Games would have endowed the city with new infrastructure, attracted a flood of tourists during the three-week event and enhanced Madrid’s image on the world stage. But we have missed an even greater opportunity for urban change because interestingly enough, the Olympic project called for a new city model—one that was drafted without public debate or a public relations effort to explain its objectives.

Urban Renovation Plan

This unprecedented urban renovation plan was based on two projects: The transformation of the M-30 into an underground motorway and the renovation of the River Manzanares and the Recoletos-Prado axis. The Olympics would have provided these two projects with the political support and the financing needed for carrying them out. Without the Olympic rings as endorsement, and with elections just two years away, any attempt now to implement such an ambitious project would be tantamount to political suicide. Furthermore, Madrid is now required to submit its financing plans to the central government for approval, following Brussels’ recent rejection of the city’s initial financing scheme for Calle 30.

Nonetheless, FCC and Abertis —partners in a consortium with ACS, Acciona, Ferrovial, Sacyr Vallehermoso and OHL— say they intend to bid for the project, which includes a proposed business and financial model for Calle 30. It also calls for the private sector to dip into its own pockets as a way to relieve the financial pressure on Madrid. With no Olympic Games on the horizon, Calle 30 (and, in general, the new urban management model) will be structured according to the latest new concept in urban management: Public-Private Partnership or PPP.

It’s a way of turning need into virtue. Rather than turning to PPP as a last resort--after traditional finance models have already failed, forcing the city to adopt “creative models”(which go by names such as MINTRA or Calle 30)—Madrid is now in a position to take the lead in this new urban initiative and spearhead the campaign to create public-private partnerships in municipalities throughout Spain. This effort should be rigorous and unrushed.

Without a doubt, working within this framework calls for a second decentralisation of power and a new financing model for towns and cities, especially now that local governments are finding it increasingly difficult to raise funding through the sale of land -a practice that distorts the real estate market. These issues form part of an interesting political debate which, we hope, will be at the centre of the 2007 municipal election campaign. Politicians and civil servants should discuss different city models rather than focus on anecdotes or other such nonsense. As citizens, we deserve at least as much.

Selection Process

So why did London win? As we’ve already said, we aren’t going to look at the politics or the social dynamics behind the Olympic selection process or even at its voting system. From the urban management point of view, one thing in particular stands out: The winner submitted a project that was excellent but virtual in nature. London won with an abstract project while competing with Madrid (and, to a lesser extent, with Paris) which participated with a real project—much of which had already been completed. Why, then, did London win? Interestingly enough, the answer takes us back to PPP. The United Kingdom is the country in which PPP has reached its greatest heights. The commitments made by the public and private sectors are sound and transparent and they respond to clear, flexible regulations (wouldn't that be nice!).

Last July, at the Madrid-Singapore Urban Management Workshop organised by the Urban Management Forum of the Instituto de Empresa, we had the opportunity to attend a talk by Rory Joyce, CEO of Driver Jonas, the property developer that is to carry out most of the work for the Olympics. He explained London’s plans for the Olympics and defended PPP as key to the future success, not only of London’s project for 2012, but also… of the British economy itself.

At the urban level, new management techniques are essential for dealing with the challenges facing our towns and cities. Urban management should be aimed at capitalizing on the potential of our companies in a flexible, transparent and organized way and offering innovative urban services. Let’s hope we learn from this summer’s disappointment to advance in the use of what is undoubtedly London’s secret weapon.

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