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INNOVATIVE MUNICIPAL RESOURCE MOBILISATION

INNOVATIVE MUNICIPAL RESOURCE MOBILISATION. Indo-US FIRE Project and Indore Municipal Corporation. INNOVATIVE MUNICIPAL RESOURCE MOBILISATION . Contents : INDO-US FIRE Project Management Innovations for Municipal Resource Mobilization Case Study of Indore Municipal Corporation.

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INNOVATIVE MUNICIPAL RESOURCE MOBILISATION

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  1. INNOVATIVE MUNICIPAL RESOURCE MOBILISATION Indo-US FIRE Project and Indore Municipal Corporation

  2. INNOVATIVE MUNICIPAL RESOURCE MOBILISATION Contents : • INDO-US FIRE Project • Management Innovations for Municipal Resource Mobilization • Case Study of Indore Municipal Corporation

  3. FINANCIAL INSTITUTIONS REFORM & EXPANSION (FIRE) PROJECT • Goal – Sustainable Delivery of Water and Sanitation Services in India’s Cities. • FIRE started in 1994; continues through 2003. • Total of US$ 18 million in technical assistance and training resources. • US$ 55 million in loan guarantees for water and sanitation projects, with new USAID Development Credit Authority (DCA) mechanism for credit enhancement.

  4. OBJECTIVES OF FIRE PROJECT • Development of Commercially Viable Urban Infrastructure Finance System • Promotion of Private Sector Participation (PSP) through development of CVIPs, including access by the urban poor • Capacity Building of local and state governments • Implementation of 74th amendment and decentralization

  5. PARTNERS IN FIRE PROJECT • USAID • GOI / Ministry of Urban Development • Housing and Urban Development Corporation (HUDCO) • Infrastructure Leasing and Financial Services Ltd. (IL&FS) • National Institute of Urban Affairs (NIUA) • TCGI-PADCO

  6. FIRE PROJECT SUPPORT • Ahmedabad Municipal Bonds • Tiruppur and Sangli Water Supply Projects • Improved Municipal Accounting System in TN • Kolhapur Solid Waste Disposal Project • Improving Access of Services to Poor, Ludhiana • Sukthankar Committee in Maharashtra • Urban Training Network/Urban Information Resource Center • Model Municipal Law

  7. MANAGEMENT INNOVATIONS IN MUNICIPAL RESOURCE MOBILISATION

  8. NEED FOR MUNICIPAL RESOURCE MOBILIZATION • Sources of revenue devolved to ULBs do not match with the wide range of functions • Increasing dependence of ULBs on higher levels of government • There is a mismatch between the functions devolved to ULBs and the devolution of tax and non-tax sources

  9. TWO APPROACHES TO MUNICIPAL RESOURCE MOBILIZATION • In order to mobilize resources on their own ULBs can impose new taxes, increase tax/fee rates and introduce management innovations within the existing revenue structures. • Imposing new sources of revenue or increasing tax fee rates require approvals from the elected municipal council and/or state government and arecumbersome and time-consuming.

  10. MANAGEMENT INNOVATIONS IN MUNICIPAL RESOURCE MOBILIZATION • Various ULBs have opted for management innovations within the existing legal revenue structure, with the objective of improving efficiency and strengthening municipal revenue base.

  11. AREAS OF INNOVATIONS • Management innovations taken up by ULBs to improve their resources in the areas of: (a) property tax administration; (b) asset management; (c) information system; (d) user charges; and (f) others.

  12. PROPERTY TAX INNOVATIONS • Simplifications of Procedures • Management Information System • People-Friendly Bill Collection • Enforcement • Outsourcing • Communication

  13. SIMPLIFICATION OF PROCEDURES • Several ULBs introduced SAS to make property tax assessments simpler and more transparent. • This method helps taxpayers to understand the assessment process and removes the discretion of the assessors to assess the properties in an arbitrary manner. • It increases taxpayers’ involvement by allowing them to calculate their own assessment within pre-established guidelines. • The Municipal Corporations of Hyderabad, Banagalore, Indore and Chennai introduced SAS and increased tax collection.

  14. MANAGEMENT INFORMATION SYSTEM • Use of Information Technology has helped ULBs to improve not only the information base but also the collection efficiency • The Indore Municipal Corporation (IMC) computerized tax records thorough private operator, conducted physical survey properties, and compared data from different sources to identify non-assessed properties. • MIS can help to take decisions and action. • Mirzapur created property tax maps and increased the number of registered properties by 44 percent.

  15. PEOPLE-FRIENDLY BILL COLLECTION • Decentralized cash collection counters • Bill collection through banks • Bill collection electronic transfer

  16. ENFORCEMENT • Once information is available, special campaign to increase property tax revenue by forming special collection teams is necessary. • Special power to teams to disconnect water supply or drainage lines, attach the property of defaulters, and issue arrest warrants for non-payment of property taxes. • Major defaulters list published and put on web.

  17. OUTSOURCING • Tax administration systems are labor intensive and sometimes the cost of collection exceeds the revenue collected. • Outsourcing can improve efficiency and save cost. • The Municipal Corporation of Ludhiana (MCL), for example, introduced a courier system for bill distribution. • The Indore Municipal Corporation used private firms to identify non-assessed properties and conduct physical survey.

  18. COMMUNICATION • The various ULBs involved the public in determining the revised tax rates by consulting resident welfare associations. Tax education and publicity campaigns, including newspaper advertisements. • Communication through email. • Tax information can be made available on web.

  19. ASSET MANAGEMENT • Proper inventory of assets and its regular updation • Computer database of properties • Developing strategy for optimal use of assets

  20. OPTIMAL USE OF MUNICIPAL PROPERTIES • FIRE Project provides assistance to ULBs to enhance their revenue base from non-performing real estate assets • Local engineering/ Valuation firm appointed to identify various properties of ULB • A Real estate consultant firm appointed to suggest optimal utilization and disposal strategies for the identified assets that will lead to revenue generation

  21. OPTIMAL USE OF MUNICIPAL PROPERTIES This is being conducted in four stages: • Real Estate Market Analysis of ULB • Disposal Strategy for the identified real estate portfolio • Approach Paper to provide a frameworkfor such exercises in the future for the ULB • Approach Paper for showcasing this opportunity to other municipal corporations

  22. City Overview Leisure & Entertainment Sector Residential Sector Commercial Sector Hospitality Sector Industrial Overview Micro Markets A to G Retail Sector Office Sector Restaurants Mid-end Segment Water Parks Luxury Segment Clubs Cinema Halls Grading of space Supply Absorption Pattern Facility Profile Star Rating Footfalls Pricing Profile of prominent Industrial Estates Occupancy & ARR’s Facility Profile Occupancy/ Vacancy Occupier Profile Rental Values Capital Values New Supply Scope of Study

  23. Developing Areas Existing Areas Vijay Nagar Industrial Area New City Old City Khajrana Old CBD New CBD Geeta Bhavan Rajendra Nagar City Overview • City divided into two distinct parts: New City and Old City • City expanding along all four directions • Maximum growth towards Northern and Eastern directions

  24. USER CHARGES • Levying Sewerage Charges • State Guidelines for Water Charges • Pay and Park Scheme • Eco Fee • Charges for Collecting Solid Waste • Fees for “Tatkal” Delivery of Services • Advertisement Tax • Cable Charges • Street Tax

  25. LESSONS LEARNED • Improved Management Information System • Simplification of Billing Processes • People Friendly Bill Collection • Communications • Local Leadership/ Champion

  26. LESSONS LEARNED • Project Specific Contribution • Outsourcing the Services • Enforcement • State Government Guidelines • Resource Mobilization is part of overall CDS/Corporate Plan/Visions Exercise

  27. Sustainable Investment CDS Formulation Capital Investment Program • Rates of growth • Revenue revision assumptions • Collection performance • Expenditure growth Assumptions • Assumption on O&M for new • investments • Lending options • - Loan grant mix • - Loan terms Situation Analysis • Legal / Systems • Municipal Acts • Taxation Powers • Borrowing Provisions • Budgeting Systems • Accounting Practices Strategic Plan • Finances • Sources & Uses of funds • Base and basis of levy of • major taxes and charges • Collection issues • Uses • Rate of growth • Per-capita Analysis Financial and Operating Plan • Project Identification & • Facility Siting • Sectoral Strategies • Integration of Line Agency Projects • Public Priorities • Services • Current levels of services • Water supply • Sanitation • Roads • Solid Waste Management • Drainage • Lighting Capital Investment Need City Development Strategy

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