INNOVATIVE MUNICIPAL RESOURCE MOBILISATION

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 Indias 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. (ILFS)
• 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 are
  cumbersome 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 framework for such
  exercises in the future for the ULB
• Approach Paper for showcasing this opportunity to
  other municipal corporations

22
Scope of Study
23
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
(No Transcript)
25
(No Transcript)
26
(No Transcript)
27
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

28
LESSONS LEARNED

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

29
LESSONS LEARNED

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

30
CDS Formulation
Capital Investment Program

• Rates of growth
• Revenue revision assumptions
• Collection performance
• Expenditure growth Assumptions
• Assumption on OM 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