Underpowered Cities

After a decline in the perceived importance of leadership and governance in cities, the last 30 years have seen important efforts to re-organise effectively for an urban age, especially in Europe and other OECD countries. Awareness of governance gaps and deficits has increased and a realisation that sectoral policies and regulations alone do not produce great cities has emerged. The profile of city leaders has grown, and governance systems are being reformed and upgraded, as city mayors lead substantive processes of invention and innovation.

It falls to city leaders to ensure that urbanisation is harnessed as a catalyst for positive change. However, as global challenges have accelerated and intensified, many formal city leaders – local government, mayors, councils, and other appointed city level authorities – have found themselves under-powered, as city governance reform has not kept pace with the demands made upon cities. In other words, most cities face substantial governance and investment deficits.

Cities around the world are trying to overcome these deficits in different ways. In some cases, higher tiers of government are giving cities more formal power, larger boundaries, greater access to fiscal resources, and more stable and capable institutions. But these cases are rare, and in most cities we have only seen a partial response in terms of empowering city leaders. Despite rhetoric about the rise of ‘city-states’, this metaphor refers much more accurately to the trading roles of cities rather than a substantial increase in the autonomy of their governments. In fact most cities are not city ‘states’ but rather city nodes and city markets, lacking any government functions akin to a state.

Official city leaders (mayors, governors, managers and others appointed by city or national level authorities) form the bedrock of urban governance systems. In some cities, such as New York, Chicago, Seoul and Tel Aviv, these leaders have ‘strong’ powers that almost resemble a ‘City CEO’, able to prepare budgets, veto legislation and make appointments to influential boards. At the other end of the spectrum, mayors in many Australian and Indian cities play an almost ceremonial role. Most city leaders have ‘weak’ formal powers and must rely on influence, negotiation and networks to build and deliver a political programme.

The last 25 years have seen a surge in popular demand for directly elected, transparent and accountable city mayors. In Europe alone, cities in Germany, Italy, Poland, Austria, Belgium, Norway, Hungary, Portugal and the United Kingdom have all introduced directly elected mayors in some or all of their cities. They were joined by Lithuania as recently as June this year. Public confidence in mayors has grown, especially in countries such as Italy, where the 1993 reform allowed visionary mayors such as Torino’s Valentino Castellani to build a transformative agenda for struggling industrial cities. Around Europe, the mayoral model has become a major driver of political devolution from central and provincial governments.

In the USA, confidence in city mayors has returned after the pioneering successes of Richard Daley, Thomas Menino and Michael Bloomberg in Chicago, Boston and New York, who all proved that big, racially diverse American cities could achieve sound fiscal management, steady stewardship and urban revitalisation. Meanwhile, many Latin American cities have also established elected city leadership as part of the continent’s wave of democratisation in the 1980s and 1990s.

Political machinations mean that direct election has not worked for every city, and change has not been a one-way street. In 2014, in the Indian State of Rajasthan cities reverted to mayoral appointments via their councils after five years of protracted political conflict among urban bodies. Central governments are also reluctant to concede powers permanently, as shown by the Russian government’s recent decision to abolish directly elected mayors in favour of appointed city managers. The mayoral system is not a one-size-fits-all solution that suits every political context.

The challenges facing city leaders can be compounded by the governance context within which their city is embedded. Many city leaders work within parameters which provide them with insufficient formal authority to meet the challenges their city faces. These include:

• Low levels of autonomy – Almost all cities (with the exception of a handful of the more empowered ‘city states’ such as Singapore, Hong Kong, Berlin) are supervised through national and /or state systems. They operate within these parameters with insufficient powers to be able to implement the policies their cities need. Even in federal systems, governing powers often remain concentrated at the state or provincial level, with little devolution to individual cities.

• Fragmented governance – Many national systems, and metropolitan areas, have too many local governments, operating with limited coordination, weak competences and powers, and within fragmented governance systems. As a result, cities are often burdened with a complex mesh of local governments combined with national and subnational bodies, all with different political leadership and reporting mechanisms.

• Short-termism – the big challenges that cities face require continuous action through several cycles of development and investment. But the majority of local governance systems provide city leaders with mandates that span somewhere between one and five years. In the US for example, the most common mayoral term is four years. Mayors in Morocco, France and South Africa are outliers who benefit from an unusually long term of six years, and in some German states a mayors’ term of office can last as long as nine years. Conversely, in India and Guyana, mayors are restricted to a one year (renewable) term.

• Lack of national support for urban agendas – relatively few national governments have specific national urban policies. Most national governments operate with strong sectoral ministries that fail to embrace spatial and territorial issues, such as cities, metropolitan areas, or functional regions. Many sector policies and regulatory frameworks unintentionally incentivise poor urban development and sprawl. Where national governments do focus on urban issues, policies have traditionally concentrated on the problems of urbanisation and (in the Western world) de-industrialisation, constraining city leaders’ ability to bring about positive change.

• Fiscal and financial deficits – Many cities lack the fiscal resources to invest in the infrastructure required for long-term growth, and operate within a sub-optimal low-investment–low-return equilibrium. Cities which lack a degree of fiscal autonomy are generally compelled to petition higher tiers of government to win backing for trophy projects, and must compete with other jurisdictions for sources of revenue. Grants from national government often come ‘with strings attached’ – requiring money to be spent within a certain time period or in a specific way (and often resulting in privatisation of infrastructure and service delivery).

• City-region governance deficits – Increasingly, cities have grown beyond their historic political and electoral boundaries, meaning the functional city region is often governed by multiple local government players. Higher tiers of government are slow to adjust city boundaries to take account of growth, and as a result proliferation occurs, often with stark social conditions emerging in multiple neighbouring municipalities. The amalgamation of local governments or redrawing of boundaries is rarely attempted by state and national governments as these exercises are politically unpopular and involve substantial adjustment costs and/or political capital.

As a result of these deficits faced by city leaders, governance innovation is becoming increasingly important. The importance of elected mayors has been pivotal to raising awareness about the needs of cities in a competitive economy. But mayors are by no means the only leaders steering cities into the future. The historic roles of formal city government have gradually become more distributed, incorporating many other organisations, delivery authorities, institutions, formal and informal bodies. Amongst these, business leadership groups like London First, Bombay First, New York City Partnership and the Committee for Melbourne have become increasingly influential in guiding and advocating for city development. Initially involved in partnerships for specific urban renewal projects, these bodies have gradually come to take on broader roles in strategic alliance with civic groups and government.

Civic leaders outside the formal structures of government have also retained a role in city governance, especially when they have amalgamated into strong and purposeful collective organisations. Over the last decade, groups such as Greater Toronto’s CivicAction have successfully advocated for regional transport, sustainability, and immigrant integration. In many developing cities, civic organisations have been champions of political reform and social mobilisation, resulting in democratic innovations such as Brazil’s City Statute that enshrine the involvement of civil society, churches and unions in urban policy. The roles of business and civic leadership in cities are an indication of how city governance has become something of a multilateral ‘public-private partnership’ of its own.

The task of governing large cities extends beyond historic administrative boundaries that now tend to be dwarfed by the size of the functional economic region. The ‘real’ geography of cities typically encompasses many smaller local governments and municipalities, with localised concerns. This means that a critical challenge for urban governance in the past 20 years has been to move towards a coherent, integrated approach to development, services and financing, and to overcome a culture of competition and duplication. In a small number of cases, state or national governments have redrawn old geographical borders to cover a much wider territory, in order to adjust to spatial changes or to prepare for future growth. Chongqing and, recently, Moscow are examples of places where city borders have been significantly altered to prepare for a future as a megacity. More commonly, a period of inter-municipal collaboration has paved the way for the successful consolidation of local councils into either a single-tier (e.g. Auckland in 2010) or a two-tier (e.g. London in 2000) system of governance. In other cases, such as Mumbai and Manila, a metropolitan development authority has been created to provide planning and project management.

The last generation has seen urban governance systems adapt to coordinate more actors in pursuit of delivering better services and implementing policy and strategy more effectively. The sources of political ‘power’ have become more diffuse, but city leaders, and especially elected mayors, have nevertheless gained more substantive capacities, higher profiles, and the ability to bypass national systems to network globally. Yet the devolution of formal political, fiscal and financial powers has tended to lag behind the evolving needs of metropolitan regions. Cities of all sizes have become more engaged in dialogue with their central governments about their longer-term infrastructure and investment needs. The new cycle of urbanisation, metropolitanisation, and re-urbanisation can expect to see two major efforts sustained. Firstly, coalitions for the reform of city and metropolitan governance will grow, with city mayors and business leaders mounting sustained pressure on higher tiers of government to regulate and legitimise metropolitan leadership. Secondly, continued innovation in investment and management tools by mayors will be encouraged through enhanced international networking and exchange. These efforts may go some way to rebalancing the future of our underpowered cities.

Greg Clark, Tom Moonen and Emily Moir lead the Business of Cities Ltd, an intelligence and strategy firm that reports on global urban trends.