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management models are special purpose authorities or special district authorities for specific services (water and sewerage, public transportation, and solid waste) as well as direct provision by local governments. These special authorities operate as quasi-public, quasi-private enterprises, and are self-governing, with their own board of directors, including local government officials. Most transport systems are operated by special purpose authorities, the largest of which is the Metropolitan Transit Agency of New York. Such bodies are responsible for 39% of US urban transport services; local governments provide 32%. High-performing local public utilities have emerged in other OECD countries, such as Japan and Korea. The Arisu Office of Waterworks distributes water to 10.4 million people in the Seoul metropolitan area.68 Many such public utilities are at the forefront of innovation in their sectors (using smart technologies to reduce water consumption, waste-to-energy technologies, zero waste strategies, etc.). Local public utilities or Special Purpose Authorities have also been developed in middle-income countries. As a result of the strong push from international organizations in the last two decades, many local and national public services have been transformed into corporatized entities, with independent boards and management.69 Public utilities allow different levels of government to pool their resources to finance major projects and attract professional staff. Consolidating management under one structure improves credit ratings to enable borrowing from domestic and foreign sources. In Latin America, one of the outstanding examples is the Empresas Públicas de Medellín (EPM) owned by the municipality of Medellin, Colombia. It, and other local or state public utilities in Latin America (such as Sedapal in Lima and Sabesp in Brazil), are regarded as among the best-performing enterprises regionally and internationally.
Indeed, some SPAs behave like private companies, developing joint ventures with the private sector, as has been the case in China. Shanghai moved from a traditional direct, in-house management system in the early 90s, to the use of numerous, publicly traded, public utilities. Some were joint ventures with international companies for the provision of basic services. Shared management between public institutions, particularly inter-municipal cooperation, has developed in many countries in Europe, Asia and Latin America. As mentioned in the introduction, these inter-municipal partnerships are particularly valuable for achieving economies of scale across municipal boundaries (for instance, in the management of solid waste, waste-water treatment, and public transport). In Asia, the Asian Development Bank has promoted ‘city cluster development’ to bring together groups of local governments to adopt regional plans and join up basic infrastructure. Metropolitan authorities constitute a unique form of inter-jurisdictional cooperation between local authorities. Unified metropolitan bodies can reduce fragmentation, achieve better coordination of basic service delivery, develop efficient management arrangements and pool their financial resources. A potential disadvantage of such unified governments is that they can be less accountable to local residents. Seoul Metropolitan Government, Mission of Seoul Waterworks, Presentation at the UCLG-ASPAC Workshop on the GOLD III chapter, held in Gwangju, Korea, May 16, 2013. 68
While large public utilities and SPAs are usually found in major cities, smaller cities and towns tend to use direct, in-house management. GOLD III provides examples of many small- or medium-scale in-house models providing local basic services. The management of solid waste, for example, is usually carried out at the city or municipal level through sanitation departments or through cooperation between neighbouring municipalities, especially for final
The main characteristic of public utilities or SPAs is their legal status. While independent, the enterprises are still ultimately responsible to local, regional or national governments (sometimes all of them). See Asia Pacific and Latin America Chapters. 69