The Urban Development Corporation Model (part two)

In part one of this post on the Urban Development Corporation (UDC) model, I employed three case studies to demonstrate how UDCs can be effective vehicles to enhance efficiency in sustainable urban development. In this post, I want to first outline Taichung's need for a UDC. I will then examine a proposed UDC structure for Taichung and offer some of my own suggestions and analysis.

Taichung's Need for a UDC

A UDC would be instrumental in streamlining Taichung's urban development process. Without debating the merits of Taichung City's 17 governmental departments, it is undeniable that eco-city projects will expose inefficient management practices. For example, if Taichung's Department of Urban Development is tasked with implementing a sustainable urban development project, its responsibilities and powers will inevitably overlap with the departments of Transportation, Land Administration, Construction, Finance, Economic Development, and Legal Affairs, not to mention the Environmental Protection Bureau. With so many overlapping organizations, it is exceedingly difficult for one entity to assume start to finish responsibility over a project. Taichung's bureaucratic miasma is only compounded by its impending merger with the Taichung County government; the two separate entities and all their agencies will integrate on December 20, 2010.

I am not suggesting that a government's separation of powers is an undesirable quality, only that its process of decision-making can delay or hamstring precise urban retrofitting projects. In order to enact Taichung's vision of becoming an eco-city, a UDC would be a most welcome tool. A Taichung UDC could tackle previously mentioned urban decay in the old city center, streamline the development of the Shui-nan Airport area, and effectively leverage private investment to stimulate strategic projects throughout the city. Furthermore, a UDC provides a powerful outlet for the city's stated emphasis on sustainable development.

A UDC Case Study for Taichung City

At the behest of the Taichung City government, the authors of the Taichung City Strategic Energy Masterplan under Climate Change created the organizational framework for a potential Taichung UDC. Named The Greater Taichung Metropolitan Area Toward 2020 Urban Development Corporation, the UDC would focus on specific development projects throughout Greater Taichung. Whereas the LDDC, Hamburg Hafencity, and the two Taoyuan Airport development corporations are all entirely public owned, the proposed Taichung UDC would be a joint public-private organization with both government and private shareholders.

In this proposal, Taichung's UDC would be more structurally diverse than the other examples mentioned in part one of this post. The mayor of Greater Taichung (recently re-elected Mayor Jason Hu) would be the Chairman of the Board. There would also be an Executive Director selected from an executive committee comprised of government officials, private entrepreneurs, independent members, and academic experts. Finally, a CEO would be selected from a pool of six managing directors, contingent upon the Mayor's approval.

An interesting aspect of the proposal is the reliance upon three parallel decision-making structures (Fig.1): technical specialists, legal/administration, and finance. Technical specialists would include an urban planner, architect, entrepreneur, and an engineer focused on climate change and energy. This committee would be responsible for innovation breakthroughs in urban planning and alternative energy development. There is also a provision mentioned in the proposal encouraging cooperation with universities and research institutes. Supporting the creative working group are two branches entrusted with implementation and financing. Leading the administrative branch are five members of the central and local government. This branch is in charge of legal compliance and the feasibility assessments for proposed projects. Lastly, a four-member financial branch would be comprised of a financial analyst, two professional investors, and a venture capitalist. The financial panel is responsible for project financing and is responsible to the corporations stockholders.

Fig. 1

Fig. 2 demonstrates each branch's role in the project approval process. Ideas for urban development projects (from private citizens, climate change experts, businessmen etc.) are initially presented to the committee of technical specialists. This panel of technical advisors serves as a clearinghouse for all projects. If proposed projects do not meet the technical panel's requirements, they are discarded. If approved, the projects are passed along to the the administrative/legal committee and the financial committee. If the project is fiscally and legally sound, it is returned to the technical team for a second round of expert review. Projects that receive a second stamp of approval are slated for completion and forwarded to the CEO. The UDC CEO is in charge of the project's timetable, implementation and profit distribution. An execution team is finally tasked with seeing the project to completion.

Fig. 2

Analysis of the UDC proposal

Aside from its public/private stock ownership, the upper-level management structure of the proposed Taichung UDC is fairly similar to the other previous case studies. The proposal's most unique aspect is its diffusion of project implementation responsibilities. The utilization of three separate project management committees, focused only on their specialties, will foster holistic and pragmatic projects. Essentially, the UDC will function as an idea pipeline, drawing on a broad range of sources for its development inspiration. This will promote project diversity and prevent tunnel-vision.

Although an organization like the one proposed seems to be very beneficial, it cannot be implemented without government support. To ascertain the likelihood of a Taichung UDC, Taiwan Sustainable Citieswas able to interview Taichung City Director of Urban Development Huang. Director Huang mentioned that he is personally in favor of such an organization, but admits that there many within the Taichung City government who see it as “太麻煩”, too much hassle. Director Huang related:

Chinese version (繁體)

"我們是比照桃園航空城的作法，成立一個組織應用至水楠機場整體開發。因為這地區的開發不能放任自由市場建設，自由市場開發的結果昰我們無法掌控的。開發後的土地不標售，我們成立一個永續經營的管理公司，這公司無論在土地或建築物上都屬於公部門所有，對於未來的發展方向及管理較為容易。但此作法必須透過立法，這前提是在縣市政府合併後才可推動。但此案目前在內部相關部門討論並未獲得支持。現階段大多數的人還是無法接受這個新觀念."

English Translation:

Based on Taoyuan Aerotropolis’ methods, we founded an organization applied to development of the Shui-nan Airport. This area’s development cannot be left alone to free market construction, since the result of free market development leaves us with no means to retake control. Post-development land won’t be sold, so we founded a sustainable operating management company, irregardless of whether it deals with land or construction, this company will belong to the government, and future development direction and management will be relatively easy. But this method must pass through legislation, and this precondition can only be implemented after the county and city government merge. But recently this case study in inter-departmental discussions has garnered little support. Only after the county and city government merger could it possibly be implemented. At its current stage, the large majority of people still cannot accept this new concept.

Director Huang's remarks are unsurprising. There will always be interdepartmental inertia when contemplating organizational reform. A proposal such as the one outlined above will take strong leadership and a coherent vision of Taichung in 20 years (as opposed to five) in order to implement. After the dust settles from Taichung's recent election and county merger, the new Greater Taichung government should re-examine the benefits of such a proposal. If Taichung wants to be a pioneer in sustainable development, it must start with a pioneering organizational structure.

What sort of UDC model should Taichung utilize?

In addition to the structural outline for the proposed Taichung UDC mentioned above, it is also important to consider what sort of qualities it will emphasize. In determining the characteristics of a Taichung UDC model, the previously mentioned UDC case studies offer promising suggestions. Taichung could emulate the socially-inclusive tone of the second generation U.K. UDC. Similarly to HCH, Taichung should adopt a strict quality over quantity approach to its land development. A Taichung UDC could create an award similar to HCH's ecolabel in order to promote high sustainability and green design standards. Taichung would also benefit from HCH's incentives for renewable energy sources and non-motorized transport, allowing the city to become a national leader in energy and transportation innovation.

Taichung should also look to the Taoyuan Aerotropolis' dual UDCs as a source of inspiration, as government decisiveness intervened to correct past inefficient practices. Like the renovation of TTIA, Taichung's eco-city aspirations are a crucial priority, not only in an economic sense, but one of identity. By becoming Taiwan's greenest city, Taichung could distinguish itself from its larger Northern and Southern neighbors. A UDC in Taichung is the vehicle that could vault Taichung into a different status of international city, staking out its own green credentials and becoming a model for the rest of Asia.