Inter-municipal cooperation

Inter-municipal cooperation (IMC) is a generic term for all joint provision of public services between municipalities, who are normally but not necessarily neighbours. It is part of the science of administration.

General

Municipalities are elements of administration and have a history of several hundred years in Europe.^[1] One can speak of IMC when two or more local governments work together to provide a public service. All gains and losses are shared between the participants of the cooperation. These cooperation spread from only coordinated behaviour up to founding a joint venture that settles the task for both participants. As the territorial consolidation often fails because of political resistance inter-municipal cooperation is a way to keep public services efficient and effective without territorial consolidation.^[2] IMC can be divided into two categories: In case of a joint agreement municipals work together to operate a certain plant or share the provision of a service. The other category is called service agreement, where one town provides the service for the other town, e.g. town A provides the snow plowing services for town B.^[3] In both categories all types of cooperation can be found.

History

Cooperation of municipalities is an appearance of nowadays. A historic example of inter-municipal cooperation is the Hanseatic League.^[4] It was created by municipalities in Northern Europe and lasted from the 13th to the 17th century. Change came with the Industrial Revolution as cities grew rapidly and the requirements concerning public services increased. While cooperation was initially without obligation, with the beginning of the 20th century IMC was increasingly legally codified. As an example, the “Siedlungsverband Ruhr” was founded in 1911 and exists until today. It has extensive powers in planning the settlement of the region around the Ruhr. The services and the standards had been raised after the Second World War to a quality of public services never known before. But with increasing costs on the one hand and decreasing inhabitants combined with decreasing tax income, municipalities have increasing problems in maintaining the quantity and quality of public services. One way to cut costs and increase efficiency is to cooperate with neighbouring municipalities.

Benefits and Barriers

IMC is used to increase efficiency and effectiveness in providing public services. The joint financing and operating of these services can cut costs and achieve economies of scale, which becomes increasingly important in areas of decreasing numbers of inhabitants. Also the gain use of latest technology and equipment can be seen as a benefit of IMC in case it would be unaffordable otherwise. Furthermore it can eliminate duplicate efforts. A major advantage in Europe is that the European Union is providing incentives for municipal partnerships.

The most important barrier for inter-municipal cooperation is the lack of trust between the potential partners. Though the partnership means that services are provided together politicians and citizens may fear a loss of control over the service. As well one participant may fear to be taken advantage of. Beside the lack of trust the often complicated legal structure of IMC can be a barrier. Though IMC is no daily work, municipals have to look for advisors who can provide the experience that is needed. Besides that resistance among citizens and politicians can be met when the goal of the partnership is consolidation as citizens may fear the loss of identity and politicians the loss of decision-making power. If consolidation is the goal of the partnership, it should be communicated right from the beginning. If it is not, the limits of cooperation should be defined and communicated.

Types of Inter-municipal Cooperation

Coordinated Behaviour

Coordinated behaviour is the lowest level of inter-municipal cooperation. According to that it is the best enforceable way of IMC as it is non-binding. Each participant can leave the cooperation whenever wanted. Typical examples for coordinated behaviour are combined strategies for tourist development.

Public Contract

To perform a public contract is more binding than a coordinated behaviour. The costs for the formation of this cooperation are low as only the legal consulting may result noteworthy costs. Typically this kind of cooperation is chosen, when the service is similar in each of the participants, like one town settles the snow plowing service for one or more other towns and receives a certain amount of money in return.

Administration Unit

The participants of the intermunicipal cooperation found and own the administration unit. They transfer the right to provide the public service to the newly formed unit. As well as the service, the administration unit will have the right to raise the fees for this service, if such fees were previously raised by the participating municipalities. As these units need clear defined rights and obligation the effort to form them is much higher.^[5] For example, disposal services and water supply organised in such units.

Private Limited Company

To use a private law company to perform an inter-municipal cooperation is not without problems. Some countries, so as Germany, allow the municipals the ownership of private companies only if the purpose of the company is an economical not a public service. The easiest way to form a company by private law is the private limited company. The participating municipals benefit from the advantages of this form of corporation. It is easy and fast to found and the liability is limited to the assets of the company. In case the owners of the Limited have agreed on an assumption of the losses the cooperation can become an expansive engagement.

Public Limited Company

To organise an intermunicipal cooperation with a public limited company is one of the least used possibilities. Although the PLC shares the advantages of the Private Limited like limited liability the higher administration and financial effort makes the PLC rather unattractive for IMC. Besides that the PLC is often very difficult to control by the owners what rules is almost out for IMC.

Phases of implementing IMC

The phases to implement an IMC can be divided in up to 14 phases.^[6] Usually it is enough to distinguish four phases: the analysis of the needs, the analysis of the effects, the implementation and the evaluation.

At first one has to perform a “needs assessment”^[3] to find the areas in which IMC can benefit the participants. Though the partners are often the direct neighbours of the municipality there is no need for a great search like there is in the private sector. What is needed is an exact specification of the goals the IMC should achieve. The parties have to realize what they want and make sure that the partner has the same goals. Especially in the area of public services, where there is a constant dialogue with citizens about these services, it is important to make the process and the goals as transparent as possible. For example the citizens can be involved in the process of forming the IMC by using workshops or panel discussions.

After that, a feasibility study is needed to analyse the economic, operational and administrative efforts and benefits. If the service to be organised as an IMC already exists, it needs to be exactly specified. All the facts flow into the negotiation of the agreement, whether it is a contract, an administrative unit or a private company. At this point the involved parties should be clear about the form of financing the IMC. It is advisable to seek legal advice as IMC can become legally very difficult.

When everything is fixed in contracts the participants can start to realise the project. As well as in the first phase of the IMCimplementation it is important to communicate the process to all involved parties. Especially when problems arise, transparent behaviour is needed to sustain trust between the involved parties.

After the successful implementation of the project, the parties should negotiate certain progress of improvement an adjustment to changing environmental conditions. It is advisable to establish the “change management” in the contract between the involved parties. There should be a periodical evaluation of the IMC so that changed prerequisites will be noticed.

Inter-municipal Cooperation in international area

Belgium

By a framework decree of 2001, inter-municipal cooperation was reformed by the Flemish Government . A variety of forms of inter-municipal cooperation were legally implemented. Beside that certain elements of supervision were implemented, to ensure control by the municipal councils. The framework insists on the “purity” of IMC, so municipalities shall be involved primarily.^[1]

Finland

Especially in the thinly populated Finland inter-municipal cooperation has been an effective tool to ensure public services at reasonable cost. Finnish local governments are self-governing with a large variety of responsibilities. Due to this fact the services provided by the municipals are numerous. Even service competition between municipals is quite common in Finland.^[1]

France

France was long time mainly governed by a central state. Within the last century the municipals gained more and more autonomy. Nevertheless inter-municipal is often performed on voluntary basis. As discussing about territorial consolidation is politically hazardous in France, IMC becomes more and more important to maintain public services at reasonable costs.^[1]

Germany

Inter-municipal cooperation has a long history in Germany. In the administrative system of Germany (State, Federal States, Communities) the municipals have to finance their services themselves. Therefore municipals have a natural interest in providing public services efficiently.^[1]

United Kingdom

In contrast to other European Countries local governments are highly restricted in the United Kingdom. Therefore inter-municipal cooperation is not that common in the UK. Although municipalities have the authority to perform public services they often do not have the possibility to raise additional fees.^[1]

United States of America

Municipalities in the USA are highly fragmented. There are 39.000 local governments and 22,000 of them have under 2,500 inhabitants.^[7] Besides providing public services themselves, municipalities in the USA have used privatization (contracting out) and cooperation with neighbouring municipalities for a long period of time. Cooperation is used to maintain independent identities and still achieve economies of scale. Most of the cooperative ventures are single-function (education, water, housing, transport).

References

1 2 3 4 5 6 Hulst, Rudie (2007). Inter-Municipal Cooperation. Amsterdam: Springer. ISBN 1-4020-5378-9.
↑ "When is IMC relevant?". Local Government and Public Reform Initiative. Retrieved 2011-07-05.
1 2 Officer of the State Comptroller. "Municipal Cooperation and Consolidation" (PDF). New York State. Retrieved 2011-07-05.
↑ Froecker, Hans-Joerd. "Interkommunale Zusammenarbeit" (PDF). Friedrich-Ebert-Stiftung.
↑ Hessen Ministry of Economy, Traffic and Development. "Interkommunale Kooperation" (PDF). Retrieved 2011-07-05.
↑ "Establishing IMC". Local Government and Public Reform Initiative. Retrieved 2011-07-05.
↑ Warner, Michael E. "Inter-municipal Cooperation in the USA" (PDF). Urban Public Economics Review. Retrieved 2011-07-05.

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