Step 5 - Decide on areas of cooperation

From Municipal Cooperation

Establishing IMC
PHASE 1: Initiating cooperation
PHASE 2: Establishing cooperation
PHASE 3: Implementing IMC
PHASE 4: Evaluating IMC

The feasibility studies may reveal that IMC is desirable and feasible in a wide range of areas. The questions that arise are:

  • What possible IMC areas should be selected for cooperation?
  • How many possible IMC areas should be selected for cooperation (single- or multi-purpose IMC)?

In other words, how ambitious should IMC be?

The answer to this question involves a number of political and managerial decisions that can only be taken by elected municipal officials and senior municipal staff. For this reason, it is essential that each municipality organizes a meeting to present and discuss the findings of the feasibility study with the relevant senior municipal officials, including the mayor and the heads of departments, particularly those concerned with IMC. The selection of the areas of cooperation involves a review of a number of parameters such as those given in Figure 3, namely rationale, need, cost savings and feasibility.

Chart 3: Inter-Municipal Agreement Evaluation Matrix

Inter-Municipal Agreement Evaluation Matrix

The selection of the initial areas of the IMC is critical for its future development. When selecting the IMC service areas, it is important to remember that the areas of cooperation also determine to a large extent the other critical parameters of IMC: legal form and financing (please refer to Steps 8 and 9 below). For instance, the sharing of administrative services would most probably only require a contract or an agreement and not the establishment of an IMC legal entity, whereas the joint provision of a utility service may require its establishment. It is more costly to establish a new legal institution than to just sign a contract or an agreement.

There are IMC areas that are easier and cheaper to implement than others. Establishing a joint delivery of taxi licences is technically and financially less demanding than setting up an IMC public-private partnership for waste collection. Opting for a single-purpose IMC is easier than engaging in a large multi-purpose initiative. Multi-purpose IMC is expected to be more cost-efficient than single-purpose IMC due to savings on overhead costs. However, issues of manageability and control during operations can arise that may offset any cost-savings derived from a larger IMC structure. On the other hand, there may be government financial incentives that offset the start-up and operations costs of more complex or multi-purpose IMC. There may be grant schemes that render engaging in one IMC area more attractive than in another. Also, financial incentives and grants may be more accessible under public law legal forms than under private law legal forms.

In addition, there are IMC areas that are more political than others and require trust. Engaging in joint planning of local development is clearly more politically sensitive (particularly if the mayors come from competing political parties) than sharing administrative staff for the delivery of construction permits. The extent to which a given form of IMC is feasible depends on municipal resources, municipal capacities, previous experience of the municipalities in working together and trust. Trust is an essential condition for successful IMC, but it takes time to build.

Experience shows that municipalities that have limited capacities and resources, and no experience in working together should be pragmatic and start small by focusing on one or very few simple IMC areas. They may then gradually expand to other more complex areas as experience and trust between actors is built. A less complex project shows a consensus among the participating municipalities, usually involves limited financial risk, and may have a greater potential for success. The municipal officials can see the benefits of a successful effort firsthand and build future cooperative efforts on this solid foundation. Box 16 illustrates a possible sequence for the gradual development of IMC.

Box 15: Possible sequence for the gradual development of IMC

  1. Start by jointly managing some indirect functions, such as payrolls of employees, tax collection and electronic document processing, using a contract only.
  2. Move to direct functions with specific technical requirements, for instance, garbage collection, catering for schools, pupils’ bus transportation, still using contracts.
  3. Increase the number of indirect and direct functions, and move from agreements or contracts to the establishment of a legal person (association or commercial company) that will perform a variety of municipal services.
  4. Eventually initiate joint strategic development functions such as urban planning, economic development promotion and environment policy through a territorial IMC entity.