AHURI BRIEF

What can Australia learn from international ‘smart cities’?

Examining the key elements to deliver a successful innovation district or smart city

7 September 2020

Australian City Deals are aimed at increasing the productivity and liveability of specific geographical areas, and often target technology-based economic developments as a key solution. Internationally, a number of similar technology-focussed regional development programs—perhaps best called ‘smart city’ programs—can suggest features that need to be considered and addressed in such ‘deals’.

Recent AHURI research reveals that successful and sustainable programs need more than just a high speed internet system, as the international evidence demonstrates a critical need to manage housing and other supportive infrastructure alongside the growth of innovation districts.’

The research examines some of the key elements to deliver a successful innovation district or smart city:

Anchoring

To be effective, a technology-based regional development program can benefit from working alongside an appropriate Anchoring institution. These institutions are permanently embedded in a place, and include hospitals, schools, universities, technical colleges, sporting facilities and public utilities as well as arts and cultural institutions such as art galleries and museums. These institutions both receive and give benefits to programs through the clustering of research and development opportunities, from the nurturing of startup and postgraduate research opportunities, and from the ability to leverage the economic weight of these anchors for community-wide benefits.

Collaboration

The international evidence points to greater success for government initiated development programs when they include ways for collaboration between governments, businesses and communities. Together with R&D (research and development), innovation and inclusiveness, the aim of any government sponsored, place-based program should be to deliver benefits to the greater community, including improving engagement and employment opportunities for local, lower skilled workers.

Affordable housing

Without the provision of appropriate housing, including public/social, affordable and mid-range housing, as well as other infrastructure for affordable and connected living, innovation districts are unable to maintain an equitable and sustainable mix of lower and higher income households. The international research highlights the significant productivity costs when such policies are delayed or ill considered.

For example, the 2012 South Lake Union redevelopment of inner Seattle, dominated by firms such as Amazon, Google, Apple and Facebook, saw a doubling of apartment stock in four years. By the middle of 2018, however, 14 per cent of the units were vacant due to unaffordability. Despite this, Seattle has the third highest homelessness rate in the US, and there is recognition that economic growth failed to coordinate with appropriate investments citywide.

Successful smart cities in practice

Our research looked at a number of examples of international technology-based regional development programs.

Table: Selected international models of innovation districts

Project

Description

Key features and strategies

Issues and challenges

Chattanooga Innovation District, Tennessee, USA* Developed 2015 to maximise advantages of the ‘Gig’ Internet (a 1 gigabit-persecond fibre optic network) in the mid-sized city
* Includes diverse technology startups, and other innovation corporations
* Digital equity focus with targeted opportunities for underrepresented groups
* Affordable housing supported through local land-use tax breaks

* Need for more affordable housing and other affordable infrastructure including transportation and food and social options

One North, Singapore* State-led public-private partnership launched 2001
* Various knowledge clusters across 200 hectares including startups, anchor institutions and established firms
* Supported by strong infrastructure and high amenity

* Profits maintain public housing (for ~80% of residents), education and other infrastructure - no huge state subsidies for the private sector with little public return

* Strongly state-led publicprivate partnership unique to Singapore’s governance model that prevents profit-driven private corporations from directing policy

Greater Circle Initiative, Cleveland, Ohio* Anchor-based community wealth building program ‘buy local, hire local, live local, connect’
* Now Cleveland’s second most dense ‘job hub’ and cultural mecca with 9500 plus residents
* Ecosystem supported by local procurement and purposecreated co-operatives.
* Forgivable housing loans promote wealth and reduce commutes
* Supported by good transport access to downtown Cleveland
* Demands strong leadership and collaboration
* Long-term, community-wide benefit requires commitment
* Support limited to workers within initiative organisations not other groups of low socioeconomic status

Source: AHURI Final Report 334

For further international case studies, view the full report

The Greater University Circle Anchor Initiative (GUCI) (Cleveland, Ohio, USA)

The GUCI was initiated in 2005 to address significant challenges around disinvestment and disadvantage. It engaged with the economic potential of local anchor institutions, including a university and health institutions. Previously, the area faced a significant economic divide, with many residents locked out of their employment and educational opportunities, and prospective students and employees from elsewhere bypassing Cleveland. This meant the institutions also suffered a downturn.

The GUCI focussed on:

  • institutional partnerships—creating opportunities for diverse institutions to work together
  • physical development—catalysing transportation and real estate projects that reconnect neighbourhoods
  • economic inclusion—encouraging institutions to buy local and hire local, and empowering new and existing residents to live locally
  • community engagement—ensuring residents have authorship in the revitalisation of their neighbourhoods.

Four targets were outlined: ‘buy local’, ‘hire local’, ‘live local’ and ‘connect’.

In the decade since its inception, GUCI members worked together to develop a US$3 billion local procurement program to funnel purchasing power to local businesses. Three new ‘green’ employee-owned businesses were created to service this procurement, creating wealth for the local community. These new businesses hire more local people, retrain them and offer them pathways to a career. The GUCI has also increased the number of anchor institution employees who live in the local neighbourhoods and has improved the quality of life of residents.

‘Gig’ city (Chattanooga, Tennessee, USA)

The 2010 launch of the first 1 gigabit-per-second fibre optic Internet network in the US in Chattanooga led to the establishment of the ‘Gig’ innovation district in 2015. The Gig covers 56 hectares and includes a mix of startups, venture capital firms, public organisations and not-for-profits, arts organisations and anchor institutions.

One $ billion in private investment for redevelopment led to the innovation district attracting wealthier households, and the city recognised the need to improve equity and inclusion for the wider local community. As a consequence, the Technology, Gig and Entrepreneurship Task Force adopted two types of strategies, each facilitated by a range of public and not-for-profit organisations, and funded by place-based foundations, grants, and corporate sponsors:

  • promoting digital equity and fostering entrepreneurial opportunities for under-represented groups, such as by providing computer skills, coding lessons and startup acceleration programs to school children, low income and unemployed residents, small businesses, women and minorities across the community
  • programming the downtown area as a place for everyone, through involving a wide range of organisations, public events include Tech Tune-up Tuesday, seminars, graduation ceremonies for skills courses, and other events aimed to be welcoming and interesting for all.

One North (Singapore)

In this State-led public-private partnership, the National University of Singapore and other anchor institutions support clusters of industries and researchers focusing on biomedical sciences, ICT, startups, media, and talent development.

The 200 hectare business park is an example of how the agglomeration of firms around anchoring institutions promotes a collaborative research and development environment, particularly when supported by suitable low-cost housing for young entrepreneurs and postgraduates.

The program maintains affordable state owned public housing for around 80 per cent of its residents, creating an environment attractive to researchers and young tech workers, nurturing a sustainable mix of startups, and medium and large-sized firms, along with productive research and development collaborations with university departments as anchors.’

To find out more about successful smart city initiatives, and the role of affordable housing in supporting digital innovation and employment growth in these areas, read our recent report Affordable housing in innovation-led employment strategies.