Bilbao Ria 2000: urban regeneration through local self-financing strategies

Este artículo está también disponible en / This post is also available in: Spanish

Everyone who visits Bilbao for the first time, comes to see, even to take a quick picture, one of the most unique buildings in Europe: the Guggenheim Museum. Its avant-garde ship-shaped design recalls what this area of the city once was: the hub of port, mining, and industrial activity in Biscay, one of the most prosperous provinces in northern Spain.

If the beginning of the 20th century made the Bilbao estuary a pole of regional economic development, the 1980s put an end to that golden age with the industrial reconversion of the country. Deindustrialization not only took away thousands of jobs, but also completely emptied a strategic space for the city, leaving behind rust and abandonment. However, that was not the end of a space that had given so much to the city. Thanks to the creation of a public company, the Bilbao estuary became a benchmark for urban regeneration through self-financing strategies.

Keep reading and discover in this article, which is part of a series on subnational financing, how the collaboration between public administrations made it possible, through strategies for capturing capital gains, to recover investments and turn the Bilbao estuary into a model of urban regeneration at the European level. We hope that this example will also serve as an inspiration for many municipalities in Latin America and the Caribbean.

Bilbao Ría 2000: public company to regenerate Bilbao

Bilbao Ría 2000 (BR2000) was created in 1992 with the objective of managing the regeneration of the areas affected by the deindustrialization of the Bilbao estuary. This organization, structured as a public company, brought together representatives of the Ministry of Transport and Public Works (national government), the Basque Government (regional level), the Provincial Council of Bizkaia (sub-regional level) and the Bilbao City Council (local government). Since its founding, it has been responsible for finding sources and mechanisms of funding outside traditional public budgets, including donations of land from the national government in redevelopment areas and the capture of capital gains.

Strategies for financing Bilbao Ría 2000

BR2000 initially received a financial contribution of 2 million euros from each participating municipality in the Bilbao metropolitan area. However, the intention thereafter was for the organization to receive its funding from other sources. It is important to note that BR2000 was an organization that relied heavily on self-generated funds, so it only undertook projects for which there was a guaranteed surplus to help support new projects and proposals.

This is a chronological summary of the main strategies for financing this initiative from the initial donation of land to the recovery of all investments, improving the quality of life of its inhabitants:

• The parties that were part of BR2000 donated land in areas targeted for transformation efforts.
• Municipalities were responsible for land use changes as outlined in the PGOU.
• Based on the land use changes, BR2000 sold certain land parcels targeted for mixed-use development to private developers.
• The resultant funds collected from the sale of land were then invested in the construction of sanitation and transportation infrastructure and public space.
• Approximately 10 percent of the financing for the projects came from European structural funds (Feder and Urban). The remaining 90 percent, showing the organization’s self-financing prowess, was obtained through the sale of land.
• Approximately 65% of BR2000’s funds are used for urban projects, with the remaining 35% set aside for other projects, which have, for the most part, already been carried out, including the Variante Sul Ferroviária, the Bilbao tram, the Renfe station in Santurzi, and metro in Bansurto.
• The construction of the underground (regional and urban) passenger train station attracted new residents and, as a result, new customers for both existing busi­nesses and new ones that emerged as demand grew. And, beyond the economic benefits, the conversion of the freight hub to a park also improved air qual­ity and helped to reduce the environmental impact of the district.

Ametzola neighborhood: first success story of Bilbao Ria 2000

The case of Ametzola illustrates the success of BR2000.  This neighborhood was one of the first actions of the public company, freeing up a large area of land occupied by an old freight station. The project invested around 90 million euros to build a better connection between the southern part of Bilbao and the city center, eliminating the physical barrier of the railway lines.  In addition, around 900 residential buildings were constructed, as well as new streets and public spaces, public parking lots and a new metro station providing access to the city’s urban train. Including planning and implementation, the entire Ametzola revitalization project took approximately 15 years.

Four key factors in the success of Bilbao Ria 2000

Major social, economic, and environmental crises were necessary for BR2000 to become a reality. Many projects would probably not have been implemented without this public company, which requires clear institutional leadership in times of crisis. The creation of the company thus streamlined processes and facilitated the economic viability of the projects.

Below, we share some key points of BR2000, which can be very useful for municipalities in the region seeking the regeneration of degraded urban spaces through self-financing strategies:

1. Creating a private company with capital and public participation as an instrument whose main objectives include: priori­tizing interventions, sales of land and public properties and management of public funds for investments
2. Self-financing of infrastructure through land use changes and strategic interven­tions, helping to balance public budgets.
3. Balancing highly profitable projects with social projects, such as affordable housing, through integrated operations.
4. Identifying additional support; Euro­pean cooperation funds financed 10% of the BR2000’s total investment.

The IDB, in its role as a multilateral financial leader in LAC, is available to offer its knowledge, technical and financial support to enable the development of innovative financing strategies for cities in the region. Next week we will share another article on subnational financing. In the meantime, if you know of any other success stories like BR2000’s, we invite you to share them in the comments section. See you soon!

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