Funding Systems Transformation in Cities: Lessons from Dublin

This is the second blog in a series covering the activities of the TransCap Initiative and the Centre for Public Impact on piloting a systemic approach to urban climate finance with Dublin City Council. Find out more about the origins of this work in our first blog post, “Piloting Systemic Finance for City Climate Action”.

Like so many local governments, Dublin City Council is tasked with delivering on multiple high-stakes challenges – more homes, lower emissions, as fast as possible – within a system it does not fully control. Our deep dive into funding for adaptive reuse in Dublin revealed that capital is only one constraint, and power, incentives, and institutional design are at least as, if not more important. In a highly centralised governance model, even the largest local authority cannot mobilise sufficient resources to finance transformation without reshaping the systems around it. This project uncovered a hard truth: systemic funding for climate-positive housing is less about inventing new instruments, and more about rewiring the conditions that make action possible.

Against a cityscape of glass office blocks and centuries-old Georgian terraces, we set out to discover: What is the nature of the funding challenge? And which interventions could catalyse more funding and faster progress towards Dublin’s circular housing goals? 

We learned that

1. Structural conditions like centralisation and control of public funding strongly limit Dublin’s ability to access the types and amounts of funding needed to address complex, interconnected issues like climate action, social housing provision and dereliction.

2. Money problems are people problems: working together across departments and creating meaningful relationships with other owners and managers of financial capital in Dublin and Ireland takes time and energy. Incentives for people across the ecosystem to take on risk, innovate and share power need to be realigned, and there’s a clear need to create more opportunities for different actors to come together to align and deliver on shared objectives.

3. The basic enabling conditions must be established first before money can start flowing. This means clear ownership of the problem, held by a dedicated and sufficiently-resourced team, and a clear, stable vision. That vision needs to be backed by a strong coalition within DCC, across the city of Dublin and Ireland as a whole.

If you want to know more about how we got there, read on.

So we explored different pathways to advance circularity in the built environment and after weighing factors like viability, carbon reduction potential, and co-benefits, we decided, together with our partners at DCC, to focus our efforts on advancing adaptive reuse of vacant and derelict buildings.

The potential is enormous. DCC is committed to creating 40,000 new homes between 2022 and 2028, and we’ve estimated that adaptive reuse could contribute around 8,900 housing units. Not to mention the co-benefits of addressing residential dereliction as a means of urban regeneration: lived-in streets and areas are safer and more attractive, commute times and emissions are reduced, regenerated vacant-above-the-shop-units (VATSUs) can drive economic activity and vitality, and DCC taking the lead can signal to owners of nearby private properties to follow suit. All of these are reasons why addressing dereliction is a priority issue for both Dublin City Council and the Irish Government.

In the second phase, we built on our initial findings and recommendations and zeroed in on the issue of funding. How big a barrier is funding in all of this? What is the nature of the funding challenge? And which interventions could catalyse more funding and faster progress towards Dublin’s circular housing goals?

This analytical inquiry yielded a range of useful insights: 

1. DCC is heavily reliant on national government funding. 
2. The funding landscape is complicated and fragmented, with sources from across different national departments and programs.
3. The majority of funding instruments disperse money in the form of grants, and only a small number are set up to provide loans or guarantees.
4. Most of the available funding serves very specific purposes – be it adaptive reuse for community development, heritage preservation, or energy improvements – and in many cases, it is unclear to what extent these programs complement each other. 

We tested our learnings from both the funding gap analysis and the value flow diagram with our partners at DCC and other stakeholders in the housing and climate ecosystem, and used them to explore which interventions could release more financial capital for adaptive reuse. To our delight, we found that this artefact proved useful and instructive to our partners at Dublin City Council and has also been used by other stakeholders, including members of the Vacant to Vibrant Building Alliance.

The last few months of deep investigation into the nature of the funding challenge for adaptive reuse in Dublin surfaced a host of valuable learnings, some of which are summarised here:

1. Structural conditions: the Irish context, with its pronounced centralisation, strongly limits the agency of local authorities – even big and powerful ones like DCC – to effectively tackle complex issues like housing and climate. DCC has ambitious goals to mitigate climate change and solve the housing crisis while improving quality of life for residents, but structural conditions strongly limit its ability to access the types and amounts of funding needed to address the issue.

2. Money problems are people problems: Accessing sufficient funds is only part of the problem. Siloed organisational structures and rigid ways of working make it very difficult to tackle cross-cutting issues like adaptive reuse, which require people to work together across departments and create meaningful relationships with other owners and managers of financial capital in Dublin and Ireland. Incentives for people across the ecosystem to take on risk, innovate and share power need to be realigned. We’ve encountered widespread desire among different actors to work together, we need to create more opportunities to do so.

3. Enabling conditions: No amount of mapping funding flows, convening multi-stakeholder groups or designing innovative funding schemes will be enough to help Dublin tackle its climate and housing challenges on its own. The basic enabling conditions must be established first. This means clear ownership of the systemic problem – of creating low-carbon homes, in a housing crisis, and supporting thriving communities – held by a dedicated and sufficiently-resourced team, and a clear, stable vision. That vision needs to be backed by a strong coalition within DCC, across the city of Dublin and Ireland as a whole.