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INTERNATIONAL CONFERENCE

INTER-MUNICIPAL COOPERATION AND GOOD GOVERNANCE:CYPRUS AND EUROPEAN EXPERIENCE

Summary Report and Preliminary Conclusion Prepared by Ramona Velea, CoE Expert, Centre of Expertise for Local Government Re-form

Nicosia, February 8th 2017

Centre of Expertisefor Local Government Reform - CoE

Union of CyprusCommunities

International Conference on IMC – Nicosia, Cyprus ►

1 INTRODUCTION............................................................................................................................................... 3

1.1 THE BACKGROUND...........................................................................................................................................31.1.1 THE CYPRIOT CONTEXT................................................................................................................................31.1.2 INTER-MUNICIPAL COOPERATION...............................................................................................................3

1.2 THE CONFERENCE............................................................................................................................................41.2.1 ORGANISERS................................................................................................................................................41.2.2 OBJECTIVE...................................................................................................................................................41.2.3 ADDED VALUE.............................................................................................................................................41.2.4 PRESENTED EXPERIENCES............................................................................................................................4

1.3 NATURE AND PURPOSE OF THE REPORT..........................................................................................................4

2 CONFERENCE HIGHLIGHTS – SUMMARY OF PRESENTED EXPERIENCES..............................................................5

2.1 INTRODUCTORY SESSION.................................................................................................................................52.1.1 UNION OF CYPRUS MUNICIPALITIES............................................................................................................52.1.2 UNION OF CYPRUS COMMUNITIES..............................................................................................................5

2.2 EUROPEAN EXPERIENCES.................................................................................................................................52.2.1 IRELAND......................................................................................................................................................52.2.2 FRANCE........................................................................................................................................................62.2.3 SWITZERLAND.............................................................................................................................................72.2.4 POLAND.......................................................................................................................................................72.2.5 AUSTRIA......................................................................................................................................................8

2.3 INSIGHTS FROM THE ROUND TABLE - SHARING OF EXPERIENCE FROM COUNTRIES CURRENTLY DEVELOPING IMC 9

2.3.1 GREECE........................................................................................................................................................92.3.2 MALTA.........................................................................................................................................................92.3.3 GEORGIA......................................................................................................................................................92.3.4 ALBANIA....................................................................................................................................................102.3.5 ITALY..........................................................................................................................................................102.3.6 UKRAINE....................................................................................................................................................112.3.7 ARMENIA...................................................................................................................................................11

3 PRELIMINARY CONCLUSIONS AND RECOMMENDATIONS................................................................................12

3.1 GENERAL REMARKS........................................................................................................................................123.1.1 FACTORS ENABLING IMC...........................................................................................................................123.1.2 IMC REFORMS AND ECONOMIC TURMOIL................................................................................................123.1.3 IMC AND AMALGAMATIONS.....................................................................................................................123.1.4 IMC AND CIVIC ENGAGEMENT...................................................................................................................133.1.5 EVOLUTIONARY DIMENSION OF IMC PROCESSES......................................................................................13

ANNEXES................................................................................................................................................................ 14

3.2 ANNEX 1 - PROGRAMME - INTERNATIONAL CONFERENCE............................................................................143.3 ANNEX 2 – NOTES ON LOCAL GOVERNMENT REORGANISATION AND CO-OPERATION IN IRELAND..............16

Summary Report


1 INTRODUCTION

1.1 THE BACKGROUND

1.1.1 THE CYPRIOT CONTEXT1

During 2012, Cyprus was struck by a banking sec-tor crisis. The crisis had severe implications for economic growth and fiscal sustainability. In April 2013 the Cypriot authorities agreed to the terms of a €10 billion bailout programme with the Troika (the European Commission, Interna-tional Monetary fund and the European Central Bank).

A reform programme begun, one element of which was the structural reform, aimed at raising the efficiency and effectiveness of the public sec-tor. The reform of the local government fell within these structural reforms. Under the provisions of the MoU, a review of the Local Government was carried out by the Na-tional School of Government International (NSGI), U.K. and a report was delivered to the Cypriot Au-thorities in April 2014.

Current status of Local Government in CyprusIt consists of 39 municipalities in urban areas (nine of which are within the occupied area) and 487 communities in rural areas (350 in the area controlled by the government and 137 in the occupied area). These local authorities cover all of the territory of the island, in a directly elec-ted unitary level structure.

Generally, municipalities have much greater powers and responsibilities and larger budgets than communities; there is also considerable vari-ation within the groups of municipalities and communities on powers, responsibilities and budgets.

In general, Community Councils are generally re-sponsible for waste disposal, water supply and

1 The background was highlighted by the Ministry of Interior of Cyprus, during the Conference.

public health. Municipal Councils are, in ad-dition, responsible for the social services, and some larger Municipal Councils are responsible for the process of planning permission.

1.1.2 INTER-MUNICIPAL COOPERA-TION

Inter-Municipal Cooperation (IMC) is envisaged by the Council of Europe (CoE) as a key factor in the strengthening of local government and as well as a tool for promoting good governance. This stems from the fact that, if implemented effi-ciently and effectively, IMC has proven to have a positive effect on the quality of the life of citizens and on their collective welfare (i.e. by means of improved services and infrastructure, achieving economies of scale, etc).

IMC agreements and forms may vary among the Member States of the Council of Europe, on ac-count of existing legal frameworks and on ac-count of different cooperation “traditions”. How-ever, IMC usually address issues of primary con-cern to citizens such as roads and traffic manage-ment, transport, water supply, schools and kindergartens, health centres, sports facilities, waste collection and disposal, museums, theatres and music halls, cemeteries.

Although forms of IMC vary across Europe, there are some similarities between the IMC arrange-ments that allow for its classification in four broad categories2:

Informal IMC – based on informal relations among municipalities, with no precise legal basis since they do not entail any binding legal decision;

Weakly formalised IMC - mostly based on agreements or contracts.

2 Toolkit Manual for Inter-Municipal Coopera-tion (2010) - prepared by the Council of Europe, the United Nations Development Programme and the Local Government Initi-ative of the Open Society.

Inter- Municipal Cooperation and Good Governance: Cyprus and European Experience


Functional “enterprises” – mostly based on the establishment of municipal enterprises with (public or private) legal ‘personality’ and their own budget and property.

Integrated territorial cooperation – based on the establishment of strong political struc-tures (and a degree of financial autonomy) with multi-purpose competences in matters of strategic interest (e.g. economic develop-ment, town planning, roads, public).

1.2 THE CONFERENCE

1.2.1 ORGANISERS Union of Cyprus Municipalities Union of Cyprus Communities Ministry of Interior Council of Europe Centre of Expertise for

Local Government Reform and the European Committee on Democracy and Governance

1.2.2 OBJECTIVEThe conference aimed at the exchange of IMC ex-perience of the CoE member states, in the con-text of wider local government reforms, good governance, capacity-building, legal framework, CoE standards and recommendations.

1.2.3 ADDED VALUEExchange and debates were envisaged as a mu-tual benefit for all participants: not only Cyprus but as well for the delegations of the participating Member States.

1.2.4 PRESENTED EXPERIENCESThe conference consisted in three main sessions, focusing on:

SESSION 1 - Development of IMC in Cyprus:

Ministry of Interior - Local Government Reform in Cyprus

Notoria International - Presentation of the Report on Local Government Reform in Cyprus - prepared on behalf of the Union of Cyprus Municipalities

UCM, UCC - Districts and Local Clusters SESSION 2 - Exchange of European Experience and Best Practice: Presentations from the mem-ber states: Ireland France Switzerland Poland Austria

SESSION 3 - Round Table Discussion on Legal As-pects of IMC - sharing of experience from coun-tries, which are currently developing IMC frame-works/actions: Greece Malta Ukraine Georgia Albania Italy Armenia

1.3 NATURE AND PURPOSE OF THE REPORT3

The report summarises the main highlights of the conference as well as recommendations and con-clusions emerging from the debates.

The report is addressed to the Cypriot authorit-ies, as well as to all participating delegations, pro-moting thus the peer-to-peer approach of the Council of Europe, as an instrument of learning through peer exchanges.

To this end, all conference materials will be pub-lished on the website of the Union of Cyprus Mu-nicipalities (www.ucm.org).

3The materials used for the drafting of the present report were: i) minutes of the con-ference, ii) Power Point presentations of the delegates, iii) written post-conference notes forwarded to the organizers by some of the delegates.

Summary Report


2 CONFERENCE HIGHLIGHTS – SUMMARY OF PRESENTED EXPERIENCES

2.1 INTRODUCTORY SESSION

2.1.1 UNION OF CYPRUS MUNICIP-ALITIES

The reform envisages two different types of clustering of services: 1) District Clusters, in-volving Municipalities, and 2) Local Clusters, involving communities.

The Clustering of Services is not envisaged as amalgamation.

Further clarifications should be addressed re-garding the powers and competencies with which the clusters will be endowed.

The proposed reform raises points around concentration and de-concentration.

UCM envisages the reform as an evolutionary process

2.1.2 UNION OF CYPRUS COM-MUNITIES

Cyprus has already engaged in informal clus-tering of services.

The existent cooperation should be consolid-ated so to raise awareness among com-munities on the future reform. Moreover, the clustering should not jeopardise the position of community leaders.

2.2 EUROPEAN EXPERIENCES

2.2.1 IRELAND4

The Irish experience with IMC begun, as for Cyprus, as a consequence of an economic crisis, which generated a number of reforms directed to local government.

On account of an overall disappointing experi-ence with traditional forms of inter-local author-ity co-operation, an innovative new system of governance has been implemented in Ireland (i.e. distinct from both local authority amalgamation and standard inter-authority co-operation).

The current main vehicle for co-operation between the 31 local authorities is a new struc-tured system of shared services initiated and sup-ported by the central Government. This approach has generated significant advantages, although reviews indicate that local authority amalgama-tion has greater potential for savings and effi-ciency.

A different approach has been implemented at sub-county level as part of a major programme of local government reform, which achieves the ob-jectives of both amalgamation and inter-muni-cipal co-operation, without the disadvantages as-sociated with each of these approaches.

A comprehensive set of municipal districts has been established to replace a former patchwork of town local authorities, which were weak and fragmented. The elected members for each muni-cipal district perform a range of important local

4 Further details on the Irish experience with IMC are provided in Annex 2 – Notes on Presenta-tion on Local Government Reorganisation and Co-operation in Ireland, Denis Conlan, Depart-ment of Housing, Planning, Community and Local Government, Ireland



authority functions in respect of the district on a devolved basis, but implementation and adminis-tration generally is carried out through a unified county-wide executive organisation.

Thus a high degree of subsidiarity, democratic representation and accountability is achieved, while at the same time avoiding the costs in-volved with traditional inter-municipal co-opera-tion due to retention of separate corporate struc-tures and to the resources needed to establish, manage and oversee co-operative arrangements and the difficulty of addressing possible disagree-ments and ensuring continued co-operation.

Some particular elements of the Irish reforms which might be relevant for the context of Cyprus:

Rigorous efficiency review of operational/or-ganisational aspects.

Structured programme of shared services at city/county level.

Structural/territorial amalgamation where warranted and feasible.

2.2.2 FRANCEThe French experience with IMC may be relevant to Cyprus, as the tow contexts share similarities related to the high number of municipalities.

The French context is characterized by a high level of decentralization and deconcentration, however, central competencies remain at the local level (especially at the regional and depart-mental level), for the following sectors:

Police, security, civil protection Taxes, budget Environment, culture, trade and work, educa-

tion. Control and overview

IMC developed in France as a result of a long pro-cess, started in 1789 and which culminated in 1992, when a new approach to IMC was under-taken.

Currently, the main types of IMC are: IMC based on contribution and IMC based on taxation (CC).

1. Contribution based IMC are focused on ser-vices, and aim at infrastructural efficiency, scale based savings and improvement of ser-vice quality. The competences are of free choice. The IMC resources are mainly insured through budget contributions and free distri-bution key. The contribution based IMCs re-gistered in 2016 are 12234.

2. Tax based IMC are project oriented forms of IMC, which aim to achieve infrastructural effi-ciency, scale based savings, improvement of service quality as well as the development of a common project of territorial development and equalization. The competences are part compulsory, but there are also optional as well as potential competences (at the choice of the involved members). The IMC re-sources are mainly insured through taxation (i.e. members vote so to establish the taxes that are devolved to the IMC/CC) as well as through general operating grants. The tax based IMCs registered in 2016 are 2062.

Points that might be relevant for the Cyprus ex-perience:

France has a strong central system, which is based on a strong local government. From the French experience, compulsory merging may result not effective.

The long French experience highlights that IMC is an evolutionary process, and that, once it is activated it allows for changes and adaptations according to the national and local transformations.

Summary Report


2.2.3 SWITZERLANDSwiss experience highlights a wide range of co-ex-isting IMC typologies and forms:

IMC established as legal entities (i.e. gov-erned by Public law, such as associations and institutions, or governed by Private law, such as foundations and companies).

IMC based on private contracts (i.e. based on existing structures which may undertake a common fulfilment of a policy or which may recur to the delegation of fulfilment to only one municipality).

IMC established as regional conference.

Among these, IMC based on private law is rapidly spreading in Switzerland, as it allows for a high level of flexibility.

The main reasons for establishing IMC in Switzer-land are: Obligation by the canton to fulfil a (regional)

policy / task; Spatial / contextual scope of a problem / is-

sue; Lack of adequate / admitted spaces for infra-

structures; Lack of knowledge to build and maintain in-

frastructures and services; Lack of or incomplete know-how to fulfil a

policy / task.

The main areas of cooperation between municip-alities are: Basic education (primary and secondary

schools, libraries); Social care and integration (people in need,

foreigners); Regional spatial planning; Care for elderly people (i.e. help services and

nursing homes); Public safety (i.e. civil protection services, fire

fighters, military); Water provisioning and treatment, waste

management; Wood and forest cooperation.

It is important to note that the members/part-ners of the IMC change according to the field / theme at stake. A municipality may be involved simultaneously in more than one cooperation process.

Currently, the process of amalgamation and that of cooperation/IMC are developed in parallel (i.e. depending on the case)

Some points and preliminary recommendations for the Cyprus experience, stemming from the Swiss case: In establishing a new IMC, partners should

first consider/set the exact goals and decide upon the areas of cooperation.

The structure of the IMC should be con-sidered and dealt with at a later stage.

2.2.4 POLANDIn Poland, IMC may take up several forms, such as inter-municipal unions, inter-municipal agree-ments and inter-municipal companies, as well as bi-lateral agreements which usually are de-veloped within the field of social services.

Currently Local Government Unions are represen-ted by 6 associations Association of Rural Gminas, Association of Polish Towns, Association of Small Towns, Union of Polish Metropolises, Association of Polish Poviats, Union of Polish Regions.

The man types of IMC that are relevant for the Cyprus context may be:

1. inter-communal unions (gmina level) – up to 226 cases; according to the register 1947 gminas participate in some of the unions (78%). Some gminas are members of more than one union; however available data are not entirely up-to-date

2. unions of poviats (5 of regional coverage) – up to 6 cases.

The main areas of cooperation between LGs are: protection of environment, solid waste and man-agement, sewage and water management, tour-



ism development, local public transport, water management, economic development, education and culture, gas infrastructure, telecommunica-tions.

The Polish case demonstrates how local govern-ment cooperation ensures concrete results in im-proving the delivery of services, as well as for what concerns financial aspects (i.e. economies of scale, accessibility to financing/funds, etc):

Example 1 – Municipal Airport (Warsaw) Example 2 – Cooperation in the Zilawa Valley

– local authorities decided to cooperate so to be able to access European funds. However, the cooperation became institutionalized and allowed the IMC to put the basis of an energy company. Currently, this type of cooperation is ensuring a financial benefit to all of its members, thanks to the profits obtained by the company.

The analysis of the Polish IMC evolutionary pro-cess shows that among the most important suc-cess factors of IMC there is the identification of common goals.

Moreover, the analysis highlights how, often, IMCs which are not based on a concrete diagnosis and lack such sense of common purpose, may result in inactive ones (i.e. legally established but not running concrete activities).

2.2.5 AUSTRIAThe IMC experience in Austria is widely spread, focusing mostly on the following sectors: tourism, waste water and water supply management, edu-cation. Other common topics of cooperation between local authorities in Austria are spatial planning and Public transport and mobility, whereas relatively new IMC may focus on areas such as business and/or industrial parks, as well as back office activities (e.g. public procurement).

The analysis of the Austrian case shows that suc-cessful IMC frameworks should:

ensure the possibility of creation of both formal and informal IMC (i.e. this aspect is highlighted as a success factor in the Austrian experience).

endorse/allow for the possibility of coopera-tion between local government units of dif-ferent sizes and scales (e.g. IMC between smaller communities and cities).

remove potential obstacles to IMC (e.g. VAT). maintain a certain level of flexibility, in order

to be adaptable to different contexts/needs; moreover such flexibility allows for the devel-opment of an evolutionary-oriented IMC pro-cess, that accompanies local government needs as they emerge (e.g. the Austrian case of IMC, and especially that of Municipal Asso-ciations, evolved from a single to multiple-purpose, so to better address local needs – 2012 legislative change).

Stemming from the Austrian experience, the fol-lowing recommendations were made as for en-abling/ensuring an IMC friendly environment: the cooperation rate per region should be

monitored so to ensure a sustainable growth; legislative frameworks must be constantly ad-

apted to address local needs; financial incentives are to be promoted, as

often they are the key driving force to IMC.

Summary Report


2.3 INSIGHTS FROM THE ROUND TABLE - SHARING OF EXPERIENCE FROM COUNTRIES CURRENTLY DEVELOPING IMC

2.3.1 GREECEAs for the case of other countries, territorial re-forms in Greece were developed as a result of an economic crisis.

The Greek case envisages different types and levels of cooperation between local govern-ments, as well as with private actors, such as: inter-municipal cooperation; intra-municipal cooperation - in the case of

big municipalities; multilevel cooperation – by means of Co-

operation Contracts allowing for local govern-ment to cooperate with entire regions,

public-private partnerships; Solid waste management authorities - public

legal entities or private, which are coordin-ated by a board of director, in which mayors are included.

IMC tackles usually concrete projects (e.g. public works), it is time-related and may be developed under the following schemes: creation of a public entity (i.e. the initiative

comes from the State); Contractual model (i.e. a more flexible IMC) Private entities (i.e. allowing as well a high

level of flexibility to the involved partners)

The analysis of the Greek experience stresses that best practices of IMC are usually characterized by a high degree of activism and commitment of the engaged municipalities, despite the size of the municipalities or the area of cooperation.

Moreover, the Greek experience highlights that among the enabling factors of IMC, the most rel-

evant are usually a context of crisis/turmoil coupled with a strong leadership of mayors.

Drawing from the Greek experience, other factors enabling an IMC friendly environment are: the absence of a legalistic framework (i.e. the legal framework should allow for a high level of flexib-ility, as well as the promotion of an overall co-operation culture among municipalities; moreover, the Greek case highlights the fact the competition between mayors may often hinder the establishment of IMC.

2.3.2 MALTA

The Maltese experience with IMC illustrates how external support may contribute to tackling obstacles to IMC, such as legalistic procedures and lack of experience (i.e. Council of Europe sup-port in building and strengthening capacities of local government, by means of tools and pro-grammes such as: Training Needs Assessment, Training Strategy, Leadership Academy Pro-gramme, Performance management, etc).

2.3.3 GEORGIAThe Local Self Government Code provides a regu-latory framework for IMC, especially by means of its Art.106, which determines the status and forms of activities of municipal legal bodies of private law, as follows:

To carry out joint activities, municipalities may, jointly establish a joint stock company, a limited liability company, a non-entrepren-eurial (non-commercial) legal entity, or be-come partners/shareholders/founders of legal entities established by other persons, including by a municipality/municipalities.

Joint enterprises can receive property through auctions or direct disposal (gratuit-ously or with recompense).



The main areas for cooperation envisaged in Georgia are: joint service for waste management, implementation of joint infrastructural capital projects, pre-school services, issues relat-ing to the management of stray animals, public sport facilities.

Currently, the main trends in the ongoing reform process on IMC are: Priority to infrastructural/capital joint pro-

jects Intencive consultations with municipalites Wide engagement of non-governmental or-

ganizations Support of state and autonomous authorities

The Georgian IMC experience highlighted the fol-lowing main challenges in establishing coopera-tion ties: Development of the relevant national

strategy and action plan Improvement of the legal procurement pro-

cedures; possibility for joint procurement procedures

Enable municipalities to obtain grants for joint projects

Development of the relevant capacity build-ing programmes

Development of the service standards

2.3.4 ALBANIA The ongoing territorial reform in Albania has raised some significant challenges to newly formed IMCs, in terms of financial problem, as case has been registered were debt inherited from ex municipalities.

The reform foresees the establishment of 4re-gions of functional units, which will not have an administrative character. The new form of co-operation arising from this will have to be piloted. Moreover, multilevel cooperation is promoted by the Albanian Government (i.e. innovative models of cooperation at local and central level, between actors such as local government units, local and central agencies and as well private actors).

European funding (European Regional Develop-ment Fund) may be used as incentive for IMC, as it stimulates the creation of partnerships between municipalities.

The new reform foresees legal rights for the IMC, although specific law are not currently envisaged.

2.3.5 ITALYIMC in Friuli Venezia Giulia Region is recently de-veloping, as a result of a series of reforms at na-tional and regional level (i.e. 26/2014 Regional Law) which aimed at territorial reorganization. Such reforms led to the creation of the UTI – Uni-oni Territoriali Inter comunali (Inter-territorial Municipal Units), which are active since 2016.

The main purposes of the UTIs are: To coordinate the exercise of functions and

public services on municipal, supra-municipal and greater area level.

To contribute to territorial, economic and so-cial development.

The UTIs are local territorial authorities and legal entities, with full statutory and regulatory autonomy. The UTIs implement mainly 2 types of competences: those endowed by the members/municipalities within the Union and those who are assigned to them by the Regional Authority.The UTI – Valli e Dolomiti Friulane unites 20 mu-nicipalities, and is run by means of the following bodies: Assembly – composed by all mayors; each

mayor has 1 vote in the Assembly (unlike the recommendation of the Regional Law which suggests );

President – elected by the assembly among its members

Manager/Director – technical and organiza-tional management.

Steering-board – 6 mayors representing the 6 sub-territories of the UTIs and the President

Summary Report


(i.e. this boy allows for a more efficient de-cision-making process).

The case of this Italian UTI underlines the import-ance of a high degree of leadership at local gov-ernment level (e.g. Mayors) for the establishment of an IMC, as well as the importance of a high de-gree of management capacities and skills later on, in the implementation phase. Moreover, the Italian case demonstrates how IMC may be used as a way to guarantee equal rights and services to all citizens, independently of the area of residence (i.e. by means of the UTI, citizens of the remote valleys and mountains be-nefit from equal services as citizens residing in bigger urban areas).

2.3.6 UKRAINEBetween 2014 and 2016, the Ukrainian com-munities signed 73 cooperation agreements in areas such as public services delivery, road con-struction, reconstruction of educational, medical, sports facilities, flood prevention and joint devel-opment projects.

The right to IMC is established in the Ukrainian Constitution which states that “territorial com-munities of villages, settlements and cities may unite on the basis of agreements in matters of public ownership as well as on budget provisions to implement joint projects or jointly finance (maintain) public enterprises, organisations and institutions, and to set up for these purposes the respective bodies and services.”

The principles underlying IMC, therefore, are: re-spect of law; voluntarism; mutual benefit; open-ness and transparency; equality of rights of the parties concerned; mutual liability for the co-operation results.

IMC may be established, by means of cooperation agreement, as follows: delegation of one or several tasks to one co-

operation entity by other cooperating entit-

ies, together with a transfer of appropriate resources;

implementation of joint projects (time and resources specific);

joint financing (vs. ownership) of municipal-owned companies, institutions and organisa-tions;

establishment of joint municipal companies, institutions and organisations;

establishment of a joint management body by cooperating entities to jointly perform ori-ginal functions. Joint management bodies may be established as independent executive authorities of a council or as structural units of the executive authority of the council.

2.3.7 ARMENIA The ongoing IMC reform in Armenia finds its legal basis in the following legislative frameworks: Constitution Law on local self-government Law on inter-municipal unions

The recent Law on IMC envisages the institution of Inter-Municipal Unions as “legal entities of public law, the peculiarities of the operation of which are laid down by this law. [The] Each Union shall independently manage its property, use the property transferred to it for use, have estimate of revenues and expenditures, as well as a stamp with the image of the Republic of Armenia Coat of Arms and its name”.

IMUs in Armenia may be established either on voluntary basis (i.e. by the Community Councils) or on mandatory basis (i.e. by the Law, upon the proposal of the Government).

Currently, the Law envisages in its articles all as-pects related to the forms, statuses and de-cision/-making procedures of the future IMUs.



3 PRELIMINARY CONCLUSIONS AND RECOMMENDATIONS

3.1 GENERAL REMARKS

Preliminary conclusions of the conference and debates sessions were voiced by Ms. Jutta Gutzkow, Head of the Good Governance Division of the Council of Europe. Stemming from the overall presented benefits to and challenges of IMC, Ms Gutzkow reinforced the main results of the working-day debates, referring to the importance of IMC as an instrument for promoting local democracy as well as for achieving economies of scale.

The following paragraphs illustrate the main points arising from the conference debates.

3.1.1 FACTORS ENABLING IMCThe experiences presented during the conference illustrate a heterogeneous map of IMC across Europe: in fact, approaches, models forms and management of IMC differ from one country to another. However, de -bates and presentations highlight critical factors for IMC establishment as well as for IMC proper imple-mentation, such as:

Overall legal framework – in most cases, IMC needs a personalized approach that may reflect and respond to local needs of the involved municipalities. However, an overall legal framework is needed in order to direct and guide the establishment and implementation of IMC. Moreover, legal frameworks may as well account for a high influence in the process of incentivizing IMC (e.g. stick and carrot approaches).

Political will and leadership – mayors have a crucial role in the establishment and implementation of IMC. Moreover, the leadership should be extended to the overall system of involved local gov-ernments, in order to allow for a sustainability of the IMC (i.e. beyond the political mandate).

3.1.2 IMC REFORMS AND ECONOMIC TURMOILThe overall context/background of financial turmoil, on which the Cypriot reform is developing, is perceived in some cases as a boosting factor towards IMC (e.g. stemming from experiences of Ireland, Greece, etc). Although reforms concerning IMC are not financial oriented, most of the time they tend to address such is -sues as they aim to achieve on one hand economies of scale, and on the other hand, improvement of the quality of service delivery.

3.1.3 IMC AND AMALGAMATIONS As for the processes of IMC, the issue of amalgamations tends to be interpreted differently in different European experiences. While in some experiences amalgamation is conceived as a necessary outcome of the IMC, in other cases, amalgamation and IMC are developed in parallel, or they are mutually excluding.

Summary Report


3.1.4 IMC AND CIVIC ENGAGEMENTThe analysis of the European experiences showed the importance of IMC for increasing possibilities of cit -izen’s participation/civic engagement. Indeed, inter-municipal cooperation processes enable citizens to en-gage in decision-making process related to service delivery, beyond “municipal borders”. Such catchment areas, both in terms of service delivery and end-users, are often the realistic expression of local needs:

the management of services is often obstacled by “municipal borders”, such as in the case of infra-structure (e.g. roads) or transportation;

citizens’ interests often spread beyond such border, as in the case of commuters.

3.1.5 EVOLUTIONARY DIMENSION OF IMC PROCESSES Furthermore, in the light of the exchange of experiences, Inter-municipal Cooperation gains an evolutionary dimension: most of the peers related to such processes as constantly ongoing/developing. As already stressed, IMC describes a variety of forms of cooperation between local authorities across Europe, and al -though similarities may be traced, the implementation of such process requires in most case a personalised approach, at national and local level.

The experiences presented during the conference, have pointed out how exchanges of practices and expert support contribute highly in the definition of a tailor- made approach for a specific context (i.e. either na -tional or local). IMC is thus perceived as an “evolutionary process”, which may start with pilot projects and which develops constantly so to better meet local and national needs.


ANNEXES

3.2 ANNEX 1 - PROGRAMME - INTERNATIONAL CONFERENCE

INTER-MUNICIPAL COOPERATION AND GOOD GOVERNANCE: CYPRUS AND EUROPEAN EXPERIENCE

8 February 2017, Nicosia

Organised by the Union of Cyprus Municipalities, the Union of Cyprus Communities and the Ministry of In-terior in co–operation with the Council of Europe Centre of Expertise for Local Government Reform and the

European Committee on Democracy and Governance

Venue: Filoxenia Conference Centre

9.15 Registration of the participants - Filoxenia Conference Centre

Welcome Coffee

9.45 WELCOME AND OPENING SPEECHES:

Alexis Galanos, President of the Union of Cyprus Municipalities (UCM)

Andreas Kitromilides, President of the Union of Cyprus Communities (UCC)

Ministry of Foreign Affairs

Antonis Economides, Ministry of Interior

Representative of the Ministry of Foreign Affairs

Antonis Antoniou, European Committee in Democracy and Governance (CDDG)

Jutta Gutzkow, Head of the Good Governance Division, CoE

10.15 STRENGTHENING LOCAL GOVERNANCE THROUGH IMC:

Introduction by the Moderators: Alina Tatarenko, Centre of Expertise & Christos Hadjiyiangou, UCM

10.25 DEVELOPMENT OF IMC IN CYPRUS:

Antonis Economides, Ministry of Interior: Local Government Reform in Cyprus

10.55 Mauro Giorgini, Notoria International: Presentation of the Report on Local Government Reform in Cyprus - prepared on behalf of the Union of Cyprus Municipalities

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11.15 Districts and Local Clusters:

- Christos Hadjiyiangou, Acting Secretary General of the UCM - Panagiotis Damianou, Secretary General of UCC

11.45 Coffee break

12.00 Exchange of European Experience and Best Practice: Presentations from the member states:

1. Ireland : Mr Denis Conlan, Department of Housing, Planning, Community and Local Government, CDDG member

2. France : Jean-François Devemy, Ministry of Interior3. Switzerland : Michael Bützer, Deputy Director and Head of Politics, Association of Swiss communes.4. Poland : Dr Cezary Trutkowsky, Chairman of the Polish Foundation for Local Democracy5. Austria : Ms Melanie Lutz, Policy Officer for Urban & Regional Development, Association of Austrian

Municipalities - Österreichischer Städtebund

13.30 Lunch

14.30 Council of Europe IMC Tool and Relevant Recommendations: Ms Ramona Velea, CoE expert

15.00 Round Table Discussion on Legal Aspects of IMC - sharing of experience from countries currently developing IMC:

6. Cyprus : Ms Eleni Mavrou, President of the Committee of Internal Affairs, House of Representatives, Parliament

7. Greece : Prof Charalampos Koutalakis, University of Athens8. Malta : Mr Adrian Mifsud, Director of Local Government, Ministry for Justice, Culture, and Local

Government; CDDG9. Ukraine : Ms Olena Kucherenko, Ministry of Regional Development; CDDG10. Georgia : Irma Sekhniashvili, Vano Khukhunaishvili Center for Effective Governance System and

Territorial Arrangement Reform11. Albania : Ms. Eriselda Cobo, Strategic Planning, Prime Minister’s Office 12. Italy : Andrea Carli, Mayor of Maniago 13. Armenia: David Ghazaryan, Adviser to the Minister of Territorial Administration and Development 14. Bulgaria : Stanislava Atanasova, Ministry of Regional Development and Public Works; CDDG

16.30 Coffee break

16.45 IMC, Local Government Reform, and Good Governance: Council of Europe

17.15 Conclusions


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3.3 ANNEX 2 – NOTES ON LOCAL GOVERNMENT REORGANISATION AND CO-OPERATION IN IRELAND

DENIS CONLAN, DEPARTMENT OF HOUSING, PLANNING, COMMUNITY AND LOCAL GOVERNMENT, IRELAND

Summary of key points

An innovative new system of governance has been implemented in Ireland which is distinct from, and has advantages over, both local authority amalgamation and standard inter-authority co-operation. Experience in Ireland with traditional forms of inter-local authority co-operation has generally been disappointing. The main vehicle now for co-operation between the 31 local authorities is a new structured system of shared services initiated and supported by central Government. This has yielded significant benefits, although re-views indicate that local authority amalgamation has greater potential for savings and efficiency. While some amalgamations of city/county councils have been implemented in certain areas, the scope for this is considered limited. However, a different approach has been implemented at sub-county level as part of a major programme of local government reform, which achieves the objectives of both amalgamation and inter-municipal co-operation, without the disadvantages associated with each of these approaches. A com -prehensive set of municipal districts has been established to replace a former patchwork of town local au -thorities, which were weak and fragmented. The elected members for each municipal district perform a range of important local authority functions in respect of the district on a devolved basis, but implementa -tion and administration generally is carried out through a unified county-wide executive organisation. Thus a high degree of subsidiarity, democratic representation and accountability is achieved, while at the same time avoiding the costs involved with traditional inter-municipal co-operation due to retention of separate corporate structures and to the resources needed to establish, manage and oversee co-operative arrange-ments and the difficulty of addressing possible disagreements and ensuring continued co-operation.

Further details

The presentation dealt with the issue of local authority co-operation primarily in the context of territorial/structural reorganisation which was one element of a major Local Government Reform Programme de-veloped and implemented in Ireland in the period 2012-2014.

Various modes of inter-authority co-operation are provided for in Irish legislation, including joint commit-tees (advisory and operational), joint arrangements, agency type arrangements where one authority per-forms functions on behalf of another, and the formulation of joint plans or strategies. The law provides both for voluntary agreements and also mandatory arrangements under Ministerial direction but this has seldom if ever been used.

Past experience of inter-authority co-operation in Ireland has not been particularly good. Inter-authority agreements have tended to work well for once-off infrastructural projects such as bridge construction and there are also long-established arrangements between some authorities which united in the past. However, other attempts at longer term co-operation and policy co-ordination have been less successful. Commit-ments to adopt joint strategies have not been honoured and joint committees to improve co-ordination have broken down. Disputes about costs and standards of services have arisen in relation to some inter au -thority agreements. In some areas there has been serious lack of co-operation, including boundary dis-putes, conflicting policies and competition, for example in relation to development and business tax rates.

Summary Report

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Such problems were among the factors underlying decisions to amalgamate certain city/county local au-thorities.

In 2010, the relevant central Government ministry (now titled the Department of Housing, Planning, Com-munity and Local Government) initiated a Local Government Efficiency Review, which led to an intensive and concerted efficiency programme which has produced very significant cost reductions and more effect-ive use of resources. One of the key efficiency measures in this programme is a system of shared services, which s is now the most important instrument of inter-authority co-operation.

The shared services initiative involves structured arrangements to provide services on a collective basis on behalf of local authorities generally, in contrast to previous ad hoc arrangements between individual au-thorities. Arrangements are structured on a regional or national basis, for example by a particular local au -thority acting as a “lead” agent on behalf of others as is the case, for example, with a successful Payroll and Superannuation shared service project. A central Programme Management Office was established by the ministry in collaboration with local authority chief executives as an executive structure to develop and or-ganise shared service projects. Significant central Government funding has been provided for this purpose which will taper off as responsibility passes fully to the local government sector. Implementation of the shared services system is monitored and reported on by a National Oversight Commission for local govern-ment established as part of the recent reform programme.

The types of activities involved in the shared services system are mainly operational in nature, particularly what are termed “back office” services such as HR and payroll; along with some specialist professional ser -vices and procurement arrangements.

The shared service programme can, in a sense, be viewed as an alternative to territorial amalgamation. Some recent reviews of local government arrangements in specific local authorities concluded that amal-gamation has greater potential to achieve savings and efficiencies than shared services. However, amal-gamation at city or county level has only been considered feasible in a limited number of cases, for reasons of local identity and public/political acceptability.

However, a significant measure of structural/territorial reorganisation has been implemented particularly at sub-county level. The latter involved the replacement of a patchwork of 80 town councils, which were weak and isolated, by a new system of 95 municipal districts covering the entire territory of each county. It is emphasised that this was not solely a process of amalgamation but rather it involved the creation of an entirely new and innovative system of governance. An important feature of these municipal districts is that they are not separate local authorities and so do not give rise to corporate overhead or administrative re -quirements and processes and associated costs. However, they are decision-making fora, whereby the elec -ted members decide local matters at district level, with strong local community focus. More strategic policy matters are decided at county level. In effect, there is now single tier of local authorities incorporating dual governance levels, with the system based around the role of the elected members rather than corporate structures. In this way subsidiarity and local democratic accountability are achieved, at the same time as greater efficiency by virtue of having a single county-wide administrative and operational structure.

The principal objective of structural reorganisation was not cost reduction, but rather strengthening local government, providing more effective and cohesive governance and administration, and helping to position local government to become, over time, the main vehicle of governance and public service at local level, with potential to take on more far-reaching roles in the longer term. A key objective was to address anom-alies and weaknesses particularly in the former town council system, which had a range of problems such as lack of resources, limited functions, outdated boundaries and duplication with the county councils. These could not have been rectified within the former structures without damaging the county councils, which are the primary units of local government in Ireland.


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However, there is also an important financial and efficiency dividend to be achieved from reorganisation due to elimination of duplication, reduced processes and better use of resources, especially personnel. It was estimated that dissolution of town councils could yield cost savings in the region of €15m to €20m per annum. This would represent between 10% and 15% of administrative costs. Possibly of greater significance than expenditure reductions per se, however, is the fact that substantial benefit arises from the freeing up of resources, particularly staff, previously absorbed in administrative structures and processes which no longer arise, and reduced duplication. These resources are now available for more productive purposes, for example economic development and improved services.

Although the reformed structures have only been in existence since mid-2014, an operational review of their impact to date was completed in 2016 to verify if the reformed system is operating as intended and if any adjustments are needed. To provide an evidence base for this review, two detailed surveys of local au -thority elected members and chief executives were carried out. The responses showed a consensus that the reformed structures are working quite well and an expectation that benefits will become even more evident over time as the new arrangements become fully bedded down. Benefits are reported both in op-erational efficiency and the effectiveness of local decision making and accountability. An added bonus or spin-off is that the opportunity of structural reorganisation was taken by many local authorities to intro-duce innovation both in service delivery and internal organisation.

Some specific shortcomings have been reported and scope for improvement of particular aspects has been identified. These relate particularly to the configuration of local electoral areas, some concerns about re -duced focus on urban areas, and need to strengthen the financial role of municipal districts. These issues will be addressed in a forthcoming report to Government with a view to implementing relevant adjust-ments to the system where warranted.

The local government arrangements that have been implemented in Ireland can be seen as offering an al-ternative to traditional inter-authority co-operation. A 2009 economic report on Irish cities stated that “In-novative means of encouraging cooperation between local authorities should be explored … but, where co-operation is not attainable, it may be necessary to consider alternative mechanisms, including the possibil -ity of merging of local authorities”. The shared services arrangements outlined above are part of that innov-ative response at city and county level but local authority mergers have been implemented where this was warranted and feasible. At the sub-county level, a more radical and innovative approach was considered necessary in the interests of operational efficiency, effective local representation and cohesive governance.

It is considered that the new municipal district system, involving administrative and electoral integration along with differentiated levels of representation and decision making, has a number of advantages over traditional inter-municipal co-operation. Not only does traditional inter-municipal co-operation retain the administrative overhead and cost associated with having separate local authorities, but there are additional requirements to establish, manage and maintain co-operative arrangements, plus the need to cope with friction or disagreement that is liable to arise, as well as the risk, based on past experience, that commit -ments to co-operation may not be followed through in practice.

A key innovation of the new system in Ireland is to dispense with the need for each municipality to have a separate corporate structure, administrative organisation and elected council, yet ensuring a robust system of municipal governance, democratic representation, accountability and decision making. This is made pos -sible through a novel legal framework which empowers elected members to perform different levels of local authority functions at county and municipality level respectively, within a unified electoral and admin -istrative framework.

Some particular elements of the Irish reforms which might merit consideration in the context of Cyprus or other countries which may be contemplating reform can be summarised as follows:

Summary Report

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• Rigorous efficiency review of operational/organisational aspects.

• Structured programme of shared services at city/county level.

• Structural/territorial amalgamation where warranted and feasible.

• Fewer tiers of administration.

• Less duplication, both political and administrative.

• National agency for performance oversight and best practice in local government

• Municipalities not separate corporate entities – reduced overhead.

• Different approaches to political and operational elements to maximise both efficiency and subsidi-arity/local democracy.

• Local decisions at municipal district level, strategic and major policy decisions at county.

• Common political membership between levels to maximise cohesiveness.


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