Overview: Municipal Enterprise

Municipal enterprises are businesses owned by local public authorities that provide services and often revenue in cities across the United States. Increasingly, local governments have turned to municipal enterprise to both raise revenue and promote local jobs and economic stability by developing a more diversified base of locally controlled wealth. Local governments have helped build telecommunications infrastructure in rural areas, used real estate investment in urban areas to support more efficient use and expansion of mass transit, and have invested in hotels to increase the flow of tourism revenue.

Privatization and government downsizing are frequently seen as the norm in the United States. Yet, oddly, the trend often is in the opposite direction. Driven by increasingly difficult fiscal conditions and greater economic instability as a result of exposure to the global market, municipal governments have taken on a much more active role in community wealth building efforts. Some are now creating new municipal enterprises. Others are expanding existing municipal enterprises.

Particular areas of municipal enterprise expansion include the following:

  1. Expansion of the scope of operations of public power companies to provide not only power, but also cable and broadband services;
  2. The development of environmental business, such as methane-recovery businesses, that both provide electricity and promote environmental goals;
  3. Increasingly sophisticated use of real estate development to generate lease revenue to finance city services;
  4. The employment of real estate development in connection with transit system development to both generate revenues and increase ridership; and
  5. The development of city-owned convention center hotels to promote economic development through tourism and increased convention center usage.

Basic sector statistics are below:

 

Municipal Enterprises: Basic Statistics

Municipal electricity providers in the U.S., 2012 2,006
Municipal power company income, 2012 $52.2 billion
Estimated 2010 general fund contributions of municipal power companies $697 million
   
Lease revenue contributed to general fund in City of San Diego, FY2006 $52 million
Income of Washington D.C. Metro from transit-oriented development, 2008 $8.8 million
Number of city-owned hotels opened since 1995 9