The Study Of The Financing Model For The Downtown-village Transformation Project In Tonglu County

The existence of Downtown villages (the villages in the city centre) is the resultant phenomenon of the land re-development and rezoning during China’s economic development and urbanization process, and a unique product of China’s urban-rural dual systems. Downtown villages generated many problems in city planning, development and management due to the differences in social and economical structures and lifestyles between the city and the village in current China. It is a confusing functional area and a chaotic and disordered part of the city. Like many other cities in China, the Downtown villages in Tonglu had impacted negatively on the quality of lives of the local residents and the development of the city, hence the imperative of the transformation of these villages.The development of the Downtown villages is a complex and systematic project which involves a great deal of tough work such as village demolition, villager resettlement, city planning and re-construction. It also affects the interests of multi-stakeholders in the relevant community. Another major challenge for this sort of project is the required huge fund which is often the project bottleneck. The traditional way of project financing includes government investment and bank loans. But these modes don’t necessarily meet the funding requirement for the Downtown-village transformation project. In the past, little was done on studying the financing model for the transformation projects except for the researches on the development of the urban infrastructures. It is therefore useful to conduct the study on innovative project financing models so as to provide some scientific guidance for financing decision making.Using the project financing mode as the starting point, this paper explored the possible financing modes, conducted empirical analysis of the financing modes adopted in the Downtown-village transformation project in the Riverside District of Tonglu County, and put forth an innovative project financing model. Under the context of vigorously promoting the transformation of the Downtown villages in Tonglu, this study appears more important.This research first analyzed the characteristics and meaning of project financing and conducted a comparative study for a typical project financing model from the angles of application scope, income requirements, financing costs, risk control and sources of funding. Second, the research studied the operation and financing of the Downtown-village transformation project while remaining focusing on the analysis of the applicability and the application process of Trust financing, IOPPP and RCP financing. Third, the research conducted empirical study on the financing modes used in the Riverside District project in Tonglu. The study has shown that Tonglu adopted the government-led operational mode and the traditional ways of project financing, i.e. bank loans plus land transfer. Though it was successful, the project needs innovation in both operation and financing. Finally, this research puts forward innovative ideas and scientific guidance on project operation and financing.This paper, on one hand, developed the theoretical framework of the financing model for the Downtown-village transformation projects and promoted the future study on project financing. On the other hand, the study had expanded the scope of the application of Trust financing, PPP and RCP project financing, etc., laying down the basis for the future relevant studies. This research will provide meaningful guidance for decision making on project financing for the future Downtown-village transformation projects in Tonglu, as well as other Chinese cities.