New legislation on urban conglomerates and metropolitan regions
On January 13, 2015, Law No. 13,089 was published in Brazil's official gazette and established a new legal framework for urban conglomerates and metropolitan regions ("Metropolis Statute"). President Dilma Rousseff signed the Metropolis Statute into law, but vetoed certain provisions in the original text of the law.
The Metropolis Statute is a benchmark for new urban configurations and only came into effect after being discussed for a period of some 10 (ten) years. It is a result of the significant attention this topic has received in recent years. Notably, the Supreme Court of Brazil, in a case involving public service concessions in connection with the sewage system, pronounced on the necessity of shared governance among governments of different municipalities.
The law stipulates the creation by the federal states of metropolitan regions and urban conglomerates, and institutes instruments of common governance among the municipalities located in the same urban conglomerate, or metropolitan region, with shared interests.
The Metropolis Statute amends Law No. 10,257 dated July 10, 2001 ("City Statute"), and provides for the creation of consortiums between federal, state and municipal authorities in urban conglomerates and metropolitan regions, as long as such consortiums are created by supplemental state law.
The new regulation contemplates the sharing of public funds and collaboration in public-private partnership projects between federal, state and municipal authorities, to further common governance goals.
Since the enactment of the public-private partnership law in 2004 (Law No. 11,079), investors have been increasingly interested in municipal and inter-municipal projects, and more investment is expected with the enactment of the Metropolis Statute.
The new legislation also promotes new investments in public sanitation, as such services can be more efficiently rendered by neighboring municipalities working together.
In its original text, the Metropolis Statute contained a provision stipulating the creation of a federal fund to finance the initiatives arising from the new law. This provision was vetoed by the President on the basis that a federal fund would restrain the ability of the federal government to allocate public funds to other prioritized matters.
Despite this veto, the Metropolis Statute attempts to guarantee the support of the federal government for such projects. However, the provisions of the law on this matter are still not clear, and a new specific regulation is expected.
Although there are still some regulatory gaps for the implementation of these projects that must be further clarified, the new law should be recognized for the mechanisms it created. The Brazilian government very much needs investments in various areas, including public sanitation. The new legislation is an important tool for bringing improvements to this area.