In October 2024, Carnegie California, the West Coast office and program of the Carnegie Endowment for International Peace, convened a group of entrepreneurs, policymakers, local government officials, and urban development specialists to inform the United Nations Human Settlements Programme’s (UN-Habitat) international guidelines on people-centered smart cities. Once approved by UN member states later this year, the guidelines will serve as a reference for member states and local and regional governments undergoing digital transformations across a wide range of readiness levels and diverse technological and urban ecosystems.
Focusing on the role of the private sector at the intersection of technology and urbanization, the October convening explored a variety of topics, including successful and failed digital transformations, community-first approaches to fostering public-private partnerships, and promises and perils in the development of “new” cities. The agenda was co-created in collaboration with participants from the African Centre for Cities, Polytechnic University of Turin, Melbourne Centre for Cities, Barcelona Centre for International Affairs, and CIV:LAB.
Reframing the Role of Technology
Discourse on smart cities has historically been dominated by a technocratic vision championed by corporations advocating a data-driven approach to urban governance. The consultation in October and the forthcoming international guidelines mark a shift toward a more people-centered paradigm. Participants stressed the need for a holistic approach that integrates technological innovation with the social, cultural, and environmental dimensions of the urban ecosystem. This evolution from a tech-centric to a people-centric model reflects a broader rethinking of urban governance, where technology is not only deployed to optimize city services but to create inclusive, resilient, and sustainable communities. In practice, this means rather than a fixed set of technologies, smart cities can be thought of as a “smart process” whereby cities evolve through continuous innovation, community engagement, and responsive governance.
City Building Versus City Development
“New city” development is once again a global phenomenon, with many efforts tied to the “promise” of new urban spaces: for example, in Egypt’s New Administrative Capital, Indonesia’s planned capital Nusantara, Kenya’s planned smart city Konza and startup city Tatu City, and California’s Forever city project in Solano County. As Shannon Mattern argued in A City Is Not a Computer: Other Urban Intelligences, new cities are attractive because they can be designed to address pressing twenty-first-century challenges like housing shortages amid rapid urban growth, novel public health threats, and climate change. New cities provide, in theory, a blank canvas, allowing public or private developers to bypass the complexities of retrofitting established urban spaces.
Critics argue that new cities ignore the communal dynamics that make urban areas vibrant, while existing cities, where people already live and work, provide a foundation for inclusive, people-centered smart development. Proponents for new cities counter that digital transformation in established cities faces bureaucratic hurdles, resistance to change, and aging infrastructure, that make progress difficult, if not impossible. In this context, digital transformations in existing cities, much like the recent attempts to create new cities in California, Egypt, El Salvador, Indonesia, and Nigeria, have faced criticism for the imposition of automated or algorithmic technologies with negative impacts on public service delivery, privacy, and human rights.
In many jurisdictions, whether to build new cities or retrofit existing ones is a false question. The scale and pace of urbanization means policymakers and developers are faced with both challenges at once. The real question is how to develop cities that balance innovation with equity and inclusivity.
Case Study: California Forever
The California Forever project in Solano County aims to develop a new city promising economic revitalization in a predominantly agricultural area. Funded by prominent Silicon Valley investors, the project envisions a modern city with eco-friendly infrastructure, affordable housing, and ample green spaces. Advocates argue the new city will boost local job markets, improve housing affordability, and serve as a model for sustainable urban development amid California’s ongoing housing crisis.
Balancing investor expectations with community needs and environmental stewardship has proven challenging. A primary concern lies in the new city’s potential impact on Solano’s agricultural and natural ecosystems, with fears that the displacement of people and local economy have adverse effects on the region. The displacement fear may have been compounded by a lack of transparency from the developers, with residents and elected officials voicing frustration over limited details regarding the project’s scope, funding, and governance, especially during the land acquisition process. Regulatory and planning hurdles have further delayed the project, casting uncertainty on its timeline and viability.
California Forever’s promise lies in its vision of an innovative, green smart city. Its future will depend on aligning stakeholder priorities with those of Solano residents and productively engaging them in the project. Such an approach will be necessary to transform the project from a venture-backed experiment to a genuinely people-centered city.
Redefining Procurement as a Lever for Change
City governments collectively spend an estimated $6 trillion annually on procuring goods and services from the private sector. However, the sheer scale of municipal procurement tells only part of the story. Procurement officials are increasingly required to source more complex goods, in greater volume, with tighter timelines. This pressure presents new challenges for long-standing bureaucracies that resist the use of procurement as a creative and strategic policy lever. Traditional procurement processes—designed to mitigate risk and ensure compliance—are slow and rigid and tend to favor large, established vendors. While these processes aim to safeguard public interests, they inadvertently limit participation from smaller firms and startups, stifling innovation and reducing the diversity of solutions available.
The consultation in October shed light on a key tension in procurement: the need for flexibility to drive innovation versus the imperative to ensure fairness and transparency. Many participants advocated iterative, performance-based contracts and flexible approaches such as Requests for Information and pilot programs. These methods allow cities to test new technologies, scale successful initiatives, and bring in a wider variety of vendors. Proponents argued that this approach fosters a more dynamic marketplace, promoting competition and enabling smaller firms to showcase their innovative solutions. Conversely, other participants raised concerns about potential biases and the erosion of accountability in a more flexible system. Traditional procurement rules, while slow, provide a structured process that may protect against favoritism, corruption, or the selection of suboptimal solutions. Some participants worried that loosening these regulations could create opportunities for favoritism or inefficiency, undermining the core purpose of public procurement.
Innovation and accountability need to sit in balance. Cities must explore ways to modernize procurement by adopting more agile frameworks while ensuring that processes remain transparent, equitable, and resistant to bias. Procurement can serve as a powerful tool for not only addressing infrastructure needs but also shaping the ethical and sustainable integration of technology.
Case Study: GovAI Coalition
The GovAI Coalition, a group of over 350 local, state, and federal agencies spearheaded by the City of San Jose, is refining public procurement practices to promote the responsible use of artificial intelligence (AI). The coalition encourages cities to use their purchasing power as leverage to set industry standards, helping cities harness AI’s potential while safeguarding the rights and interests of their communities.
In its policy templates, the coalition provides municipal leaders with the resources to structure contracts that prioritize public welfare and ethical standards in complex procurements. For example, the coalition’s open-sourced set of procurement standards and criteria address algorithmic fairness, data privacy, and explainability to ensure AI tools are accessible and trustworthy. The coalition also provides public access to a tool that documents all AI applications used by the city; the AI inventory requires vendors to disclose algorithmic processes and potential impacts on privacy and equity, establishing a foundation for accountability. By mandating comprehensive audits and ongoing evaluations of these tools as part of the procurement process, the coalition aims to prevent unintended harms and reinforce public trust in AI-driven smart city services.
The private sector’s reaction to the coalition’s procurement guidelines has been mixed, with some firms at the consultation expressing trepidation about the perceived rigidity and complexity of the requirements. Some vendors have voiced concerns that the detailed criteria, which include extensive disclosures on algorithmic processes, are overly burdensome, creating additional administrative hurdles that may deter small and medium-sized companies from participating, potentially narrowing the pool of innovative solutions available to cities. The coalition argues that these standards are essential for fostering trust and accountability in AI-driven public services.
Public-Private Partnerships: Aligning Profit with the Public Good
A core challenge in public-private partnerships (PPPs) is aligning private sector profit motives with the public good. To achieve a mutually beneficial outcome, PPPs need to be structured with clear roles, responsibilities, and transparent governance.
A critical aspect of successful PPPs lies in how governments effectively value their assets—be it infrastructure, data, or regulatory authority—and negotiate terms that prioritize community needs. Unlike the private sector, where value is often easy to quantify in financial terms, public assets are frequently assessed based on community or political significance. Providing public data or access to certain infrastructure might not have an immediate financial value but can generate long-term social benefits such as improved mobility, safety, or inclusivity. Governments must understand the full value of these assets when entering negotiations and ensure that contracts reflect the broader societal goals.
Service-level agreements (SLAs) play a pivotal role in ensuring that PPPs are beneficial for all stakeholders. SLAs set clear expectations around the performance, quality standards, timelines, and responsibilities between the public and private sectors. They are not merely administrative tools; they are the backbone of successful partnerships, ensuring that both parties adhere to their commitments. Well-drafted SLAs can safeguard public interests by embedding accountability measures that will guarantee that service delivery aligns with agreed objectives, protecting against project delays, cost overruns, or substandard work.
Transparent governance and independent oversight enable public and private accountability while mitigating the risk of conflicts of interest. Coupled with inclusive approaches that involve the local community, transparency creates the conditions for trust between all the relevant stakeholders—the city government, the community, and the private sector. Trust is encouraged through transparent decisionmaking processes, equitable resource distribution, and meaningful community involvement. When communities feel heard, it reduces resistance to new technologies and fosters a sense of shared ownership. Conversely, when transparency and oversight are neglected, decreased trust and increased polarization end up creating fertile grounds for disinformation to flourish, as the difficulty of accessing or understanding complex technical information intersects with concern over government surveillance and corruption.
Case Study: WeLink
To address the digital divide, Los Angeles County has partnered with WeLink, a private wireless broadband provider, to offer high-speed internet to underserved communities across the county. This partnership, awarded through a competitive Request for Proposal (RFP) process, aims to connect 275,000 locations across Los Angeles County benefiting low-income households and individuals who lack reliable internet access. WeLink won the contract by demonstrating its ability to meet the county’s service goals and pricing requirements.
Under the partnership, WeLink provides infrastructure and expertise, while the County facilitates site acquisition and permitting to streamline approvals. This collaboration enables the County to leverage WeLink’s technical capabilities and private investment, reducing taxpayer costs while rapidly expanding broadband access. The partnership is promising but challenges remain, including the complexity of deploying wireless infrastructure in dense urban areas and ensuring WeLink complies with the RFP’s pricing requirements.
Partnerships such as Los Angeles County–WeLink could represent a scalable model for public-private collaboration to bridge the digital divide in large urban areas. By pooling public resources and private sector capabilities, the initiative demonstrates how local governments can work with private providers to deliver long-term social and economic benefits to communities in need.
Tensions and Tradeoffs
Despite the optimism surrounding smart city development, the October consultation identified significant challenges and trade-offs for stakeholders to consider in developing smart cities.
Public good and profit. A recurring theme was how to achieve balance between the public good and private profit. While private sector engagement is crucial for advancing smart city technologies, concerns arose over the risk of corporate interests overshadowing public needs. Effective PPPs must be structured to ensure that technological advancements align with broader societal goals such as equity and sustainability. Transparent service agreements and public oversight are essential to safeguard community interests.
Speed and trust. While the rapid deployment of digital transformations can address urgent urban challenges, hasty rollouts can alienate communities, especially when adequate public consultation and trust-building measures are overlooked. Trust is foundational to the success of smart cities, and it can only be nurtured through resident and citizen participation, transparency in data use, and the prioritization of community engagement over efficiency. Examples include the Community Connectors program in Melbourne, Australia, which connects trained community-based representatives with remote populations to support the delivery of social services, as well as the Civic Resilience initiative in Pittsburgh, Pennsylvania, which partners with community organizations to co-create research and programs to foster greater awareness on digital technology and its impact on information ecosystems.
Risk mitigation and innovation. Smart city initiatives must balance the need for risk mitigation with the imperative for innovation. Governments often operate within frameworks designed to minimize risks, such as procurement regulations or strict compliance requirements, which can slow innovation. Such risk aversion can stifle creative solutions and deter smaller, more agile technology providers. Striking the right balance requires flexible governance models that allow for experimentation while maintaining safeguards that protect public resources and interests.
Skills and staffing. The skills and staffing challenge are core issues for all cities. Building a robust workforce with expertise in both technology and public administration is essential to the long-term success of smart cities. Without adequate staffing, cities may struggle to manage sophisticated projects or negotiate favorable terms with private partners, leaving them vulnerable to suboptimal outcomes. The skills gap is especially acute in developing countries, where the shortage of trained professionals limits the capacity of cities to implement and oversee smart city initiatives.
Diverse urban realities. Financing smart cities remains a substantial hurdle in a world where subnational governments are responsible for almost 60 percent of total public investments in G20 countries. While many wealthy cities often have access to private capital and sophisticated financing models, impoverished urban centers frequently struggle to secure the necessary funds for their smart city projects. Therefore, wealthier cities tend to focus smart city transformations on optimizing transportation and energy, while less-resourced cities prioritize basic needs like clean water, sanitation, and housing.
The forthcoming UN-Habitat international guidelines must be flexible enough to accommodate varied priorities, while also providing a unified framework for promoting sustainable, inclusive urban growth. The October consultation called for innovative financing mechanisms, such as blended finance, to ensure that all cities—regardless of their economic standing—can participate in the global digital transformation.
Conclusion
In an era marked by economic and environmental disruptions, the consensus among consultation participants was clear: smart city innovations must align with the broader societal goals of sustainability, equity, and public welfare. The discussions illuminated a collective vision for smart cities as vibrant ecosystems where technological innovation can improve human well-being and not be an end in itself. A reconstituted conception of the smart city requires not only embracing cutting-edge innovations, but also aligning private and public sector interests and serving the objectives of the New Urban Agenda and Sustainable Development Goals. The UN-Habitat guidelines represent a noteworthy opportunity to reimagine urban governance in a way that places people at the center of technological innovation.
