**3.3 Governance context for Medellin in the wider Colombian political landscape**

There are several features of the governance context in Medellin and Colombia more broadly that should be taken into account. Firstly, Medellin is situated within a national decentralised regime for Colombia, which places responsibility at a national level for policy-setting and decision-making and the duty to implement situated within the remit of the regional and local governing authorities. Secondly, the national Constitution in 1994 and subsequent reforms in public services [46] placed specific regulations about entities that could provide public services (public, private and community-based entities) [47]. This law had several implications, namely that sectors cannot cross-subsidise one another after the 1990s reforms. Thirdly, there is evidence of the role of the multi-utility, EPM, and its implementation of the law as a public service provider at a city level which is where this paper will focus on.

With this context of governance in mind, implementation of monitoring and evaluation activities in Medellin is overseen at a local and metropolitan level by the municipality and Area Metropolitano de Valle de Aburra, the metropolitan authority for 10 municipalities including Medellin. EPM is the primary service provider that covers a wide metropolitan area for service delivery. EPM provides potable water services in 10 municipalities in the Aburra Valley: Medellin, Bello, Envigado, Itagui, La Estrella, Sabaneta, Copacabana, Girardota, Caldas and Barbosa [48].

The 3 main governance approaches that reflect a view of having public purpose at the centre of water utility delivery are: the composition of a multi-stakeholder board, profit transfers for social projects in the city and corporate governance that dictate the interaction between the city and the company, EPM. The following section will present synthesis of these governance approaches utilised by EPM and present perceptions of the interviewees through quotes from stakeholders in the water sector. The quotes are examples where stakeholders have helped to shed light on governance approaches. They are perceptions held by the speaker and are triangulated with other speakers' perspectives and literature where relevant. The Discussion will present these findings in light of trends towards financialization, highlighting features that resonate with the entrepreneurial city delivering public purpose.

## *3.3.1 Governance approaches*

EPM's board composition is an example where an integrated group of actors from different stakeholders are included within an entity that has a level of independence in its governance.

*"The board of EPM is: the mayor, who is the president, with 3 representatives from the municipality, then we have one from the regional governments, from Antioquia, represents the governor, then you have 5 citizens, that represent different sectors, but two of them are "locals" that are elected by elected by local councils and they have control, responsibility (23:31), and need to provide information to the citizens, but the power of the mayor of Medellin is really important because it is 100% legal owner. And EPM is a group that provides services in Bogota, Bucaramanga, Cali, everywhere in Colombia, in most of Colombia." - ID21, metropolitan area (urban environmental authority).*

This finding was verified in the General Agreement on Corporate Governance (**Figure 2**) and offers an example of how a governance design at a leadership level can ensure diversity of stakeholders in a decision-making seat of authority. This includes the mayor who is the president, 3 municipal representatives, 1 regional representative, 5 representatives from industrial sectors (2 of whom must be private citizens).

The balance may be primarily due to the governance of the company itself, which requires this balance of powers in institutional agreements. Although the extent to which this system could favour the interests of the elite is neither supported nor ruled out by evidence, nonetheless this agreement affords a continuity, despite elections every 4 years.

Another governance feature that shows where the financial success lies – of an entity, as a public company that operates much like a multinational private entity – namely in an agreement between the city and company that ensures 30% of profits transferred from the company to the city annually to fund social projects. This also includes an agreement that the city has sovereignty over decisions of how the city uses the 30% of the annual profits transferred from the company. One stakeholder describes this saying:

*"So EPM is 100% property of the citizens of Medellin, 100% property of the municipality and its profits, a percentage, about 30% of its benefits, goes to the mayor for social investment. So it supports the capacity of the city to solve problems. Not only to provide but also to develop social services and development. That is really important and special and particular to Medellin." - (Municipal authority, ID21).*

**211**

manner.

**Figure 2.**

*material from ID1, (EPM, 2016).*

independent directors."

entrepreneurial city.

*Adaptive Governance as an Avenue for Delivering Public Purpose in the Wake of Financialization*

This quote is included as an example of how the two actors are arranged in efforts to deliver social goods in the city. Contextually, this quote is taken from a conversation related to the role of EPM and the municipality during and after the transformation which included social innovation efforts by the city and EPM.

*Corporate governance of EPM (examples from agreement between the City and the company) supplementary* 

There are other examples where institutional agreements between different actors enable the institutions to maintain independence and sovereignty while also working together in an integrated manner. For example, the public service company is technically the property of the municipality but exercises a degree of independence in its business affairs regardless of the political party in power. This means there is autonomy in how the company can conduct its business. However, at the same time, a percentage of profits are transferred annually to the municipality for social projects where the city oversees the spend with guidelines on how to deliver goods for the public. This form of transfer indicates a balance between independence and sovereignty as well as evidence for working together in an integrated

This balance is not one governing arrangement exclusively, but a series of differ-

This includes governance codes to ensure that the municipality does not interact with the company except through the board, does not intervene in EPM's contracting processes or other aspects of its financial planning and management. The agreement for example stipulates that the City agrees to "appoint no less than 5

The Discussion will discuss these findings and what the governance model for the Medellin case demonstrates, highlighting features that resonate with the

*3.3.2 Corporate governance and institutional agreements*

ent corporate governance guidelines that govern the company.

*DOI: http://dx.doi.org/10.5772/intechopen.89270*

*Adaptive Governance as an Avenue for Delivering Public Purpose in the Wake of Financialization DOI: http://dx.doi.org/10.5772/intechopen.89270*

#### **Figure 2.**

*Sustainability in Urban Planning and Design*

purpose.

*3.3.1 Governance approaches*

pendence in its governance.

despite elections every 4 years.

describes this saying:

The 3 main governance approaches that reflect a view of having public purpose at the centre of water utility delivery are: the composition of a multi-stakeholder board, profit transfers for social projects in the city and corporate governance that dictate the interaction between the city and the company, EPM. The following section will present synthesis of these governance approaches utilised by EPM and present perceptions of the interviewees through quotes from stakeholders in the water sector. The quotes are examples where stakeholders have helped to shed light on governance approaches. They are perceptions held by the speaker and are triangulated with other speakers' perspectives and literature where relevant. The Discussion will present these findings in light of trends towards financialization, highlighting features that resonate with the entrepreneurial city delivering public

EPM's board composition is an example where an integrated group of actors from different stakeholders are included within an entity that has a level of inde-

*"The board of EPM is: the mayor, who is the president, with 3 representatives from the municipality, then we have one from the regional governments, from Antioquia, represents the governor, then you have 5 citizens, that represent different sectors, but two of them are "locals" that are elected by elected by local councils and they have control, responsibility (23:31), and need to provide information to the citizens, but the power of the mayor of Medellin is really important because it is 100% legal owner. And EPM is a group that provides services in Bogota, Bucaramanga, Cali, everywhere in Colombia, in most of Colombia." - ID21,* 

This finding was verified in the General Agreement on Corporate Governance (**Figure 2**) and offers an example of how a governance design at a leadership level can ensure diversity of stakeholders in a decision-making seat of authority. This includes the mayor who is the president, 3 municipal representatives, 1 regional representative, 5 representatives from industrial sectors (2 of whom must be private citizens). The balance may be primarily due to the governance of the company itself, which requires this balance of powers in institutional agreements. Although the extent to which this system could favour the interests of the elite is neither supported nor ruled out by evidence, nonetheless this agreement affords a continuity,

Another governance feature that shows where the financial success lies – of an entity, as a public company that operates much like a multinational private entity – namely in an agreement between the city and company that ensures 30% of profits transferred from the company to the city annually to fund social projects. This also includes an agreement that the city has sovereignty over decisions of how the city uses the 30% of the annual profits transferred from the company. One stakeholder

*"So EPM is 100% property of the citizens of Medellin, 100% property of the municipality and its profits, a percentage, about 30% of its benefits, goes to the mayor for social investment. So it supports the capacity of the city to solve problems. Not only to provide but also to develop social services and development. That is really important* 

*and special and particular to Medellin." - (Municipal authority, ID21).*

*metropolitan area (urban environmental authority).*

**210**

*Corporate governance of EPM (examples from agreement between the City and the company) supplementary material from ID1, (EPM, 2016).*

This quote is included as an example of how the two actors are arranged in efforts to deliver social goods in the city. Contextually, this quote is taken from a conversation related to the role of EPM and the municipality during and after the transformation which included social innovation efforts by the city and EPM.

#### *3.3.2 Corporate governance and institutional agreements*

There are other examples where institutional agreements between different actors enable the institutions to maintain independence and sovereignty while also working together in an integrated manner. For example, the public service company is technically the property of the municipality but exercises a degree of independence in its business affairs regardless of the political party in power. This means there is autonomy in how the company can conduct its business. However, at the same time, a percentage of profits are transferred annually to the municipality for social projects where the city oversees the spend with guidelines on how to deliver goods for the public. This form of transfer indicates a balance between independence and sovereignty as well as evidence for working together in an integrated manner.

This balance is not one governing arrangement exclusively, but a series of different corporate governance guidelines that govern the company.

This includes governance codes to ensure that the municipality does not interact with the company except through the board, does not intervene in EPM's contracting processes or other aspects of its financial planning and management. The agreement for example stipulates that the City agrees to "appoint no less than 5 independent directors."

The Discussion will discuss these findings and what the governance model for the Medellin case demonstrates, highlighting features that resonate with the entrepreneurial city.
