Practical Guide: How Counties Can Finance and Implement Land Use Plans

Exploring tools, financing options, and partnerships for success in Kenya’s devolved system

Why this matters now

Kenya’s counties have the right planning instruments—CPLUDPs (County Physical & Land Use Development Plans), CIDPs, ADPs, and Programme-Based Budgets—plus a strong legal backbone (Constitution 2010, County Governments Act, PLUPA, Urban Areas & Cities Act, PFM framework). Yet plans still stall at implementation because money, mandates, markets, and politics don’t line up.

This guide is a playbook for action: the funding tools counties can actually use, the barriers that block them, and practical ways to make projects bankable, inclusive, and resilient.

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The finance challenge: it’s not “one gap,” it’s four

1. Planning finance — funding the studies, GIS, public participation, and approvals.

2. Capital finance — paying for infrastructure (roads, drainage, markets, water, green corridors).

3. O&M finance — keeping assets working (repairs, energy, staffing).

4. Enforcement & M&E — development control, monitoring, and dashboards.

Counties succeed when they match the right instrument to the right layer of this stack—then lock in governance so money flows where the plan says it should.

Core revenue & finance options (what’s on the table)

A) Statutory transfers & grants (the base layer)

• Equitable Share (constitutionally guaranteed) for broad service delivery.

• Conditional/sector grants (when available) for specific priorities.

• Equalization-style or marginalization windows (where applicable).

Barrier: Timing and predictability; earmarking can limit flexibility.Move: Build multi-year Capital Investment Plans (CIPs) so projects are phased to realistic cash flows; create contingency scopes you can scale up/down.

B) County Own-Source Revenue (OSR)

• Property rates & land rents (biggest underperformer in most counties).

• Single business permits, market fees, outdoor advertising, parking, cess.

• Development application fees aligned with CPLUDP.

Barriers: Outdated valuation rolls, leakages, political resistance to updates.Moves:

• Digitize billing/collection; link rolls to GIS cadastre.

• Introduce lifeline/relief bands for vulnerable groups while enforcing compliance across the rest.

• Tie visible improvements (e.g., market upgrades) to the fees collected there—citizens see value.

C) Land Value Capture (LVC) — the underused powerhouse

• Development charges / impact fees: fees for hooking into growth nodes.

• Betterment levies / special assessments: when public works raise land values.

• In-kind exactions: developers deliver roads/parks/drainage as part of approvals.

• Land pooling/readjustment: landowners contribute land for infrastructure and receive serviced plots.

• Transferable Development Rights (TDR): trade density rights from protected zones to growth areas.

• Joint ventures on public land: leaseholds/air rights for mixed-use hubs at bus parks/markets.

Barriers: Limited enabling by-laws, weak valuation capacity, fear of scaring investors.Moves:

• Pass a County LVC Toolkit (by-law + schedule + methodology) tied to CPLUDP zones.

• Start with predictable, modest rates in priority corridors; publish how revenues are reinvested locally.

• Offer density bonuses for affordable housing/green infrastructure to keep developers at the table.

D) Debt & capital markets (when projects are ready)

• County/municipal bonds or infrastructure notes, subject to debt rules and approvals.

• Pooled financing (several counties aggregate projects to achieve ticket size).

• Supplier/contractor credit for short-cycle assets where cashflows are clear.

Barriers: Creditworthiness, approvals, small ticket sizes, disclosure capacity.Moves:

• Start with escrowed, ring-fenced revenues (e.g., parking or market fees) to back small private placements.

• Seek partial guarantees (DFIs, national facilities) and credit ratings for transparency.

• Use standardized documentation through a pooled facility to cut transaction costs.

E) PPPs & performance contracts (where revenue exists)

• User-fee projects: bus parks, markets, parking, abattoirs, solid waste resource recovery.

• Energy Savings Performance Contracts (ESCOs): LED street lighting repaid from energy savings.

• O&M PPPs: private partner runs/maintains assets, meeting service KPIs.

Barriers: Weak pipelines, lengthy approvals, misallocated risks.Moves:

• Run a PPP screening: which plan assets have revenue or savings?

• Use standard risk-allocation templates; appoint a lean “PPP cell” in the CPCU.

• For marginal projects, add Viability Gap Funding (VGF) or land contributions to close the deal.

F) Climate & blended finance (make resilience pay)

• Adaptation/Climate windows (e.g., accredited entities for GCF/Adaptation-style funds via national channels).

• Green bonds / blue bonds for drainage, mangroves, water resilience.

• Carbon/eco-credits (e.g., mangrove restoration, urban forestry) to create long-term revenue streams.

• Results-based financing tied to verified access/resilience outcomes.

Barriers: Accreditation, MRV (measurement/reporting/verification), pipeline readiness.Moves:

• Package climate co-benefits explicitly in project designs; adopt simple MRV aligned to national systems.

• Partner with accredited entities/DFIs and conservation NGOs to bridge capacity.

Out-of-the-box ideas counties can actually use

• District Improvement Zones: levy a small, time-bound fee on properties that benefit from a new corridor, dedicated to that corridor’s upkeep.

• Air-rights & vertical concessions: monetize the space above public transport yards/markets for mixed-use development.

• Diaspora micro-notes: small, regulated placements to diaspora groups earmarked for visible, named assets (e.g., ward-level clinics).

• Social/Development Impact Bonds: pay private funders back only if settlement upgrading meets access/resilience targets.

• Water funds & corporate partnerships: downstream companies co-finance upstream catchment restoration to protect their supply.

• TIF-lite (Tax Increment Financing) pilots: ring-fence future increments in rates around a growth node to service a small loan today.

• Street furniture & naming rights: concession bundles for bus shelters, billboards, wayfinding, with a share dedicated to O&M.

The hard stuff: legal, policy & political barriers (and how to navigate)

Legal/Policy

• Borrowing and bond issuance require compliance with PFM controls and approvals; some LVC tools may need explicit county by-laws.

• PPPs must follow national PPP provisions; unsolicited proposals need clear rules.

• Development charges must be predictable and transparent to withstand challenge.

Political economy

• Adjusting rates/fees is unpopular; short political cycles drive flashy projects over basics.

• Plan continuity breaks when leadership changes.

Practical fixes

• Continuity compacts: Assembly resolutions protecting the top 20 plan priorities; deviations require published justification.

• Social tariffs + cross-subsidies: protect low-income users while enforcing payment from commercial/upper-tier users.

• Earmarking & visibility: ring-fence a portion of new revenues to visible ward assets—people pay what they can see.

• Transparent dashboards: monthly disclosure of collections, spend, and project progress by ward.

Packaging projects so money will follow (bankability 101)

1. Start with the map: Every project has a CPLUDP tag and a geolocation.

2. Sort by revenue logic:

   • Public good (roads, stormwater, open space): grants, LVC, pooled debt.

   • Revenue/savings (markets, parking, LED, abattoirs): PPPs, ESCOs, ring-fenced OSR.

3. Right-size scopes: Phase to 6–12-month deliverable chunks tied to realistic disbursements.

4. De-risk early: Land ownership cleared, E&S screening done, stakeholder buy-in documented.

5. Show the numbers: Simple financial model (capex, opex, revenues/savings, DSCR if debt).

6. Govern for trust: Escrows, independent supervision, publication of contracts and KPIs.

A 12-month county financing playbook

Month 1–2: Inventory & CIP. Extract priority projects from CPLUDP/CIDP; build a 3–5-year Capital Investment Plan with costs and phasing.Month 3–4: Revenue uplift. Digitize OSR, update valuation rolls, plug leakages, set lifeline bands.Month 5–6: LVC by-law. Pass development charge schedules for two pilot corridors; publish use-of-proceeds.Month 7–8: PPP/ESCO quick wins. LED street lighting, market management, parking concessions—small deals, fast payback.Month 9–10: Climate window. Prepare 2–3 adaptation projects (drainage, riparian buffers, mangrove/urban forest) with basic MRV.Month 11: Pooled finance prep. Join or initiate a pooled facility for standard documentation and investor outreach.Month 12: Transparency push. Go live with a public dashboard (collections → projects), and hold ward forums on the next-year ADP.

Micro-cases (illustrative patterns)

• Market upgrade via PPP: County provides site & basic services; private partner builds/operates stalls and sanitation; fee share funds O&M plus ward projects.

• LED ESCO: Private firm finances LEDs; county repays from verified energy savings; streets get brighter, O&M falls.

• Land readjustment for a ring road: Owners cede strips for the road; serviced plots gain value; county recovers costs through betterment and rates uplift.

• Blue-green resilience: Coastal county funds mangrove buffers with a blend of grants + voluntary carbon revenue; protects settlements and fisheries.

What success looks like (KPIs you can track)

• Finance: OSR collection rate; % development budget with secured funding; leverage ratio (grants mobilized per KES of county funds).

• Delivery: Share of projects delivered on time/on budget; variation orders trend; average contract award time.

• Equity & resilience: % spend in underserved wards; % projects with climate screening; days of service reliability.

• Trust: Citizen satisfaction; participation reach; dashboard usage.

How Lybrae Spatial Solutions can help

• Finance-ready CIPs: We convert your CPLUDP into a costed, phased, and fundable pipeline.

• LVC & by-laws: We draft development charge schedules, betterment frameworks, and density bonus policies tied to your map.

• PPP/ESCO packaging: From screening to risk allocation and deal documentation for revenue/savings projects.

• Climate finance & MRV: We design adaptation projects with simple, defensible measurement systems.

• OSR modernization: GIS-linked valuation rolls, e-billing, and compliance programs that citizens trust.

• Governance & transparency: CPCU set-up, continuity rules, dashboards, and ward-level engagement.

Bottom line

Counties don’t have a financing problem so much as a matching problem: aligning the right instrument to the right asset, with credible governance and phased delivery. When money, maps, and mandates align, implementation accelerates—and citizens feel the difference.

Ready to turn your plan into bankable, visible projects?Let’s build a funding mix that fits your county—and delivers results you can point to on the ground.