Economic actions in the wake of the COVID-19 pandemic



The Reykjavík City Council unanimously agreed on an Emergency Plan of Action as an initial response to the crisis caused by the COVID-19 pandemic.  The actions are aimed at safeguarding the well-being of the citizens, their livelihoods and to secure the foundations of the community by mitigating the widespread consequences of the crisis.

Ever since the COVID-19 pandemic spread to Iceland, the City of Reykjavík has worked relentlessly towards ensuring that all necessary services remain intact, while analysing at the same time every potential economic effect of the crisis.  The Plan of Action agreed yesterday is based on that analysis.

The actions aim to lessen the effect of the economic downturn as much as possible; protect livelihoods and living conditions of all citizens; provide essential support for the restoration of companies and the business sector; and to ensure prosperous future with quality of life for the citizens.  At the same time, we plan to monitor closely the development of conditions for individuals, families and businesses alike through a special City Watch on welfare- and employment issues.

The Plan of Action contains 13 measures.  They include deferral of fees, increased scope of flexibility for homes and businesses, and a reduction in real estate fees.  The city and its companies – Reykjavík Energy, Associated Icelandic Ports, and Reykjavík Social Housing – will accelerate their constructions and housing development, and a new marketing campaign will be launched presenting Reykjavik as a viable tourist destination. Particular attention is given to creative arts, innovation, knowledge science and technology, culture, sports, arts and event management. Special emphasis will be placed on actions geared towards the labour market, in particular to groups that assumedly will be hardest hit by the situation, those who are self-employed and people of foreign origin.

1.   Deferral of fees, cancellations and reductions

Monthly bills and fees for homes and families will be cancelled or cut due to reduced services, quarantine or other Covid-19 related response.  Companies will be given the opportunity to postpone up to three payment dates in the spring of 2020, and other postponements and / or reductions of charges may be considered in the case of a temporary fall in income, according to point 1 e.

a. Homes.  Preschools, compulsory schools and after-school centres.  Fees will be reduced, cancelled or corrected in accordance with reduction of services due to Covid-19 response, conferring to specified rules. Reduced opening hours of swimming-pools and museums and other cultural activities, will be taken into consideration for cardholders of annual memberships, and the duration of their cards extended accordingly.

b.  Companies. Postponing of imbursement of up to three payment deadlines of commercial property real estate tax will be granted for the year 2020, according to laws and regulations. Real estate owners are encouraged to allow their tenants to benefit from these postponements of charges, as already agreed with a number of large commercial real estate companies.

c.    Reduction of property taxes. The City of Reykjavík will speed up the reduction of real estate tax on commercial property, leaving the rate at 1.60% by 2021.  

d.   Suspension of rent.  The City Council has commissioned the Finance and Risk Management Department to formulate rules for deferral or discount of third-party leasing in the City of Reykjavik's premises on the basis of applications, due to a temporary fall in income in the light.

e.   Suspension of fees. The City Council has requested the City's companies to consider the possibility of postponing fees and / or reducing charges in the case of a temporary fall in income, in accordance to special regulations.  

2.   Flexibility in collection of fees and payment deadlines

The Department of Finance and Risk Management is commissioned to draft a proposal for temporary amendments to the City of Reykjavik's rules for collection of payments, which entails increased flexibility regarding payment deadlines by taking into consideration the possibility of a temporary fall in income.  These rules will apply both to households and businesses alike. The proposal will comply with existing rules and regulations of non-discriminatory principles and good governance. The goal is to increase flexibility to respond to the current situation, to ensure fair collection of payments, and that penalty interests and other costs will be minimized, while respecting principles of non-discrimination and maintaining the best interest of the city at the same time. The rules will be submitted to the City Council for confirmation.

3.   City Watch for welfare and employment issues

In the coming months, the City of Reykjavík will be collecting facts and figures on the ongoing development of the situation, and how it affects individuals, families and the business sector.  Further proposals and actions will be based on the findings in coming months, for approval of the City Council, the appropriate committees, or in collaboration with other local authorities and the government. Other stakeholders will be consulted in order to get the best indication of the current situation, with special focus on children and their education, and what the effect will be on businesses, individuals, families, disabled people, elderly, unemployed and other vulnerable groups.

4.   Tourism and the tourist industry

Measures to present Reykjavík as a viable tourist destination will be undertaken as soon as the situation allows.

a.   Joint marketing campaign of the government and Promote Iceland.  The City of Reykjavík will actively participate in the implementation of this joint marketing campaign in the wake of Covid-19.

b.   Reykjavík marketing campaign. The Department of Culture and Tourism will be tasked to develop a special marketing campaign as a response to predicted collapse of tourism in 2020-2021. The estimated cost of the City of Reykjavik will be at least ISK 150 million. Proposals are due in May.. 

5.   Innovation and new technology

 Investments for developing and implementing of new technologies at the City of Reykjavik will be accelerated.  Collaboration with entrepreneurs and the innovation community will be reinvigorated for evolving new solutions on the basis of a new innovation policy. Proposals are due in May.

6.   Creative arts

Ensure improvements of conditions for long-term growth of the creative industries, with a focus on creating facilities and work accommodations, among other things, in the new hub for the creative arts in Gufunes. Proposals due in May.

7.   Knowledge science and technology

Further plans in support of the knowledge science community will be developed, in collaboration with the University of Iceland, University Science Campus, Reykjavik University and the National University Hospital of Iceland.  Proposals due in May.

8.   Culture, arts, sports and event management

Proposals for actions to enrich the cultural and social scene in Reykjavík, with special focus on creative arts and sports will be developed in close collaboration with the Alliance of Icelandic Artists, and the Reykjavík Sports Association. Proposals will be available in May. 

9.   Targeted labour market measures

Necessary labour market measures to respond to unemployment will be developed timely, as the occasion arises. This will be carried out in cooperation with the government and all parties to the labour market, with a special focus on groups that are known to be especially susceptible to the situation, i.e. self-employed individuals, people of foreign origin, and women.     Emphasis will be placed on offering job opportunities, vocational training and Icelandic studies, together with other education on unemployment benefits.

10. Acceleration of investment and maintenance by the City of Reykjavik and its companies

Already this year, investments will be accelerated and maintenance increased to boost employment and keep the economy going. Additional investments will be undertaken by the City Fund and by companies owned by the city that may amount to some ISK 5 billion this year in total, and be even higher amount in 2021. Issues on cost sharing, taxes and other fees in regards to the construction work, will be negotiated with the government.

a.   The City's investments in new construction and maintenance will be increased by 2.5 billion by 2020, focusing on manpower and value-adding projects.

b.   Reykjavík Energy and subsidiaries. Additional investments are under consideration.

c.   The Reykjavík Social Housing are developing a plan for supplementary living arrangements and apartments.

d.   Associated Icelandic Ports are, together with Reykjavík Energy, working on a plan on energy exchange at the ports and will negotiate further developments with state authorities.

11. The preparation of investment projects on behalf of the City of Reykjavik will be accelerated

Competitions for the planning and design of investment projects will be accelerated and site planning will be given priority.  This includes competitions on Reykjavík Transport Centre, a competition on enlarging the city library in Grófarhúsi,  competition on the renovation and reconstruction of Laugardalur swimming-pool, competition on constructions of schools and preschools, conduction of a market survey on City Parking Garages, competition on a new square, the organization of new neighbourhood centres in Arnarbakki and Völvufell, and possibly elsewhere.

12. Preparations of investment projects in cooperation with the state will be accelerated

Changes in planning and preparation for the State's investment projects that are already in an agreement will be given priority, such as important transport projects within in the capital area, new nursing homes, constructions on the University of Iceland campus area, new National University Hospital of Iceland, together with other projects. 

13. New efforts to develop diverse and economical housing

In order to prevent a foreseeable shortage on the housing market, a new effort will be undertaken in housing development, focusing on cost-effective apartments, and the safe and sufficient supply of plots and increased building rights on the basis of the Reykjavík City Plan.

Plans for land allocations, additional investments and housing development will be updated in consultation with the labour movement, non-profit building associations, the Federation of Icelandic Industries, the Housing and Construction Authority and the government. The first draft will be due in May, and a full