Medellin Colombia
Medellin's public transit system has been credited with integrating lower-income areas of the city. REUTERS

Colombia’s second-largest city, Medellín, is aiming to overcome a lingering reputation as a center of drug trafficking and is billing itself as a modernizing and increasingly safe place.

Medellín was recently named the winner of the 2012 “City of the Year” contest, held by the Urban Land Institute, a Washington-based nonprofit that researches land use and real estate development around the world.

The contest, sponsored by the Wall Street Journal and Citigroup (NYSE: C), sought to determine the “most innovative” city of the year, settling on Medellín, which beat out other finalists like New York and Tel Aviv.

“Few cities have transformed the way that Medellín … has in the past 20 years,” read a ULI statement, highlighting improvements to public security, transportation and civic spaces.

“Medellín’s challenges are still many, particularly in housing,” it added. “However, through innovation and leadership, Medellín has sowed the seeds of transformation, leading to its recognition as a city with potential for long-lasting success.”

Medellín became known during the 1970s and ‘80s as a major center of cocaine trafficking and for being home to the once powerful and now defunct Medellín Cartel led by the notorious Pablo Escobar.

With the death of Escobar in 1993 and the subsequent disintegration of the Medellín Cartel, the city has been working to reclaim its name and recover from years of rampant drug-related crime.

According to the ULI, Medellín’s homicide rate dropped nearly 80 percent between 1991 and 2010, a statistic which it cited as proof of the city’s progress in public security.

The key to Medellín’s success on this front has been investments in integrating lower-income areas with the city center.

“Today, gondolas and a giant escalator shuttle citizens from steep mountainside homes to jobs and schools in the valley below,” read a Citigroup statement. “As a result, travel time for the majority of its citizens has been cut from more than two hours to just a few minutes.”

Diana Negroponte, a senior fellow at the Brooking Institute’s Latin America Initiative, said these public transit investments have not only provided better access to the city center for people living in poor neighborhoods, but improved security in these areas as well.

“When you enter one of these (gondola) cabins, it takes your picture,” she said. “Now authorities know who is going in and out of these neighborhoods,” adding that this has been integral in driving out gang activity.

Negroponte also points to the city’s investments in public spaces such as community centers, libraries and schools, which have also helped transform crime-ridden slums in to secure neighborhoods.

The recognition of Medellín’s progress comes amid a push from the Colombian government to attract more foreign investment.

“The country is one of the most competitive investment areas in Latin America, offering incentives such as: 15 percent income tax, no customs contributions (VAT, tariffs), an application of benefits in international commercial agreements, and the possibility of participating in the local marketplace,” reads a promotional statement from Proexport, Colombia’s government agency in charge of promoting exports, international tourism and foreign investment.

Medellín Mayor Aníbal Gaviria said the contest gave his city a global platform to exhibit its growth and its ideas for improving civic life.

“This will strengthen us as a city in the purpose of continuing to advance in innovation, but also in the purpose of continuing to advance as a city with more coexistence, with more security and with more peace,” Gaviria said.