After 23 years under Labour control, the Capital found itself under the rule of a new political partnership.
The decision by the Lib Dems – who emerged from the election as the biggest party on the city council – to team up with the Nationalists, who were third behind Labour in the polls, surprised many. And the partnership between the quietly, hardworking Lib Dem leader Jenny Dawe and her often confrontational SNP counterpart Steve Cardownie promised potential fireworks.
But how has this sometimes uneasy alliance fared as it passes the halfway point before the next local authority elections?
Today's Edinburgh is very different to the one of May 2007. So, how has the council coped with the ups and downs of running the Capital through one of the biggest economic crises in memory?
Here the Evening News team of specialist reporters offer their analysis of the successes and failures of its first half term in office.
Sport and the arts
GRASSROOTS sports and the arts will always cry out for more money than councils feel they can afford, especially in such tough economic times.
The failure to grasp the nettle on the future of Meadowbank Stadium early in its tenure now looks like a golden opportunity missed. The economic slump means there is no reasonable prospect of suitable facilities for a Capital city being created in the forseeable future.
Continuing cuts to funding for clubs, community groups and facilities will never be popular, but seem inevitable.
The city was committed to rebuilding the Commonwealth Pool as part of its commitment to the 2014 Glasgow Games and has pressed ahead with smaller projects, a refurbishment of Glenogle Baths and a new skatepark at Saughton.
Investing in a revamp of the Assembly Rooms and cutting investment in the King's might be deemed a reasonable minimum in the current climate.
The prospect of thin years ahead for arts funding will strengthen arguments for finding new ways to attract private cash.
Balancing the books
THE on-going bins dispute is likely to be only the first salvo in a long struggle between the council and the unions as city leaders wrestle with a 90m funding black hole.
The council deserves credit for sticking to its guns in the face of union pressure – something that cannot be said of the city authorities in Leeds who faced a similar dilemma – but the cost to the public purse of bringing in private contractors remains unclear.
The council has largely adopted a "salami slicing" approach when it comes to cost-cutting, with every area shouldering its share of the pain in the search for efficiencies.
This has led to criticism of a lack of leadership, although it is hard to pursue political priorities when there is little money to spend and it's the administration's avowed aim to balance the books at all costs.
It is certainly true that senior city officials carry more sway than they did under the previous Labour regime, an inevitable result, perhaps, of the lack of experience in the Lib Dem-SNP ranks. The true test of their approach is still to come with this year's and next year's budgets.
ONE project and one alone dominates the council's transport agenda - the city's embattled tram line.
Badly over-budget and behind schedule, comparisons to the Scottish Parliament fiasco have yet to be realised, but no longer seem like pure mischief making.
The job of the Lib Dem/SNP coalition – which inherited the scheme from Labour – has been to oversee and scrutinise its management by tram firm TIE.
One transport leader, Phil Wheeler, has stepped aside amid concerns about the council's ability to get to grips with the task.
The low-profile of his successor, Gordon Mackenzie, has done little to reassure critics on this front.
Bad news for the trams is also bad news for Lothian Buses. The two will be linked by the joint operating company Transport Edinburgh Limited (TEL).
Already struggling due to the impact of the tram diversions, Lothian Buses posted is first-ever operating loss last year and is expected to have to bail out the trams to the tune of around 5 million a year in the initial years of their operation.
Despite gripes about the state of Edinburgh's roads, the council deserves credit for record investment of 20m in the last year alone.
Efforts to encourage cycling have also been good.
THESE are turbulent times for the city's schools.
Pupils' achievements may be rising in both high school exams and primary literacy and numeracy tests, but relations between parents and the local authority have rarely been lower.
The coalition could hardly have got off to a worse start by announcing – then pulling back from – plans to close 22 schools.
Their down-sized proposals have been handled better, but the council has nevertheless struggled to shake-off the perception that it is aloof and not listening to parents' concerns.
It is to be hoped that can change in the weeks and months ahead as the local authority faces up to harsh economic realities.
Credit is due for finding a way to press ahead with the rebuilding of Portobello and James Gillespie's high schools, as well as extensions for Towerbank and Corstorphine primaries, despite the stalling of the government's alternative to PFI funding.
Schools budgets were saved from 2 per cent "across the board" cuts last year after protests. The effects are likely to be felt in the classroom if they cannot pull off a similar feat again.
EVERYONE realised the new voting system introduced for council elections in 2007 was going to mean no party would emerge with a majority at the City Chambers. But no-one expected an SNP-Lib Dem coalition – and few expected it to work out well.
After some initial hiccups, the two parties seem to be making their coalition work surprisingly smoothly – although only by agreeing to disagree about the biggest project in the city – the trams.
However, with the SNP in power both at Holyrood and the City Chambers, the council has had direct access to ministers to press Edinburgh's case.
But the most obvious gain for the city from the SNP government at Holyrood is the Capital City Supplement, recognising the extra costs faced by the city because of its unique role – and that was mainly due to Independent MSP Margo MacDonald.
COMING into power shortly before the financial slump, economic development should reasonably be one of the areas of the council to perform poorly.
However, in facing up to the downturn and taking action, economic development leader Tom Buchanan has emerged as one of the councillors to receive most credit.
There can be little doubt his burgeoning reputation has been helped by the council officials he works with. The appointment of former Scottish Enterprise director Dave Anderson as city development director in 2008 indicated a new business-friendly approach.
In setting up the Economic Resilience Network, the council has faced these hard times head-on and continued to get disadvantaged people into work, assist company growth and attract new firms into the Capital.
It has drawn up a blueprint for the redevelopment of Princes Street and tried to get developers on board. It has also been ambitious enough to look favourably at potentially controversial new ideas, such as Scotland's National Wheel in Leith.
And the council has set up the Destination Edinburgh Marketing Alliance, a new marketing body to promote the city.