The Theme
Capturing values – experiences from the real world
The theme for capturing values from leveraging land and land based instruments can broadly be identified to comprise four categories of land value capture methods.
Monetising publicly-owned land assets
In the absence of comprehensive asset management strategies, land owned by public agencies is either left susceptible to illegal possession, or values realised but only sub-optimally. Long-term asset management strategies are critical to ensure value optimisation of public land assets in view of cyclicity in land markets. Also such monetisation when done in silos of the public institutions, may generate resources for the asset holding agency, but may not contribute to larger planned development.
Development fees and levies
Developer fees, impact cess, betterment levies and other such instruments have been experimented in India and other developing countries. There is wealth of experience on what works and what doesn’t. Factors that contribute to acceptability of such levies, and their success in mobilising resources include – correspondence to the extent and pace of rise in market price of land; a transparent capital investment plan and visibility of commensurate resources deployed in such investment; and simplicity in methods of levy and collection.
Land use and density authorisations
Zoning regulation and density authorisation are not just important urban planning instruments, but can also be strategically leveraged for mobilising revenues. The viability of such strategies from Mumbai and other places around the world has valuable lessons. With rising land prices and larger public benefit in limiting city sprawl, densification within existing city limits offers an attractive and yet controversial array of instruments for mobilising resources.
Contribution of public land in joint venture developments
Amongst the strategies being adopted rapidly in many countries, this approach is being widely used for land-intensive infrastructure projects such as airports, seaports, highways, etc. Adaptions of this model have also been used to enhance project viability. Challenges lie in expropriation at first instance; controversies that emerge from handing over opportunities for capturing land value increments to the private player; timing of value enhancement being typically after the project has been implemented and cash flow for the project has stabilised while funds are actually required at the construction stages.
Issues Beyond Technical and financial challenges
Beyond the technical and financial structuring challenges of such instruments, lie the issues surrounding institutional mandates, coordination and redistribution / deployment of the value increments captured.
Cities around the world are complex entities, with complex institutional arrangements. Network infrastructure of metropolitan or regional scale generally reaches out beyond territorial and / or functional jurisdictions of local civic agencies. Such projects might generate high economic returns, but are often constrainted by gaps and overlaps in institutional mandates. How does such mismatch impinge on government’s ability to capture land-value gains?
In the Indian context, does this reinforce the need for institutionalising governance mechanisms at the metropolitan level. Not just technocratic planning and project implementation, but also mechanisms for project prioritisation and allocation of resources.
The Policy Workshop at Bangalore and Conference in New Delhi will take a deep dive into the above sets of issues.
