Non-Negotiable Developer Obligations in the Spanish Land Readjustment: An Effective Passive Governance Approach that ‘de facto’ Taxes Development Value?

Abstract

Land Readjustment (LR) is often presented as an alternative 'third way' among public and private approaches to governance in urban development. Unfortunately, not much literature analyzes the effectiveness of LR, which depends on its ability to capture land value increases to finance public infrastructure. LR can capture land value increases with taxes and contributions to be levied after the readjustment, and/or with developer obligations. This paper focuses on how non-negotiable developer obligations function within the Spanish LR, and whether they succeed in delivering public infrastructure. The findings also feed into the debates about the effectiveness of public and private governance approaches and the limits of public value capture instruments.

Swiss land improvement syndicates: ‘Impure’ Coasian solutions?

“…Furthermore, LIS have been applied where property subdivisions were deemed inappropriate or fragmented. As primarily land readjustment tools, LIS are comparable with land readjustment policy instruments in other countries: in the Netherlands (Muñoz Gielen, 2016; Van Der Krabben and Lenferink, 2018; Van Der Krabben and Needham, 2008), Germany (Home, 2007), Spain (Gozalvo Zamorano and Muñoz Gielen, 2017), Portugal (Almeida et al, 2018; Condessa et al, 2015), Turkey (Uzun, 2009), Israel (Alterman, 2007), Egypt (Soliman, 2017), India (Byahut, 2014), and China (Li and Li, 2007). The role of planners and local authorities in relation to these policy instruments varies depending on the planning and legal systems in different jurisdictions.…”

Using Sustainability-Oriented Developer Obligations and Public Land Development to Create Public Value

“…However, in practice, it is not easy to distinguish between earned and unearned land value increments, mainly because different phases in property development all entail varying increases in property value caused by different factors and actors [37,40]. As a result, there is typically an uncertainty over what actor/actors have caused what value increase and thereby who should capture what value from property developments [6,16,36,38]. Christensen [41] illustrate the difficulty in accurately identifying value increments for different planning and development stages, which Valtonen et al [5] highlight as an issue for equitable public value capture.…”

“…This instrument has a variation of names used in different countries, such as 'planning gain' in Great Britain [42,43] or 'exactions' in the United States [44], but 'developer obligations' is recognized as a general term used internationally [17,37,44] and will therefore be used here as well. Gozalvo Zamorano and Muñoz Gielen [16] (p. 278) define developer obligations as "contributions of property developers and landowners made in exchange for a public decision on land-use regulations that increases the economic value of their properties". Land-use regulations can here include "additional development rights, fast-track processing, or relaxation of some regulation" [37] (p. 775), and 'contributions' typically refer to some form of monetary payment, land, or construction services for the direct provision of infrastructure [17,18].…”

“…As implied by their names, N-NDOs are not negotiable while NDOs are negotiated between local planning authorities and developers. N-NDOs are prescribed in national and regional legislation and in more detail in local policy documents and legally binding land use or zoning plans [16,18] and have generally been explored more than NDOs in previous literature [17]. NDOs are often less regulated and thereby provide planning flexibility, which is important for dealing with high levels of complexity [17].…”

“…Previous literature on developer obligations as public value capture instruments has typically focused on the provision of infrastructure, such as roads, surrounding private properties (e.g., [6,[16][17][18]). The present study contributes to these ongoing discussions by exploring sustainability-oriented NDOs that instead entail the implementation of sustainable and innovative solutions and practices within private property, such as wastewater recycling systems.…”