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    Chapter 33 - Land Use Regulation and Windfall Gains

    Uploaded by

    WalterReiner

    Copyright:

    © All Rights Reserved
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    of 17
    US. Cena Buea. 209, Asa Sucvy af Stat a Local Goverment Fs ceed ‘duough The Uhan Instat Brookings nsuiton Tx obey Cente Stat a oc {Goretient Fiance Data Query System hp axpoeyenter og dy pages cin. Accessed December 32009, (Us. Depastrent ofthe Tew, Of of State and Lacl Financ. 9. eral State Leal Pal Relatinae Report the resident and the Conroe Missing, DC, CGonerament Painting FRc. lls, F200. "America Government Fane the Long Run190 tows" Jour f Bano Prpetias - 8 Wilts, E2005. "Baoots, Budget Constraints, ana Leviathan: Comparative Federalist and Lessons em the Esty US" Comparative Poli Subs 375-58, ‘Wilde, David E210. "nteroveromensl Transfers to Local Governments" In ‘Muncpl Revenues and Land Pies Gregory K. Ingram ad Yuan Hong, {9-76 Cambridge, MA: Lincoln Tosttate of Land Policy. ‘ima, esi, Sony Hoo, Matthew Negowaki Kit Rucben and Robert Tannen 2006 Fal Dipti aro States, FY 200, Washington,DC. Urban tite and ih [New England Public Policy Cntr atthe Federal Reserve Bank of Boson ‘ings John. 985."On Fal Daparitesacoss ities” ural of ria Fzouones, 937 7 CHAPTER 33 LAND-USE REGULATIONS AND PROPERTY VALUES: THE “WINDFALLS CAPTURE” IDEA REVISITED RACHELLE ALTERMAN aw issues infand-use planning areas universal a the bipolar relationship between ‘epulation and property values. This issue caties deep economic, social, and ds tcbutive justice implications. Do governments have the right to rep some ofthe increment in value attributable to planning decisions? And the corollary: Do gov exnments have an obligation to compensate private landowners for value decline ‘du to land-use regulations Two American scholars have whimaically tabbed this ise as “windfalls” and “wipeouts” (Hagman and Misczynsli i978). This topic kas {ried planning policy for along time, yet is no closer today to being resolved in a politically of legally sustainable manner. ‘This chapter revisits the upwaed side ofthe Iand-vlue coins How relevent iit today around the worl, and especially among advanced-economy countries? The iea that landowners should share some of the increased vale oftheir land with society encompasses a wide range of situations and polis, will fist addres the issue broadly and then focus on one spciic type of vakte capture—where the rise in propectyvalusis due to land-use regulations or public works, This ubiqaitons ‘opic has not benefited fom enough comparative research! By analyzing the 1. Deptethe big fhe od naue sue ths nt bensied fom nich tai onpurtie esti The only ajc cada wor tht ks at bat sides hse 26 LURAY PUBLUE FINANCE AND GOVERANEE experiences ofa lrge sample of advanced-economy counties, this haptersecks contcibute to knowledge sharing on this impor My argument istractured in seven sections. The fist two introdce the debates ‘over teal- property ights and the hi capture policies. The subsequen, 3 etween macro, dict, and indie roceed 10 focus on direct value captire and the wotld, The coaching earning, set ome challenges for ftir cross Tue Depare OvER Real PROPERTY AND ['rs IMPLICATIONS FOR VALUB CAPTURE ‘The Role of Real Property ‘Way isthe nexus between government regulation and economic valu especially 1an0-USE REGULATIONS AND ROBERT VARIES = Philosophers, economists, leet schol sole that real propecty should play of ite well-known special abuts: andi ee provides the essential context for socal an poi inneplaceabe, each location is unig would suffer HLocks, in Sande 2007, 3-125. According to Locke, one of the pata ‘mount jusifiations forthe very existence ofthe sate is its capacity to protec pri. of mea uniting into commonwealth, and sanction unbridled private hinking. They criticize gov and tation, arguing that unfetered or only milly czament land:nse regu | tegulated landownership would utilize [and more eliintly by means of market forces (Lefooe 1981; Fschel 1995; Yandle 995; Bickson 2000}. According to this {ANO-SERIGULATIONS AND PROREMFY vats 19 co ‘URtAM PUMLC FHANCE AND GOVERNANCE -amember those benefits thatthe socioty reasonably garde as accestay for human Ideology of feed, De Soto (2000) an others note the world’s societies, real property represents the primary part of household ses, ing emphasis on the special cole of rel-property ownership and restrain in ing development (LIN-FAO 200%; Ho and Spoor 2006). 1 longer occupy center stage But the debates over the spprop te relationship between private property rights and the public intrest hae not ‘at ees to place va iy derived obligations on it There are many vations ‘on this general idea The basic concep is summarized by Alexander (2009 thu"An fuer is morally obligated to provide tothe society of which the individual is ‘constuction cf building). Tue [pea or Lanp-Vavur Capture: History the value of land is created by society and should therefore be cenped s by no means nev The b Specifically atthe ides of capturing increments created by land-use reglition, 760 [sel "nto the single ties, afew sl local exception. The only type of kn tax tac i ntenainally widespread i he loa property takin sore jriadicons imposed ony on ann otersabo on boitstrucues Hovseverin ost counties pop- ety taves capture only asia percentage of property values and are ds only a mall ‘stge of George'sidea(vanera)-Ye the underlying rationale ofthe Georgina ent sillcompeling amin Itsofen cited in support of thee that the aed alae ‘specify crested by land-use regulation decisions shoul be shared with the pubic ‘Value Capture and Land-Use Regulation: The “Betterment Capture” Idea ‘Cureenly the vast majority of courts acos the glabe-rearnly joined bythe pos ‘Communist ones—have adopted las for regulating land use nd development (though ment when introducing national land-use planning a one of the wos evils of on its ground landlords for puting up the value of thie and (Hansard 909)" 5 Forsa example of on of the movements ogniaions see tp vowachennporetoundation or See sn pve ner LAND-USE REGULATIONS AMD FHOWERTY VALS 1681 However, neither side ever worked satisfactorily (Grant 1999), as discussed ater in this chapter, pls in advance and sobstited a system wheeeby each development approved “case by case" through a "planning permission” (Booth 2003) Local goverameng ust prepare local plans, by ‘opment rights. Ths, the very ther side of the coin—capturing the lowed to keep the windllls then syremetty of loge beotb the wipeouts and aot be eligible to compensa analysis on compensation mens for value ep vale created by ‘Tar DistINCTION BETWEEN MAcro, Direct, Anp Inpirecr Varur-CaPTure INSTRUMENTS concept ¥ capturing vole ising dec from land-use regulation or public works, The most term avaable to denote the ater typeof vale ineteseisbeiterment—a word inated in Betsh English and sil has no American English counterpae. {aN-USE REGULATIONS anD PROPERTY WALES Ey + hings (cans wih "akin ~an soe oea nthe eves US cone af ati. 4 Volue epurs~2 genet patently denoting the sve Figue aga Key Terms and Definitions Regarding Dee Value Captore providea mors level field for research and knowledge exchange, I propose distinc ‘ion among thre sets of policy instruments that relate to vale capt (2) lrectand (3) inne instruments. Macro Value Capture Embedded in Broader Land Policies the major types in declining order by degree of inerve propery: 2. Nationsization ofall land 2 Substitution of private property by long-term public leaseholds 5. Land benking 44 Land readjustment ae URBAN PUNLIC FINANCE AMD GOVERNANCE °F LAND-USEEGULATIONS AND HMOPERTY VALUES ms Communism, such regimes too are decreasing de to full or quas-pritatization policies (aiscssed above). More recently, public Iaseholds are used on rect value capture standin its own ‘be divided into two subtypes, and the econd subtype ‘The concept of better! soos, Confusing, both may be farther divided into to subtypes of deci- often denoted by the same ton: betterment, parks, or others ising from land use regulation: The value rse ie due toa land-tse planning or development-control decision, ‘Capture ofthe unearned increment may take mony forms including capital pains ‘2x on land or real propecty an uneetned increment tax upon tt i adj ct specuai story of the international experience i fiom government land-use decisions. But fi Mieuaipiian lapew wee oper tre shold be inte me LURAY PUBLIC PANE AND GOERNANES, " LAxD-USE REGULATIONS AND PRONERTY WALES 767 that predated hata wtcument migrated to many of the British colonies and protectortes but experienced many failures (Peterson 2009, 36-38; Grant the execution of public ‘of proving the eansalrela- ulies in determining the geographic Indirect Value Capture the “cover” of some other rationales beyond the desire to capture the unarmed clue to new transport evolving cate forthe Word Ban and Mada (2010) fo the UN repo in oder to contrat y stand sone, unrelated to capture of betterment based on land use wit dec vale capture relation. Land-Use-Based Betterment Capture BeTTERMENT CAPTURE: ‘Tre INTERNATIONAL EXPERIENCE alue capture instruments along the planning: How prevalent is direct beterment capture around the world? This section andthe historically the eats form of bet then proceed to focus on land Infrastructure-Based Betterment Capture th varying degrees of co rantries belonging to the EU and those outside it iferent nd language backgrounds, and so forth, uments ace infrastructure based.

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