Workshop “Land-based value capture: rationale, policy instruments, opportunities and pitfalls”

Location: HK Building
19 November 2019

Universitas Gadjah Mada: prof. Bakti Setiawan

Radboud University: prof. Erwin van der Krabben, dr. ir. Ary Samsura
Lincoln Institute for Land Policy: dr. Zhi Liu

Introduction to workshop theme: land policy and land-based value capture

Public infrastructure investments and planning decisions to change the land use often lead to
substantial increases in land and real estate values. In many countries, regulation exists to capture
part of that value increase and to use it for funding of for instance new infrastructure, public
transport development and other public facilities, the construction of affordable housing or the
transformation of urban areas. The efficient, transparent and fair use of such value capture
regulation often is not easy and many implementation problems may occur. A way forward may be
to prevent the use of value capture instruments as stand-alone instrument, but instead to integrate
them in more comprehensive land management policies.

Usually, urban land management policies serve three main goals: 1) to assemble (formerly)
fragmented land to enable a proposed development, 2) to ensure (part of the) funding of on-site and
off-site public infrastructure and facilities that are necessary to support the proposed development
(cost recovery), and, interrelated with the second goal, 3) to capture (part of) the increment value
that appears as a result of the land use change and/or public infrastructure investments (land-based
value capture).

Land assembly can be interpreted as a transfer from passive to active land ownership. Active
landowners are those who are willing to develop their land, while passive landowners take no
particular steps to market or develop their land. Moreover, the assembly of plots usually offers a
more efficient and more profitable development opportunity. Often, land assembly, cost recovery
and value capture are part of the same strategy.

In many jurisdictions, cost recovery tools and land-based value capture mechanisms are interrelated
and cannot always be clearly distinguished from each other. Both cost recovery and value capture
tools are meant to capture (part of) the increment value of the land that usually arises due to one or
more of the following variables:

 The owner of the land and/or property makes efforts himself and invests in the qualities or
accessibility of his plot of land and/or property;
 Others, public and/or private parties, make efforts and investments that positively affect the
qualities of the location in which the plot of land and property are located;
 Public bodies allow more profitable use and building possibilities through land-use regulation
decisions.

We may distinguish land-based value capture mechanisms based on direct and indirect rationales:
direct instruments seek to capture all or some of the value increase under the explicit or implicit
rationale that this value increase belongs to the community and not to the landowner, while indirect
instruments seek to capture value increase under other, different motivating rationales. Direct
instruments are considered wealth redistribution instruments and are thus often seen as tax that
need explicit and detailed legislative base. Indirect instruments are usually more pragmatic, can be
referred to as a kind of developer contribution or developer obligation, and may largely vary across
the world in terms of size and applicability (i.e. exactions, impact fees, infrastructure-based or
development rights-based betterment capture).

Goal of this workshop

In today’s workshop Universitas Gadja Mada, Radboud University and the Lincoln Institute of Land
Policy will present an international overview of the use of land-based value capture instruments as
part of broader land management policies and discuss opportunities and potential pitfalls for
establishing land-based value capture instruments in China. The goal of the workshop is to discuss
the need and possibilities for developing a dedicated program in Indonesia to develop expertise and
competence for the implementation of land management policies and land-based value capture
instruments, to advice on the use of these policies and instruments, and to develop a pilot program
in Indonesian cities to test and build local experience with the implementation of these policies and
instruments.

The workshop will be chaired by prof. Setiawan (UGM). Prof. Van der Krabben, dr. Samsura (both
Radboud University) and dr. Liu (Lincoln Institute of Land Policy) will provide introductions to the
theme of the workshop.

Workshop program

9.00 - 9.30 Prof. Setiawan Opening and introduction

9.30 - 10.15 Prof. Van der Krabben Land management policies and value capture instruments:
international overview

10.15 – 10.45 Dr. Liu Lincoln Institute of Land Policy’s international program on the
effective use, taxation, and stewardship of land

10.45 – 11.15 Coffee break

11.15 – 12.00 Dr. Samsura Land management policy and land-based value capture in
Indonesia: success, failure, opportunities and pitfalls

12.00 – 13.00 Lunch break

13.00 – 14.30 Prof. Setiawan Discussion: Indonesian program for the implementation of
land management policy and land based value capture

14.30 Closing

About Radboud University:

Radboud University, Centre of Urban Research (CentUR), conducts research and provides training in
the field of spatial planning, land policy and real estate development, water management and
climate change, and transport infrastructure and mobility. Research and training projects take place
both in Europe and Asia. In Indonesia, CentUR collaborates with several universities and research
institutes, including Universitas Gadja Mada, Universitas Diponegoro, Institut Teknologi Sepuluh
Nopember, and Universitas Andalas. At present, CentUR participates in a NUFFIC-funded project on
Integrated Coastal Zone Management for Central Java, with Universitas Diponegoro, Deltares and IHE
Institute for Water Education. Prof. Van der Krabben is the director of CentUR, professor of Planning
and Real Estate at Radboud University and honorary professor at Hong Kong University; dr. Samsura
is a lecturer and senior researcher in CentUR and has been involved in many research and training
projects in Indonesia.

About Lincoln Institute of Land Policy:

The Lincoln Institute of Land Policy seeks to improve quality of life through the effective use,
taxation, and stewardship of land. A nonprofit private operating foundation whose origins date to
1946, the Lincoln Institute researches and recommends creative approaches to land as a solution to
economic, social, and environmental challenges. Through education, training, publications, and
events, we integrate theory and practice to inform public policy decisions worldwide. Dr. Zhi Liu is
the director of the Lincoln Institute program in China: the Peking University – Lincoln Institute Center
for Urban Development and Land Policy.