Reorienting cities effective land use policies

Part 2: Markets and Incentives
Professor David Dowall University of California, Berkeley

1

First principles: how markets and planning interact
‡ Understanding the relationship between markets and planning:
± The demand for land is derived from the demand for economic activities that take place on it housing, offices, retail uses ± Planning per se does not generate demand for land, it regulates patterns of land use ± Therefore planning needs both regulations and incentives to successfully shape urban development

‡ Planners need to know how urban land markets work
± Demographic and economic drivers shape the demand for land ± Infrastructure, particularly transportation access influence the demand for and price of land ± Overly restrictive land use can increase land prices and make real estate expensive and unaffordable

2

How developers and planners think about land
Developer perspectives
‡ Is site in an attractive location that will attract buyers and renters? ‡ Can the site access adequate infrastructure? ‡ How will government respond to proposed project? ‡ Can I get an acceptable return on my investment (land and building cost)?

Planner perspectives
‡ Will the development of the site foster the implementation of the structure plan and benefit the city? ‡ Does the site possess adequate infrastructure access? ‡ Are there any negative environmental or social impacts that may result from the project? ‡ Are there ways collaborate with the developer to enhance positive public impacts

3

Estimates of global urban land use 2001,
(Modis 500m Model)
Schneider, Friedl and Potere, 2009

Region North and South America Europe Africa South-Central Asia East Asia and Pacific Total

Urban land extent (sq.km.) 225,245 149,394 68,834 64,973 150,313 658,760

Percent of total 34 23 10 10 23 100

4

New York s Urban Development 1930 - 2000

1930s 1950s 1960s 1970s 1980s 1990s

5

Income and economic activity is increasing urban space per capita
Built-up area per person, selected Indian cities
300 Square meters per person 250 200 150 100 50 0
Co im Ja Hy ipu de r ab r ba tor ad e Ka np ur Mu mb ai Pu ne

T1

T2

Population density is falling, meaning more urban land will be required per person
Population density trends, selected Indian cities
450 400 350 300 Per er 250 200 hect re 150 100 50 0
Co i Hy d tor e er

Ja i d

r

an

pu r

Mu mb

ai

Pu n

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T1

T2

Declining densities are a global urban challenge
‡ Conversion of agricultural land ‡ Increase in heat island effects that contribute to climate change ‡ Rising energy consumption mainly transportation and commuting ‡ Undermining of agglomeration economies ‡ Governance is more complicated

Sprawl and energy consumption

Understanding how urban land use planning contributes to sustainable urban development

10

Bangkok s transport driven urban form

11

Structure plans frame and guide urban development but infrastructure systems must be programmed as well

12

Rankings for infrastructure for selected countries (Global Competitiveness Index)
Overall Qualit of Infrastructure Ranking 

in g a p o re Ja p a n Ko re a a la s ia a ila n d C in a
u s t r a lia

Qualit of orts Ranking
in g a p o r e a la s ia Ja p a n Ko r e a a ila n d C in a Ze a la n d 1 19 22 34 36 47 50 61 89 95 99 112

Qualit of Roads Ranking
ingapore 1

2 17 20 27 38 41 45 66 82 96 98 111

e

C a m b o d ia In d o n e s ia illip in e s

C a m b o d ia In d o n e s ia Vie tn a m i llip in e s

Cambodia Indonesia Vietnam illipines

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Korea Japan
ala sia ailand

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ustralia

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Financing new development
‡ Special districts ‡ Improvement districts ‡ Subdivision funding agreements ‡ Exactions ‡ Betterment levies ‡ Property taxes ‡ User fees ‡ PPPs
14

P3 project financing options
O&M Contract LDO BBO BOT BOO

Fully Public Super Turnkey DB Temporary Privatization BTO

Fully Private

- 15 -

An example of a PPP project: Concession project participants
Federal Government State Government Coordination

Concessionaire Contractor Operator Investor

Commercial Bank

Transport Project

Development Bank

Financial Agent Advisor

- 16 -

Old street grid patterns and small parcels limit opportunities for high-density development

17

Example of land readjustment
ESCAP

18

Minburi land pooling/Readjustment project, Bangkok: before and after

19

Redevelopment in LA: Bunker Hill
Public acquisition and clearance

The final product

20

Zoning incentives
‡ TDR ‡ Density bonus

21

Using TDRs as incentives for open space

22

Are new towns a panacea?
London s plan Tokyo s reality

23

A irtuous Cycle
Higher GDP growth in cities More built-up space

Infrastructure investments

POLICIES

Increase property values & taxes

24

Evolution of planning has shaped good practice
‡ Rational model
± There is a public interest ± Expertise is paramount

‡ Mediation
± Neutral ± non-neutral

Planner

‡ ‡ ‡ ‡ ‡

Negotiation Advocacy Diplomacy Mutual learning Collaboration

Developer

Community

25

Conclusions to Part 2
‡ Planners need to understand how urban land markets work to be more effective ‡ Major challenge is to promote more sustainable cities-less sprawl, more energy efficiency ‡ Promote spatial structure to enhance economic efficiency ‡ Planning and infrastructure go hand in hand ‡ Planners need to develop models of taxation and value capture to finance infrastructure and use these resources to improve mobility, connectivity and competitiveness ‡ Planners need to optimize within their local systems so one size fits all is not effective
26

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