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Financing affordable housing and infrastructure in cities: towards innovative land and property taxation

Warsaw, Poland 1516 October 2009

Sponsored by Global Land Tool Network (GLTN) with funds from the Governments of Norway and Sweden

Financing affordable housing and infrastructure in cities: towards innovative land and property taxation
Warsaw, Poland 1516 October 2009


Sponsored by Global Land Tool Network (GLTN) with funds from the Governments of Norway and Sweden Organized under the patronage of the Ministry of Infrastructure, Government of the Republic of Poland

April 2010

Published by: UN-Habitat Warsaw Office ul. Krucza 38/42 00-512 Warsaw, Poland Tel: +48 22661 97 23 Fax: +48 22661 97 24 E-mail: office@unhabitat.org.pl Website: www.unhabitat.org.pl Global Land Tool Network (GLTN) UN-Habitat P.O. Box 30030 Nairobi 00100, Kenya E-mail: gltn@unhabitat.org Website: www.gltn.net

Cover Photos from the top to the bottom: Yulia Korysheva (2009), Katarzyna Romanowicz (2009), Claudio Acioly (2006), Remy Sietchiping (2008), Gwendoline Mennetrier (2008), Remy Sietchiping (2007)

DISCLAIMER The designations employed and the presentation of the material in this report do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city of area, or of its authorities, or concerning delimitation of its frontiers or boundaries, or regarding its economic system or degree of development. The analysis, conclusions, and recommendations of this report do not necessarily reflect the views of the United Nations Human Settlements Programme or its Governing Council.

ACKNOWLEDGEMENTS Principal Authors: Gwendoline Mennetrier, Katarzyna Romanowicz Additional Editorial Input: Remy Sietchiping, Krzysztof Mularczyk, Clarissa Augustinus Design and Layout Coordination: Yulia Korysheva Sponsor: Global Land Tool Network (GLTN) with funds from the Governments of Norway and Sweden Design, Layout and Printing: Studio Grafiki A-4, www.a4studiografiki.pl



EXECUTIVE SUMMARY INTRODUCTION Background Attendance Opening of the Conference Objectives of the Conference Structure of the report PART I  LAND AND PROPERTY TAXATION: POLICY, LEGAL AND INSTITUTIONAL FRAMEWORKS Summary of presentations Acioly, Housing Policy Section, UN-Habitat Can the unearned increment in land values be harnessed to supply affordable housing?, Rachelle Alterman, Center for Urban and Regional Studies, Israel Taxing Public Leasehold Land in Transitional Economies, Yu-Hung Hong, Lincoln Institute of Land Policy, USA Land Value Tax as an Investment Mechanism for Public Transport Assets, Francesca Medda, University College London, UK An increase in the value of land as a prerequisite for imposing adjacency levies a critical analysis, Mirosaw Gdesz, Administrative Court, Poland UNECE Working Party on Land Administration, Ariel Ivanier, UNECE Environment, Housing and Land Management Division More than a tax: some ethical implications of land value taxation, Richard Lawrence Giles, Association for Good Government, Australia Public space and its appropriation in light of the theory of externalities recommendations and directions for building an intervention system by public authorities, Tadeusz Markowski, Lodz University, Poland Summary of discussions Summary of key ideas and findings PART II  LAND AND PROPERTY TAXATION IN PRACTICE Summary of presentations Innovations in the Property Taxation System in India, Debolina Kundu, National Institute of Urban Affairs, India Taxation and its effects on sustainable development with reference to the UK, Greg McGill, Planning and Development Consultant, UK Land and property taxation in the countries of former Yugoslavia with a particular focus on Montenegro, Yvonne Mller, German Technical Cooperation GTZ, Montenegro Improving public-value capture in urban development, Demetrio Muoz Gielen, Radboud University Nijmegen, the Netherlands Property tax and informal property: an essay on the challenge of the Third World, Martim O. Smolka, Lincoln Institute of Land Policy, USA Urban planning, land taxes and levies the German experience, Janina Kopietz-Unger, Karlsruhe University, Forum for cross border cooperation in Europe, Germany Summary of discussions Summary of key ideas and findings Housing sector reform in Central and Eastern Europe: regulatory framework and policy development, Claudio

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PART III  LAND AND PROPERTY TAXATION AND VALUATION: TOOLS AND IMPLEMENTATION LESSONS Summary of presentations apartheid South Africa, Moegsien Hendricks, Development Action Group, South Africa Land Value Capture: Case Studies, Policy Implementation, and GIS Land Value Mapping, Alanna Hartzok, Earth Rights Institute, USA Space Syntax as a Tool to Assess Land Value, Ahmed A. H. Saeid, Wroclaw University of Technology, Poland Summary of discussions Summary of key ideas and findings PART IV  CONCLUSIONS AND RECOMMENDATIONS Summary of key issues/ challenges/ lessons Contribution of the Conference to the debate on land and property taxation Recommendations and way forward Closing remarks ANNEXES  Annex 1. Programme of the Conference Annex 2. List of participants Annex 3. List of Acronyms TABLE OF BOXES Box 1: Participants expectations at a glance Box 2: Examples of mechanisms for capturing land value in the context of mass transit systems Box 3: A chronological account of the history of Adjacency Levies in Poland Box 4: The case of Australia and New Zealand Box 5: Bangalore: Bruhat Bangalore Mahanagar Palike (BBMP) Box 6: Ahmedabad: Ahmedabad Municipal Corporation (AMC) Box 7: Certainty in Spain Box 8: Certainty in England Box 9: Benefits of LVT Box 10: The case of Harrisburg Box 11: The case of Allentown Box 12: Components of a good value capture system Box 13: Proposals for the way forward at a glance TABLE OF FIGURES Figure 1: The context of housing policy Figure 2: Multi-Family high-rise accommodation Figure 3: Structure of the capitalized land value of accessibility Figure 4: House prices and Fundamentals Figure 5: House prices wage and inflation over time Figure 6: Graphs showing characteristics of Assessed Properties in Ahmadabad and per capita revenue receipts of AMC Figure 7: Land market and real estate in Montenegro Figure 8: Von Thunen Land-Rent Curves Figure 9: Space Syntax Methodology TABLE OF TABLES Table 1: Comparative statistics Table 2: Privatisation in CEE Table 3: Valuation methods and tax ranges for property tax Table 4: Summary of degree of certainty in Spain, England and the Netherlands Table 5: Myths about informality


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Land and property tax: financing towards equality in access to housing, serviced land and infrastructure in post-

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Executive summary

The International Conference on land and property taxation and financing of infrastructure and housing development in urban areas, organized jointly by the Warsaw Office of the United Nations Human Settlements Programme (UN-Habitat), the Global Land Tool Network (GLTN) and the Ministry of Infrastructure of the Republic of Poland, took place on 1516October 2009 in Warsaw, Poland. The Conference was aimed to enhance and share knowledge and experiences, disseminate lessons learnt from the region and other countries/ regions on policies and instruments of land management and land and property taxation, and also to generate further synergies and networks amongst participants and countries in the region and beyond. Over 60 participants from around the World, representing various stakeholders in the field, attended the event. Seventeen papers exploring policies and instruments for improving equitable, affordable and sustainable land and property taxation, charges and fees, were presented and led to stimulating discussions and exchanges. Participants at the Conference acknowledged that there was no one-fits-all solution. Most of them called for a balance between taxes on property and land and other instruments, while others advocated taxation of land value only in order to capture the socially generated land rent. Presentations and discussions covered an array of innovative approaches to land and property taxation policies, reforms and tools for a range of purposes, including revenue generation for new investment and for further financing of urban infrastructure and development, and integrated urban planning and management. Participants expressed their concern that some current taxation policies hindered harmonious and sustainable urban development. It was noted that inadequate land and property taxation systems could indeed lead to

speculation in land and on the housing market, thus increasing prices, making them unaffordable for low income households in cities. Presentations emphasised that land taxation policies could encourage land and property owners to develop or improve land and housing to the full extent warranted by its value, or to make way for others who will. Consequently, building lots are used efficiently; dilapidated inner-city areas and buildings are returned to good use, which reduces urban sprawl and decay. In the financial turmoil which we have witnessed, with its consequences for equitable and sustainable urban development, the Conference brought into the forefront innovative taxation policies and practices for improved urban land and property management that could further inspire urban decision-makers and, in the future, expand the tax base targeted at urban development. Finally, the Conference demonstrated the need for further dialogue and exchange of experiences in the area of land and property taxation both at global and regional levels, to capitalize and build on the range of pertinent knowledge, tools and practices which were discussed. Specific proposals were put forward in that vein. As a follow-up to the Conference, UN-Habitat together with interested partners intends to produce and disseminate a series of publications for various key actors, to capture the array of land and property taxation policies, tools and instruments, e.g. the Land and Property Taxation Policy Guide and the Warsaw Conference proceedings. Partners dedicated involvement will be crucial for any further efforts to promote innovative approaches to land and property taxation and sustainable urban development, in addition to UN-Habitats commitment to continue to facilitate the cooperation process.

Port-au-Prince (Haiti) Sietchiping (2008)



Social justice, urban renewal and development, the provision of decent dwellings-and healthy conditions for the people can only be achieved if land is used in the interests of society as a whole [] Public control of land use is therefore indispensable to its protection as an asset and the achievement of the long-term objectives of human settlement policies and strategies. To exercise such control effectively, public authorities require detailed knowledge of the current patterns of use and tenure of land; appropriate legislation defining the boundaries of individual rights and public interest; and suitable instruments for assessing the value of land and transferring to the community, inter alia through taxation, the unearned increment resulting from changes in use, or public investment or decisions, or due to the general growth of the community [] Taxation should not be seen only as a source of revenue for the community but also as a powerful tool to encourage development of desirable locations, to exercise a controlling effect on the land market and to redistribute to the public at large the benefits of the unearned increase in land values. Vancouver Action Plan, 1976

In this context, the UN-Habitat Warsaw Office was established in October 2006 with the support of the Government of Poland to further operational activities in Central, Eastern and South-Eastern Europe in order to effectively address human settlement concerns in the region. In 2007, the UN-Habitat Warsaw Office convened two special ministerial-level Advisory Council meetings which offered a platform for enhanced cooperation and knowledge-sharing and a mechanism to keep housing and urban management challenges high on the agenda. Both Advisory Council meetings demonstrated the need for exchanges at the regional level, including on land administration systems, and recommended to the Warsaw Office to further support the dissemination of concepts, tools, and relevant experiences for the region. The Conference on Financing affordable housing and infrastructure in cities: towards innovative land and property taxation was organised in response to that request. The Conference was organised together with the Global Land Tool Network (GLTN), as part of its mandate to improve the general dissemination of knowledge on land, improve and develop pro poor land management and land tenure tools, contribute to poverty alleviation and the MDGs through land reform, improved land management and security of tenure. The Network approaches land and related development objectives through consultations, knowledge exchange and cooperation at the global, regional and national levels, while tool development and documentation are handled at the national and local levels in various participating countries. Theproject goals of the Global Land Tool Network focus on the development of pro poor, gendered and large scale land tools. Once identified and sufficiently supported, those land tools will unlock current development obstacles and enhance delivery of the MDGs. Land Value Capture is one of the five core themes in the land sector that the Network and its partners have identified.


Land and property taxation is the practice of generating local and/or state revenue from land and property holders or users. A well-managed land and property taxation can benefit low-income groups via i.e. cross subsidies in infrastructure, services, affordable housing, land provision, etc. Without land and property tax there is a vast amount of speculation on the land and housing market, which pushes the prices sky high and makes them unaffordable for low-income earners in cities. This is especially important for Central, Eastern and SouthEastern Europe, where many countries, with economies in transition, have recently initiated land and property taxation policies and instruments. At the same time, several countries in the region are committed to improving and integrating their housing and urban planning and management. Land and property taxation has taken the central stage in the countries of Eastern Europe, particularly those transitioning to market-oriented economies with private ownership. In the region, new/innovative and varied approaches to land and property taxation policies, reforms and instruments have been experimented with for a range of purposes, including revenue generation to finance urban infrastructure and development, support decentralization, ensure affordable housing, maintain urban infrastructures and investments. Those innovations in land property taxation should be documented for knowledge-sharing and lesson-learning, especially with a view to improving urban land and property management.

The Vancouver Action Plan for human settlements contains 64 Recommendations for National Action. It was approved at the United Nations Conference on Human Settlements (first Habitat Conference), in Vancouver, Canada, in June 1976.

The Warsaw Office organizes international conferences, publications and is responsible for managing projects that assist central and local governments in the region.  The GLTN originated in response to requests made by Member States and local communities world-wide to the United Nations Human Settlements Programme (UN-HABITAT), who initiated the network in cooperation with the Swedish International Development Cooperation Agency (Sida), the Norwegian Ministry of Foreign Affairs and the World Bank, in 2006. The GLTN has developed a global partnership on land issues, pulling together global partners as well as many individual members. Those partners include international networks of civil society, International Finance Institutions, international research and training institutions, donors and professional bodies. The GLTN Secretariat is handled by UN-Habitat.  Millennium Development Goals (MDG) number 7 (on the environment and slums), number 3 (relating to womens land, housing and property rights) and number 1 (on food security).  The five core themes of GLTN are: (1) Land right, records and registration, (2)Land use planning, (3) Land management, administration and information, (3) Land law and enforcement, and (5) Land Value Capture.


The call for papers pertaining to three thematic areas was launched in early 2009. More than fifty abstracts were received addressing (1) land and property taxation policies, legal and institutional frameworks, (2) land and property taxation as a means to provide affordable housing, serviced land and infrastructure (3) tools for operationalising land and property taxation and lessons for implementation. Eighteen contributions were preselected and related papers commented on by the Review Committee. Seventeen papers were finally selected for presentation at the Warsaw Conference.

partnership to address land reform issues and to assist Member States at a global level in implementing land policies that are pro-poor, gender sensitive and to scale. While the work of GLTN partners is still relatively new, it has already made important contributions, such as recognition of the need to move beyond titling toward promoting a range of land rights and placing gender at the centre of the global land agenda. As an attempt to create a comprehensive global focus to move the land agenda forward, the GLTN strongly promotes dialogue and debates among partners with the aim to further share knowledge and experiences, document and disseminate innovative land management tools. She said that the Conference would surely constitute a great opportunity to identify and discuss a range of innovative land and property taxation tools and, and also to enrich the work undertaken by the GLTN partners on Land Value Capture (and land taxation, in general), one of the five core themes of the GLTN. H.E. M. Grabowski, the Undersecretary of State at the Polish Ministry of Finance welcomed that initiative as a way to exchange good practises and stimulate innovative solutions. He stated that changes presently affecting current real estate taxes in Poland would require further changes in the whole taxation system and confirmed the Governments strong interest in introducing new methods of financing sustainable urban development. He emphasised that the debate over land and property taxation had been ongoing in Poland for the best part of the last two decades. It has not ended and Conferences such as this one still have an opportunity to make a real impact on long-term outcomes. H.E. O. Dziekon ski, the Undersecretary of State at the Polish Ministry of Infrastructure, explained that the Polish Government was currently in the process of rethinking its housing and urban planning policies, of which the development of sustainable and affordable infrastructure was a key element. In this context, it becomes crucial to determine who should contribute to the development of new infrastructure and its maintenance: beneficiaries, central authorities, local authorities, etc., and how. This Forum may provide valuable inputs into the options currently under discussion in Poland. The minister hoped that the deliberations and outcomes of the Conference would make a contribution to the efforts of the Ministry of Infrastructures working group on financing urban development, which had recently been created. He stressed that several members of that group together with civil servants from the ministry were participating in the Conference.

UN-Habitat Warsaw Office (2009)


The Conference brought together over 60 participants from around the World, representing the academic/ research sector; central and local authorities; NonGovernmental Organizations, the private sector as well as international cooperation organizations. The list of participants is included in annex 2.

Opening of the Conference

The Conference was opened with welcoming remarks by Krzysztof Mularczyk, Director of the Warsaw Office of UN-Habitat. He presented briefly the scope of activities of UN-Habitat in the region and stressed the role of UN-Habitat in collecting and analyzing the lessons learned from successful experiences in Poland and other countries, and in documenting and disseminating the examples of good practice. He stressed that finance was the key and innovation was a must, if progress was to be made on urban infrastructure and affordable housing. In that context, he said that the Conference would certainly be a step forward in experience and knowledge-sharing on land and property tax and sustainable urban development in the region and beyond. He also repeated his acknowledgement of the support the GLTN had provided in sponsoring and co-organizing the Conference, and commended the Government of Poland for having patronised the event. He hoped that the Conference would be used as a forum for a very diverse and open debate. Clarissa Augustinus, Chief, Land, Tenure and Property Administration Section/ GLTN, UN-Habitat, remarked that the GLTN was established in 2006 with the support of the Governments of Norway and Sweden as a global

Objectives of the Conference

Remy Sietchiping, Land Tenure and Property Administration Section/GLTN, UN-Habitat, introduced the objectives of the Conference, as follows:  To share experiences and innovative practices on land management and land and property tax approaches/ tools and its contribution to financing of affordable housing, serviced land and infrastructure.


Furthermore, the introductory session was an opportunity to summarize and share participants expectations from the Conference. Recurrent expectations are highlighted in Box 1.
UN-Habitat Warsaw Office (2009)

BOX 1. Participants expectations at a glance  To share knowledge, experiences and innovative practices in Central and Eastern European countries and beyond and to compare solutions.  To learn and have a better understanding of various opportunities/ instruments/ tools to finance affordable housing and infrastructure.  To get acquainted with approaches to reconciling social and market aspects.  To better comprehend the role of taxation in redistribution of resources.  To network and initiate new collaborative actions and partnerships. To get ideas for local actions. To agree on a common agenda. To debate for and against land (value) taxation.

 To debate and learn from each other about various realities, approaches and options/ solutions.  To generate further networking among participants and the countries represented.  To draw key lessons on what works/ what does not work and to map the way forward accordingly. Participants were also briefed on the programme of work:  Three main thematic sessions focused around presentations and discussion, respectively on: - Land and property taxation: policy, legal and institutional frameworks. - Land and property taxation: practices and countries experiences. - Land and property taxation: implementation and tools.  One plenary discussion aimed at outlining the main lessons that emerged from the two-day presentation and discussion as well as a possible way forward.

Structure of the report

The report is organized into four chapters, e.g. the first three chapters recapitulate the presentations and discussions held during thematic sessions and the fourth chapter underlines main conclusions and recommendations for the way forward, produced by the Conference.

Before the start of the conference, participants had been asked to list (up to three) their expectations from the conference.


Riga (Latvia) Korysheva (2009)

Part I



Housing sector reform in Central and Eastern Europe: regulatory framework and policy development
Claudio Acioly

With the shift to an open market economy initiated in 1989, the role and responsibility of the post-communist state evolved with regard to infrastructure and housing provision. Large scale privatisation and the retreat of the state have especially had a significant impact on housing stocks. Shifts of ownership, unaccompanied by a transformation of policy and institutional mechanisms, have left the existing housing stocks in poor repair. In most transitional countries, the housing sector faces severe challenges, including with regard to safety, quantity and liveability; however the gravity of the problem varies from country to country. Acioly provided an insight into his work with governments of transitional countries, with regard to policies prevalent under the new regime. He examines the legal, regulatory, institutional and policy environments, and how they have adapted to the new context. A call is made for introducing some form of property tax and homeownership maintenance fees to finance maintenance of the housing stocks.

FIGURE 2. Multi-Family high-rise accommodation

Source: Acioly, 2009

Understanding the Housing Sector

Institutional, legal and regulatory frameworks, within the housing sector, work together to form a specific housing market context. The context of housing policy is thus affected by numerous social, economic and political factors which impact the supply and demand of housing stocks and hence their affordability (Figure1). This process entails an interplay of labour, finance, infrastructure, land and building materials. The context of housing in transitional countries is unique, especially due to large scale changes with
FIGURE 1. The context of housing policy

The Context of Housing Policy

Affected by availability of:
land Infrastructure Building Materials - BM Organisation Building Industry Skilled & Productive Labour Self-reliance BM production

regard to ownership, the role of the state and macroeconomic conditions. There are three main sectors pertaining to housing, that need to be mentioned; these are: the ownership sector, the private rental sector and the public rental sector; all have undergone major transformations in the last two decades; in many instances, those changes are still on-going, often to the detriment of the condition of housing stocks. Acioly underlined the importance of the public rental sector in the context of transitional countries, which has seen an erosion of its role on the housing market. In most cases, governments stimulate homeownership, and existing housing stocks are often put to privatisation. The newly emerged ownership sector demands new responsibilities for homeowners who are required to contribute to the maintenance of housing stocks. Property maintenance companies are often hired to fulfil this new role. In the case of rental sectors, this process is more challenging; here housing associations play an important role, often with poor results.

Affected by:
Demographic conditions Rate of urbanisation New household formation Property rights regime Housing Finance Fiscal Policies Subsidies



Housing stocks: owner vs. renter occupancy

affected by regulatory, institutional & policy frameworks

Macro-economic conditions

Claudio Acioly Jr. / UN-HABITAT


Source: Acioly, 2009

Multi-family high rise housing, known as superblocks (Figure 2), the product of modernist ideas in architecture and urban planning, are an important form of housing in Central and Eastern European (further CEE) countries. In CEE countries 53% of housing stocks are multi-family buildings and 29% are high rises, compared to the EU15 countries, where these figures stand at 45% and 14%, respectively. In Hungary, Poland, Slovakia, around 20% of housing stocks are made up of multi-family


PART I Land and property taxation: policy, legal and institutional frameworks

high-rise housing, with Spain and Ukraine leading at almost 30%. As mentioned earlier, after the 1989 economic reforms, ownership in CEE countries underwent significant changes. Table 1 shows some international comparative research data regarding housing occupancy. Since 1989, 85% of Eastern European housing stocks have been owner occupied. Latvia is a case in point of this transformation; here owner occupied accommodation rose from 19% pre-1989 to 79% after the open-market policy was launched. Currently, the private sector accounts for an average of 95% of housing stocks in the CEE countries; this means virtually no public sector involvement in the provision of housing (Table 2). This fast-paced change has brought many challenges.

TABLE 2. Privatisation in CEE % of stock privatised 19902004 Czech R Estonia Hungary Latvia Lithuania Poland Slovakia Slovenia Bulgaria Romania TOTAL Source: Acioly, 2009 12 70 15 53 58 18 31 23 2 27 23 % private sector 2004 83 96 96 84 97 92 96 94 95 97 95 % public sector 2004 17 4 4 16 3 8 4 6 4 3 5

Understanding the housing challenge: maintenance and management

According to Acioly, the housing problem has its roots in fast-paced transformations and results from legal difficulties, management shortcomings or simply bad policy. Currently, in Europe there is a housing backlog valued at 4 trillion Euros; it is estimated that it may take between 40 to 100 years to solve. Due to such a high demand, it is very likely that high rise housing will have an important function in the years to come. Generally, owners have little knowledge about their rights and obligations in relation to their property; there is a huge degree of ignorance about regulatory frameworks. Consequently, the repair and maintenance of buildings is often unattended to, contributing to their dilapidation and deterioration of the living environment. After the fall of the communist regime, an emphasis has been put on owners participation in housing stock management; however, the novelty of this concept and lack of clear understanding of what it entails, has meant that management is often fragmented and inefficient, with owners facing difficultly with organizing collective responsibility. There have been no practical arrangements put in place to support owners to manage their flats, consequently they are unable to fulfill their obligations as owners; at least not in the same sense that homeowners in western capitalist economies contribute to housing management. Very often, a large proportion of homeowners have little disposable income to contribute to management needs. According to Acioly, the poor financial situation of owners and the need for investment in their properties will not be sustainable for the housing stocks in the long term.
TABLE 1. Comparative statistics EU15 % owner occupied <1989 % owner occupied, present % private rental, present % public/social rental, present Source: Acioly, 2009 58% 62% 14% 10% NL 45% 54% 9% 37%

The strategy: multi-sector approach

The resolution of the housing problem will demand interaction between the central government, financial institutions, development corporations, municipal governments, NGOs and the private sector, which should seek to engage with homeowners through homeowners associations. Acioly underlined the important role that the government needs to play; it should set the rules but at the same time it must have the capacity to enforce the law and a strategy to make it work. Thestate and municipalities should create an environment in which communal ownership of housing should be treated as a private sector, with the owners having clear rights and obligations. Thestate should have the role of an enabler, and if owners are unable to meet their obligations, then they should be offered an alternative. This essentially means that maintenance of owner occupied housing stocks should be the responsibility of owners; however, governments should help facilitate the process.

Conclusion and relevance to affordable housing

Acioly presented a comprehensive picture of the state of housing stocks in Central and Eastern Europe after the post 1989 economic transformations. Thetransition to a new regime of homeownership brings along new responsibilities for homeowners, who need to partake in management of their properties through homeowners associations, housing agencies and property management companies. Nevertheless, homeowners do not always

EU10 47% 70% 5% 8%

EE 85% 10% 3%

LV 19% 79% 3% 16%

LT 29% 87% 8% 3%



fulfil their obligations, which leads to deterioration of housing stocks. Even though the problem of housing management is endemic in post-communist countries, there are similar problems in more mature capitalist economies; for instance, the formation of ghettos, in the French banlieux. Nevertheless, the essence of the Central and Eastern European problem lies in the shortcomings

of its fiscal, legislative and regulatory capacity after the ownership shift. To solve the problem an interaction between multiple players is needed, which, according to the presenter, requires a strong enabling state. However, the housing problem will continue to pose a challenge for CEE countries, where huge housing backlogs have accrued over the years.


PART I Land and property taxation: policy, legal and institutional frameworks

Can the unearned increment in land values be harnessed to supply affordable housing?
Rachelle Alterman

Affordable housing is increasingly becoming a gaping hole. Alterman emphasised the growing problem of exclusion and lack of housing affordability, which is persistent not only in developing countries but also very visible in developed economies, such as the United States. It is thus thought that the unearned increment, the rise in land values, could be used to finance affordable housing and other public services and infrastructure. Alterman stresses the importance of the rationales for capturing value, ultimately leading to a specific set of policies depending on the institutional environment. Various direct and indirect value capture mechanisms are analysed. Even though the idea of land value capture is not new, few countries have adopted it in its pure form; since its original conception by Henry George, the idea of land value taxation has morphed into various degrees and forms of the original concept. Experimentation with different instruments is still at its embryonic stage. Alterman analyzes the U.K, represented as the worlds laboratory with regard to taxation policies.

Theconcepts are often confused; however, they need to be understood as two different entities as they arise from different rationales.
Rationales for value capture

Direct value capture mechanisms refer to an increase in the value of land of private owners through actions undertaken by public authorities or by the general community. The rationale for capture is thus the fact that the increase in value was not caused personally by an individual and hence should be shared with a broader community. That type of mechanism has generally been slow to catch on.
Direct Value Capture mechanisms  B etterment (in contrast to compensation, aggravation): the rise in land values caused directly by a planning or public works decision. Used in UK and former colonies. Unearned increment: any rise in land values,  whether due to public decisions or to the general economy; stressing the fact that the rise is not due to landowners own initiatives and efforts. Used internationally. Plus-value: or value increase as above, but a more ideologically neutral term. Used internationally. Windfalls (in contrast to wipe-outs): Coined in the  USA.  Givings (in contrast to takings): an esoteric take of the reverse US concept. Source: based on Alterman 2009

Affordable Housing: The gaping hole

Affordable housing resources have decreased substantially in recent years; Alterman linked this to:  The retreat of governments and reduction of public finance. Reluctance of citizens to pay higher taxes.  Privatisation or semi-privatisation of existing social public housing stocks.  Regulation which has caused an erosion of the existing affordable housing stocks.  Regeneration of cities with the omission of affordable housing. Exclusionary zoning and gated communities. There is an ensuing need to research instruments other than direct taxes to finance or incentivize affordable housing. Such instruments are generally associated with planning regulation and land policy.

The unearned increment: Direct and Indirect Value Capture mechanisms

The issue of dealing with changes in land values caused by planning and zoning is problematic. Thequestion is to whom should the added increment go to and how heavily it should be taxed. In the case of a value decrease, should landowners be compensated? These issues remain in policy planning today. There are two types of value capture mechanisms direct and indirect.

Indirect value capture mechanisms are used increasingly by various countries and local governments. They result from different legal and policy environments which generally make the use of direct value capture mechanisms problematic. Therationales for these capture mechanisms also tend to differ from the traditional rationales. Alterman described those alternative rationales as concentrated on the anticipated impacts of development. These might include the need to help recover development costs that would otherwise be imposed on public budget; however the local authority should not exact mitigation from the developer in the case of windfalls, as this would constitute a direct capture mechanism. These capture mechanisms are usually more complex and less well defined. Alterman referred to these as developer obligations.


Indirect value capture concept and instruments   Developer obligations (exactions (USA), planning obligations, planning gain (UK), participation (France) cost recovery (Netherlands): variety of mechanisms used by planning authorities to transfer some or all of the burden of supplying public services, amenities, or environmental mitigation obligations, from the public authority to the developer.  Infrastructure levy: the oldest type of obligations based on betterment rationale; limited to cost of construction.  Impact fees or linkage: Preset levels and rules of developer obligations.  Developer agreements: Discretionary obligations negotiated case by case at various levels and for a variety of purposes.  Incentive zoning: (USA) Pre-set two-tier system as an incentive for developers to provide a specific public good e.g. Affordable Housing. Transfer of Development Rights: based on the  ability to transfer the plus value of one development to another so as to compensate those whos planning and development rights have been reduced. However, not usually suited for affordable housing. Source: based on Alterman 2009

moment it is inoperative as it needs further revision. In general, capital gains tax was mentioned as a common way of capturing the unearned increment, existing in the UK, the US and the Netherlands. The researcher also noted a distinctive rise in the use of indirect mechanisms, such as impact fees, linkage, development agreements and incentive zoning. The UK can be regarded as a world laboratory with regard to experimentation with value capture instruments. Aplethora of different modes have been tested, however, they were often removed or changed with the advent of a new government. The rates for recoupment have varied greatly, reaching as high as 100% in the Post War 1947 Act; however they never continued for long enough to enable good evaluation of their benefits. Since 1980, there has been a resounding no to direct betterment capture in the UK. The chronological account of the betterment capture mechanisms illustrates how a system wrought with political and ideological complication can lead to an ultimate failure of this type of tax application.

Tentative lessons, conclusions and relevance to affordable housing

Additional rationales for the capture of the unearned increment listed by Alterman include:  Reduction of the (political) temptation to misuse planning decisions to enrich individuals.  Reduction of land speculation by reducing its gains.  Increasing the trust in governments planning decisions.  Reduction of a growing public objection to new development (affordable housing in particular).  Provision of a financial resource to compensate those whose property values decline due to planning.

Capture mechanisms in practice

The difficulty in designing and implementing direct unearned increment instruments arises from multiple dimensions that need to be considered. Firstly, the undertaking needs to be anchored legally. Additionally, thetaxable cause that created the rise needs to be defined as well as its incidence point. Furthermore the method of payment and the plus value rate need to be agreed upon. This brings the problem of who received the proceeds, and how this revenue is used. Alterman conducted a twelve country review of direct value-plus capture via the use of betterment taxes. It was found that the concept of betterment taxes still rests in theory rather than practice. The study revealed that the mechanism has only been fully operative in Israel, where the betterment level is high. Spain was pointed out as a country with a partial low-rate quasi-betterment tax. In Poland the betterment tax is newly introduced and at the

The analysis of the cross-country study provides some tentative lessons and conclusions, which can be used directly in relation to affordable housing. First and foremost, sustainable political support is essential in order to implement the capture mechanism, especially for its long lifespan. Implementation of a direct mechanism is difficult as it requires national legislation, which is a politically charged issue, especially if the debate has high public exposure. Additionally, a purely direct tax has high administrative costs. With regard to the use of proceeds from captured value, affordable housing is only one of the competing needs. Affordable housing is a contentious issue; part of the problem is that affordable housing is disliked due to its negative connotation and thus more difficult to obtain sustained political support as opposed to other public services. The lack of flexibility of the current national laws makes it more difficult to cater to the changing needs of affordable housing. Due to their more flexible nature, indirect instruments can perhaps offer an alternative means of financing affordable housing; their level can be adjusted according to needs. They can indirectly retrieve the plus-value. Nevertheless, the introduction of such instruments is not straightforward; it requires a high level of skill from local government professionals. In order to make it sustainable, a level of trust in the government and low levels of corruption are necessary. Concluding, targeting affordable housing is more challenging than targeting traditional public services. Theinstruments that have been reviewed point to the need of periodic evaluation in order to suit the political and social environment. This is true of both developing and developed nations.

PART I Land and property taxation: policy, legal and institutional frameworks

Taxing Public Leasehold Land in Transitional Economies

Yu-Hung Hong

The revenue generated from taxing land and buildings is becoming an increasingly important source of finance for economies in transition. Nevertheless, due to specificities of land ownership, transitional economies face a unique context. This makes it more difficult to implement western models of property taxation which generally rely on the premise of private ownership of land. In order to overcome this obstacle Hong suggested three solutions. To simply impose a land tax on publicly-owned land and treat it like private land could distort the newly emerging privately-owned real estate market. In this context, Hong analysed the appropriateness of those solutions by asking three main questions: 1. To what extent would the idea of imposing a property tax on land that is not private property be acceptable to would-be taxpayers in transitional economies? 2. When interests in land are shared between a government lessor and a lessee under a public leasehold system, who shoulders the final economic burden of the property tax? 3. When a uniform tax is imposed on both land and buildings, to what extent would the varied durations of land leases complicate the process of valuing property for tax purposes? Hongs account provided a context-specific analysis of how taxation systems with regard to leaseholds have the potential to contribute toward future affordable housing and public infrastructure development.

it might yield. The most important characteristics are the nature of the lease term and the lease value. With the onset of a market economy, the practicality of the current system is doubtful as payment for the use of land is generally close to nil. However, due to the fact that land is state-owned under leasehold systems, theacceptability of imposing a tax on land that is not privately-owned and for which lessees have already paid, is in question.


Hong pointed to the fact that applying a tax to nonprivate land tenure arrangements is a complex issue. Would-be taxpayers do not feel that they should pay for land that they do not own, and compliance problems might ensue. Hence three solutions are being put forward:
Privatization of land

Understanding Leaseholds

The main premise of leasehold systems is the fact that land is generally owned by the state. It has been thought that a taxation system could be devised to raise funds to finance services and infrastructure. Due to the heterogeneity of leasehold systems, any alteration or implementation of a taxation system needs to carefully consider individual characteristics of leaseholds because of the varying results
A leasehold is a type of property tenureship. It can be understood as a bundle of rights, whereby a party can buy the rights to the land: the right to transfer, develop or lease the land. Unlike a freehold, the right to the land is set for a certain amount of time. Lease durations are usually between 50 and 99 years. Land Premium (leasing fee): a lump sum payment made to the government, called a Premium System. Annual Land Rent: annual land rent fees called a Land Rent System.

If land is privatised then the issue of ownership as an obstacle to the imposition of land taxation would be overcome. With the embracement of the open doors policy, it was thought that countries would implement a dual system of ownership, which would be phased out as land ownership becomes privatised. Nevertheless, due to the fact that land rent is usually cheaper than property tax, this transformation has been rather slow. The government has to raise taxes to increase its property tax base, which discourages would-be property owners from acquiring property. The social and political importance of communal land tenure has also been an obstacle, privatisation would be seen as acting against national ideologies and customs.
Treatment of Public leasehold rights as private property

In order to overcome the objections to taxing public leaseholds, it has been suggested that public leasehold rights be taxed. However, this approach would require a constitutional amendment, which is difficult to obtain due to legal, political and social circumstances; it is an especially contentious issue in post-communist countries where the public-private debate is highly charged. Future taxpayers and public officials might mistakenly assume that on account of paying property tax, their leasehold is actually a freehold and that in reality they are the de facto land owners. Education is thus crucial in order not to cause further complications.
Labeling land and building taxes separately

Hong warned that the name on the label needs to be correct. This is because it determines the public reaction


which is of political importance. In the case where the owner of land and a building is not that same, it is important to differentiate between the two taxesproperty tax on buildings and use tax on land. This would mean having a tax on land use rights and another on improvements. However, the valuation process of the two entities could be arduous.

Economic Incidence

In any tax system it is crucial to understand who bears the tax burden. Hong pointed out that in the short run, if leasehold rights are fixed it would be the government lessor who bears the burden of tax; this is because future tax liabilities of land users would decrease the demand for land rights and thus decrease the lease revenue. However, if capitalisation of tax payments does take place, it would result in inter-departmental shifts in power (Land bureau tax agency) and in a change in fiscal relationships within government structures. Despite the decreased lease revenue created by land tax, if capitalisation of public expenditures is turned into increased land values then the decrease would be compensated for. However, it is crucial that the revenue be used to fund services and infrastructure in order to boost the demand. Once the net balance of capitalisation is zero, the revenue generated from land tax will no longer have a detrimental impact on lease income.

For long-production cycles a long-term lease is preferable, this is because it is in the economic interest of the owner to invest heavily in the production cycle, which results in an increased land value. On the other hand, if the land lease were short the owner would limit his investment due to the possibility of having to relocate which would be financially burdensome and which consequently would decrease the land value. Conversely, if the production cycle is short then a short-term lease is probably more profitable and would result in higher land value. Such intricacies need to be understood for purposes of mass valuation techniques, however, this field is still severely under-researched. Another method to appraise leaseholds is based on rental value. However, one must be aware of the discrepancies that could exist between fair market value and contractual rent. The contractual rental price may be significantly below the market price for rental of the same property, if not adjusted periodically. In transitional countries, where rental charges are particularly low, it would be difficult to overcome the unwillingness of taxpayers who might put up a legal and political fight.

Policy Implications and relevance to affordable housing

Tax assessment

Property valuation is an important issue that needs to be considered when implementing a tax system, especially in a public leasehold system. Nevertheless, tax assessment is a complex process and it is difficult to obtain accurate values; Hong pointed out several factors that need to be taken into account. The value of land depends on the lease term and conditions as well as the nature of activity taking place on the site. Hong emphasized the duration of the lease as one of the most important factors.

Despite the above mentioned difficulties, property taxation in leasehold systems is still plausible in transitional countries. If a suitable taxation system is put in place it has a potential to be an important means of funding for services and infrastructure. Themethod applied (privatisation, treatment of property rights as private property or separation of taxation on land and building) depends on the context of each individual country. Assessment of leasehold value is an essential component of a workable tax system but it is one of the biggest hurdles to be overcome, and valuation techniques are still under-researched. Theimportant point to be made is that the design and implementation of a property tax system needs to go hand in hand with land reforms.


PART I Land and property taxation: policy, legal and institutional frameworks

Land Value Tax as an Investment Mechanism for Public Transport Assets

Francesca Medda

The provision of efficient and sustainable transport systems is increasingly important in countries experiencing urban growth. This need is especially pressing in megacities of the developing world, in which automobiles remain the dominant form of transportation. This has, directly and indirectly, resulted in pollution, growth of slum settlements, crime and congestion. The provision of mass transit systems, which act as a public good due to their carrying capacity and service competitiveness, such as an underground transport system (metro), is expensive. Hence, there is a need to look into innovative systems of financing transportation; this requires a conceptual shift in funding mechanisms in order to encourage investor confidence, thus stimulating investment and overcoming institutional barriers. Medda suggested two types of financial tools that could be used to fund public transport: 1) Land value capture taxation, 2) Tax based on accessibility. The motivation behind Meddas research is the realisation that there is a shortage of funds going to public transport, with international agencies, such as the World Bank indirectly supporting the use of private automobiles. This is reflected, for instance, in the fact that between 2001 2006, 80% of investment in the transport sector by the International Bank for Reconstruction and Development and the International Development Association focused on road sector projects. In addition, 58% of urban projects concentrated on roads and streets.

recovery is thus complicated, especially in the case of social infrastructure; the appropriate mechanisms of cost recovery will depend upon the urban context. The different mechanisms of capturing land value in the context of mass transit systems, according to Medda, are betterment tax, tax finance increment (TIF) and joint development mechanisms. Box 2 provides practical examples of the use of each of these mechanisms.
Betterment tax

This capture mechanism is seen as a simple and efficient levy meant to recover the increased value of private assets. Betterment tax captures the increased value of land due to increased accessibility, reduced pollution and congestion directly resulting from investment in transport. The added benefit of this tax is that it reduces land speculation, leading to higher density urban development. The negative aspects include the evaluation of impacts, difficult collection of taxes due to incomplete registration and displacement of the assetrich and the cash-poor.
Tax finance increment (TIF)

Land value capture and accessibility

The main idea behind land value capture is that an increased land value created due to transport investment could be captured and used to finance transport systems. The main components of land value capitalisation due to accessibility are: access to urban externalities (natural amenities), social infrastructure (public services, school etc.) and development infrastructure (highways, sewerage systems and water supply) (Figure 3). The provision of a transport system will have a varied impact on access to social and development infrastructure. Cost
FIGURE 3. Structure of the capitalised land value of accessibility

This capture mechanism is essentially a development incentive package. It is used to capture a portion of the absolute value added to a discretely defined tax base via an increased tax rate for agents benefiting from the original investment. In this way a portion of the private benefit accrued from a public investment can be recovered by the investing authority and used to finance the original expenditure. Thus, the public investment can be met with a repayment which targets more justly those who have directly benefited from it. This will usually take the form of increased property, land or commercial values as a result of public investment, which can then be recovered by the local authority. Additionally, there is an inherent implication that the investment by the local authority would be reduced if the rate of return of the developer exceeds a certain target. Nevertheless, the TIF is controversial due to the fact that it impacts upon district funding by the government and thus financing through TIF often increases taxes.

Capitalised Land Value of Accessibility

Source: Medda (2009)

Capitalised Land Value of Access to Urban Externalities

Capitalised Land Value of Access to Social Infrastructure

Capitalised Land Value of Access to Development Infrastructure



BOX 2. Examples of mechanisms for capturing land value in the context of mass transit systems Betterment Tax: Hong Kong metro system The case of the Hong Kong metro is a well-known example of using betterment tax to finance public infrastructure. Theland in station areas is leased to the MTR Corporation by the Hong Kong government under different restrictions. Theland can be developed and is usually leased for a renewable period of 50 years. The betterment tax is based on the full market value. The amount of revenue accumulated by MTR Corporation from non-fares accounts for 35% of the total revenue. These are proceeds from land rent (direct betterment tax), station commercial and related businesses, such as advertisement (Indirect betterment tax) and other public transport investments. Tax Increment Finance (TIF): Arlington Heights, Chicago In Illinois, the lifespan of a TIF is about 23 years. Arlington Heights is one of Chicago areas 130 TIF suburbs. It used to be a small residential suburb with only 150 inhabitants in 1985, however it redeveloped its downtown and increased the population 10-fold to 1500 residents as a result of a sound commuter rail station investment that used TIF as a funding source. The value of the property in the area increased sevenfold. Joint Development Mechanisms: Bus Rapid Transit (BRT) in Brisbane The Mater Hill station, part of Brisbanes BRT system, is a well known case of a joint development project. The bus transfer station has had a hospital built on top of it. The station thus has multiple uses; it is used for commercial activities of the private sector but it also forms part of the public service. Nevertheless, the use of stations as places for commercial activities has not been welcomed by all authorities. There is fear that the systems reputation might be tainted by advertisements and degradation of the physical environment.

Joint development mechanisms (JDMs)

This mechanism relies on the cooperation between public and private sectors. The profitability of an investment is increased by encouraging property development in a given area. The advantage of this capture mechanism, as compared to the previous two, is that there is no need to differentiate between direct and indirect impacts since construction costs are shared. Both the private and public sectors are winners- increased accessibility favours the private developer and the public sector is aided in the financing of the project. JDMs are straightforward in implementation since they do not use taxation mechanisms.

tax rate in a district with greater accessibility would hence be lower than in a district with lower accessibility. Tax revenue can be earmarked for transport investment in areas of low accessibility, which have higher tax rates.

Policy Outlook and relevance to urban infrastructure (transport)

Taxes based on accessibility

The increase and improvement in accessibility are often seen as the main priorities of transport investments. If this is the case, then there is a need to consider the different levels of accessibility that are achieved. Accessibility should, however, not be confused with mobility. Transport accessibility should be treated as a merit good, meaning that a greater socio-economic view should be taken into consideration in the decisionmaking process. Arailway will have a greater merit good than a road because it is more accessible to all than aroad system, which requires a automobile. There is thus a greater equality of accessibility. A proactive transport policy approach would encourage residents to settle in areas closer to a transport system via the design of a differentiated accessibility-based tax. The

The development of public transport systems suffers aconstant shortage of funds; however, it is increasingly important to cater to mobility needs of populations. Well-designed transport investments not only increase accessibility but have the added value of decreasing congestion and pollution. Both the mechanisms, land capture taxation and accessibility taxation, despite having different conceptual foundations, have the potential of becoming viable tools for financing investments, especially in times of economic turmoil. They provide a sound means due to their flexibility and adaptability and creation of incentive structures. An important pre-requisite for introducing land value capture mechanisms is to be aware of the profitability of the transport investment. Ultimately, in the context of sound sustainable development, Medda suggested that it would be important for public transport and land development planning to forge closer ties. Meddas account provided solutions to increase accessibility via sustainable and appropriate transport investment, which still remains a major problem, especially for poorer citizens who live on fringes of settlements. Agood transport system would thus offer them more opportunities and increase proximity to the job market.


PART I Land and property taxation: policy, legal and institutional frameworks

An increase in the value of land as a prerequisite for imposing adjacency levies a critical analysis
Mirosaw Gdesz

As a lawyer by profession, Gdesz offered the case of Polands land taxation system, which is based on the ad valorem formula. He provided a chronological account of the evolution of infrastructure charges from 1929 to 1998, pointing out different legislative influences on the taxation system and analysed how it could impact the means of financing public infrastructure. The current type of regulation is assessed in order to understand whether it provides a suitable means of engaging private owners and developers for purposes of financing public infrastructure. The main argument provided by Gdesz was the need to impose a new type of infrastructure fee, the implementation of which would also entail giving more power to local authorities. This is difficult since local authorities, still recuperating from decentralisation which resulted in significant transformations and shifts in power, do not have the capacity to deal with legal and administrative challenges that have arisen. With the current system in place, Gdesz argued that having affordable housing in Poland remains a challenge. In order to analyse the suitability of the adjacency levy as auseful means of financing public infrastructure by private owners and developers, it is important to understand how it is calculated and how it has evolved in the Polish system. An adjacency levy is imposed on property owners when there is an increase in the value of land. This may occur as a result of provision of public services, when a plot is subdivided or when plots merge. Theevolution of adjacency levies is shown in Box 3. Due to its impact on infrastructure development, Gdesz labelled 1990 as the most difficult year for Poland as it resulted in the prohibition of land dedication. In reality this means that people have to pay when they give their land to be used for infrastructure development.
BOX 3. A  chronological account of the history of Adjacency Levies in Poland 1929: Introduction of infrastructure fees (fixed tariff). 1990: Prohibition of compulsory land dedication as aresult of plan approval. 1991: Assessment revolution: the increase in value is introduced as a base for levies assessment. 1994: Introduction of planning gain levy. 1998: No further introduction of infrastructure type of adjacency levies (subdivision levies). Source: Based on Gdesz (2009)

Calculating adjacency levies: means and challenges

The increase in value of land is generally caused by development or improvement of local infrastructure; however, windfalls can also occur as a result of granting planning permissions to developers. Gdesz pointed out the three different types of levies that are often conflated: the planning gain levy, the subdivision adjacency levy and the new infrastructure adjacency levy. The demarcation between adjacency levies and planning gains/fees is difficult as isolating the increased value factor from other factors can be problematic. The increase in value of property due to infrastructure provision itself poses difficulties for local authorities as the linkage between the increased adjacency levies, resulting from the increase in property prices and the construction of e.g. a road, is not fully understood and accounted for.
Adjacency Levy: is a levy that is imposed on property owners when there is an increase in the value of land. This may occur as a result of provision of public services, when a plot is subdivided or when plots merge.

As it currently stands, when calculated, the adjacency levy should not exceed 50% of the property value increased as a result of infrastructure provision and should not exceed 30%, when property value increases due to parcel consolidation or subdivision. The decision on the levy rate is made by the mayor and the municipal council. However, calculating the increase in value is problematic and can be manipulated by assigning different degrees of importance to individual characteristics of the plot. This, in turn, may be used to benefit the interests of different stakeholders. Another problem is that the calculation is based on plot size, meaning that the rates that are used for calculation are the same in Warsaw and in rural areas of Poland. Thus, Gdesz proposed that other factors should be taken into account in the calculation. For instance, the character of the built environment as well as the plots location should be reflected in the calculation. These flaws in the current adjacency levy system in Poland undermine its usefulness as a mechanism to encourage developers contribution into public infrastructure financing. Based on his knowledge of Administrative Court rulings, Gdesz proposed elimination of adjacency levies as a percentage of the value of development. He further suggested that more discretion should be


given to local governments, who at the moment lack in power. A development agreement should thus lead to a compulsory levy. Adjacency levies and planning windfall levies, together making up an overall windfall tax, should ideally act as a means of cost recovery for the provision of infrastructure.

concentrated on public infrastructure specifically), he contributed to the general understanding of how adjacency levies in Poland can work both as a failure and an advantage as a means of financing public goods.

Ultimately, Gdesz asserted that the current regulation on assessing adjacency levies which is based on the increase in land value (ad valorem formula) is not an appropriate tool to ensure private owner and developer participation in the financing of public infrastructure. The methodology used to calculate the increase in value needs to be modified, hence Gdesz proposed a new type of infrastructure fees. While not addressing directly the provision of affordable housing (the presenter


Warsaw (Poland) Korysheva (2009)

Conclusion and relevance to urban infrastructure

PART I Land and property taxation: policy, legal and institutional frameworks

UNECE Working Party on Land Administration

Ariel Ivanier

The UNECE Working Party on Land Administration (WPLA) is part of the Environment, Housing, Land Management Division within the Office of the Executive Secretary. Itworks to provide guidelines and sustainable policy design at the national level to help overcome the most pressing land management challenges. Ivanier provided an outline of the WPLA findings with regard to land and real estate mass valuation systems in the UNECE region. The aim of the research was to provide summarised data on the legal and practical approaches employed in mass valuation for taxation purposes. Those findings could benefit governments and local administrators as well as real estate representatives involved in valuation. The overall findings suggest a need for increased partnerships between public and private entities if sound land administration for the purposes of sustainable development is to be achieved. Ultimately, it is necessary to disseminate the social and economic benefits of sound administration systems among the most vulnerable groups.

Study on Mass Valuation

The rationale of the study rested upon the need to enhance knowledge of mass valuation techniques which could be used by governments to administer property tax. Property valuation would ideally be done en masse. Statistical analysis would be performed systematically on real estate units. This would save time and keep the cost of implementation low. Currently, in the UNECE region, mass valuation in land and real estate systems tends to operate as either part of land administration or fiscal regimes. The methodology adopted for purposes of the study involved circulation of a questionnaire about systems of mass land and real estate valuation for tax purposes to all relevant authorities in the UNECE region. The aim was to increase the understanding of the current practices and the legislation involved. The countries that took part in the study included Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Cyprus, Denmark, Estonia, Finland, France, Georgia, Germany, Hungary, Iceland, Italy, Latvia, Lithuania, Malta, Netherlands, Norway, Romania, Russian Federation, Slovenia, Slovak Republic, Spain, Sweden, Switzerland, and United Kingdom (UK).

 72% of the countries reported that they adopted systems of mass valuation of land for taxation purposes.  14% of the countries reported that they were in the process of developing it.  Land administration authorities at the national level are usually those responsible for mass valuation.  From a historical perspective, mass valuation is a twentieth century phenomenon.  The main difference across the region was with understanding the term land; it was understood as either solely the surface of the earth but in most cases it also included improvements attached to it.  55% of the countries fund their valuation activities from the central budget.  In the majority of the countries re-evaluations are generally done every 45 years. Over half of the countries perform an indexation during each period.  41% of the countries make valuation data open to the public.  The data are also used to calculate transfer taxes and compensations related to land reform and consolidation.  The majority of the countries use the market value approach for valuation purposes.

Conclusion, policy outlook and relevance to urban infrastructure

WPLAs challenging goal is to achieve sound and sustainable land administration systems; this requires promotion of the security of tenure and calls for a need to modernise the cadastre and registration systems. Furthermore, the deepening and the expansion of real


The mass valuation study provided an interesting insight into the valuation techniques in the UNECE region, and the findings may potentially be used to learn and improve valuation systems within and outside of the region. Some of the findings of the study were the following:


UN-Habitat Warsaw Office (2009)


estate markets are considered necessary, along with the development of an effective network of public officials in the region, in order to overcome current land administration challenges. In the context of the ongoing world recession, there is an even greater need to create a more stable economic environment, which will most probably remain a priority for land administration in the years to come. If adequately developed, administration systems could ensure fair distribution of wealth through collection of taxes on land and real estate, which could subsequently

be used to finance public infrastructure and affordable housing. Alternatively, subsidies could be given out to the poorest socio-economic groups to help promote affordable housing. That is why accurate and reliable valuation for taxation purposes is a critical pre-requisite. Shared valuation standards are also useful for purposes of market transactions, equitable tax policies and mortgage access. TheWPLA thus emphasises the need for more research and knowledge exchange through capacity building activities and workshops, given that transparency and free access to information are fundamental principles of valuation systems.


PART I Land and property taxation: policy, legal and institutional frameworks

More than a tax: some ethical implications of land value taxation

Richard Lawrence Giles

Giles argued for higher land taxes for the purposes of financing public infrastructure and affordable housing. According to the presenter, the problem of shrinking funds is especially apparent in the current economic world recession. Drawing upon the work of Henry George, Giles explained how Georgist beliefs could be used as a remedy to defeat the current recession. As a starting point, it was stressed that if the fundamentals are wrong then the tools used to overcome the problems will also be wrong. As the first fundamental, a fiscal reform is proposed. However, weaved into the presentation was a constant reminder of the purpose of taxes; the need to address the link between progress in terms of poverty alleviation and the use of taxation, the bigger picture, which is often forgotten. Giles shone light on the ethical perspective of land value taxation, which should not be thought of solely in terms of a fiscal argument but should also be considered in moral dimensions. Subject to debate is thus the argument of whether land values are private or public. The evolution of land value taxation in New Zealand and Australia over the last century has been mapped, pointing out to the impact that it has had on issues such as speculation and equality and subsequently, access to housing.

Studying Australia, Giles asserted that the lack of LVT has resulted in a large increase in the price of land due to a greater demand for speculation. This has meant that house prices are on average equivalent to 8.5 times the household income in Australia and are largely classified as severely unaffordable in the majority of New Zealands markets. Box 4 explains the tax systems in both Australia and New Zealand. Figures 4 and 5 illustrate the chronic housing unaffordability by pointing to the growing gap

Graph 1

FIGURE 4. House prices and Fundamental

House Prices & Incomes

Source: Giles (2009) FIGURE 5. House prices, wages and inflation over time

Fiscal Measures: Land value taxation

Land value taxation (LVT) is a useful mechanism as it provides a positive feedback; the more that land value tax is used to reinvest in the community the more the land values rise; Its application enhances the tax base. A fiscal reform with regard to taxation is seen as convenient as it does not involve any compliance costs. LVT curbs speculation and breaks the increase of land prices. Hence, it leads to a more efficient and equitable use of land. However, a conflict may often arise between the government and land owners as to land values and taxes. By taking more of the land value, the government acts in a way that reduces the land price (which is a disadvantage for land owners), making it more affordable for future home owners.

Source: Giles (2009)

Henry George is considered to be the most famous advocate for land rents, known as the single tax. He believed that wealth was created through increased social and technological improvements, profit from which remains in the hands of land owners. This unearned wealth, should not be concentrated in a few rich land owners, but should be redistributed for the use of everyone. This, according to George, would be more just and equitable as he believed that land belonged to everyone. Restricting access to natural resources is thus one of the causes of poverty. One of the economic arguments is that if a sufficient tax were placed on land value, then there would be no need for other forms of taxation. Itwas believed that a single tax could improve the workings of a free market as it does not burden the economy. Theideology is called Georgism.



BOX 4 The case of Australia and New Zealand Land Tax In 1952 the Australian government imposed a Land Tax in six states. The highest revenue comes from Central Business District (CBD) areas of major cities it is estimated that in 2007, $262 billion was collected in total revenue. However, the benefits of land value taxation are offset by exemptions, differential rates and thresholds. In a recent Review of State Taxation it was found that land tax was ranked third after income tax and tax on hired labour. In Australia, land tax collection contributes only to about 0.57% of federal government revenue. In New Zealand the fate of the tax was even worse. It was applied between 1891 and 1920, and accounted for 10% of overall revenue. After 1990, its contribution fell significantly. Local Rate Local rating is often seen as more important than Land Tax. It was an especially important source of revenue for the States of New South Wales and Queensland in Australia. In 2007 local rates accounted for one-third of local government revenue. Nevertheless, the land value component of tax rates has been shrinking since the 1970s. The introduction of rate-pegging reduced local revenue from taxes and user-charges took over as the major contributor to local government revenue. In New Zealand, the local rating of land value is still used and currently stands at roughly 60% of local government revenue.

redistribution being one of the purposes of the tax. Nevertheless, the public often sees land values as private wealth and as a consequence ethical implications of land value taxation are sidelined. Amoral and ethical dimension thus needs to be added to the fiscal argument, which requires analysis from a more social perspective. There is hence a need to shift the economic argument that land tax is harmful for first time buyers and housing construction. With regard to equity, Giles pointed to the importance of land value to any community. There is fierce competition for land, in which the community is often pitched against the investor. (Nominal value capitalized value). It is thus necessary to lower the price of land for poorer socio-economic groups in order make it affordable. To overcome this hurdle, not only is a fiscal reform needed but more importantly, a social reform should be considered. Giles sees the issue of land value taxation as a great moral question, comparable to slavery.

Conclusion and relevance to affordable housing

between incomes and real house prices. However, the real issue is land unaffordability as opposed to housing unaffordability.

Taxes and Equity

The purpose and the benefit of taxes need to be placed in a larger context. Giles pointed to the need to link the use of taxation to poverty alleviation; equity and

Two major arguments were put forward by Giles, a fiscal argument followed by a moral dimension. The advantages of land value taxation are enumerated, including breaking the increase in land values, which curbs speculation and makes land more accessible to poorer socio-economic groups. Attempts with the taxation mechanism have been examined based on Australia and New Zealand. However, the major overwhelming argument put forward by Giles was the moral and ethical value of taxation. As a Georgist follower, the presenter argued that property constitutes only a produced entity, everything that is part of the natural sphere i.e. land, should belong to everyone. That is why land value taxation revenue should belong to the public. If implemented, thesingle tax due to its simplicity has a potential to serve as a main source of finance for public infrastructure and as a means to make housing more affordable.


PART I Land and property taxation: policy, legal and institutional frameworks

Public space and its appropriation in light of the theory of externalities recommendations and directions for building an intervention system by public authorities
Tadeusz Markowski
Public space, particularly in cities, plays an important role with regard to functioning and order. Markowski presented a theoretical approach to the way public space is understood, by focusing on the notion of public and private goods in relation to the theory of externalities. Public space is thus analysed from an economic perspective; Markowski believes that there is currently alack of a comprehensive study of the operation of market systems in the context of public space. Consequently, solid understanding of the theory of public goods and externalities associated with public space as public good leads to a cogent means of regulating their consumption and construction. Effective management of public space though faces many difficulties- due to manifold externalities that are difficult to define and involve multiple stakeholders. The planning process is thus complicated by the need to take into account legal, restrictive and economic instruments. Ultimately, public space must be structured in such a way as to reflect the maximum merits of a public good, and that is a challenge for current policy makers. majority of developed countries; being a product of mans work and thus bearing the characteristics of a mixed good. Public space can hence be understood as a good which is jointly created and used and one that gives access to other private and public goods. Due to the multidimensionality of externalities that are part of public space, the latter is in high demand and often undergoes subversive appropriation. When public space is appropriated its direct usage by consumers is restricted, and at the same time, it indirectly restricts access to other public and private goods. Appropriation of public space can thus lead to various conflicts which cannot be solved solely by the use of market instruments.
Ownership vs. Usage

The nature of goods: public vs. private

In practice, most public goods, despite carrying the label public, acquire with time the characteristics of amixed good, meaning that some people are excluded from their utilisation. In order to obtain a public good, the consumer is often required to incur a cost, which introduces the aspect of exclusion. Markowski thus distinguished between two groups of public goods:  Goods which do not involve an obtainment cost e.g. a road. These goods are referred to as accessible optional goods.  Goods which do involve obtainment costs for their use. The cost will depend on the spatial distance between the potential user and the service. The costs incurred may be one-off, or recurring. These goods are referred to as localised optional goods. Public goods nearly always result in externalities, meaning that other benefits or costs are indirectly associated with it. An understanding of public goods in relation to the types of externalities sheds light on the way that externalities are understood.

Drawing on the theory of public goods, Markowski underlined that usage is a more important factor than ownership, this applies especially to public space. Private activities may take place in public areas and public activities may take place on private territory. This gives rise to a question about the actual need for ownership when it comes to public space. Markowski thus questioned the social and economic justifications for the traditional preference for public ownership of public space. This understanding is useful for public space management
A Public Good is one that is non-excludable and where consumption by one party does not preclude the consumption by others. Good examples include street lighting and military defence. A Private Good is excludable and is restricted to the use by one person at a time (rivalrous). Externalities are spill over effects of a private transaction, wherein the costs and benefits associated with the consumption of the product are not reflected fully in the price. For instance, manufacturing often causes a negative externality in the form of pollution and healthcare often produces a positive externality in the form of improvement of societal wellbeing. The parties affected by this spill over (material or non-material products) are unable to control their production. Internalisation is the process of transforming externalities into private costs for the transacting parties. For instance in the case of air pollution (negative externality) produced by a factory, a tax could be placed on the manufactured goods. In this way under or oversupply of the good can be corrected and the quantity supplied can optimised for society as a whole.

Public Space and externalities

Using the theory of public goods, only space that is undeveloped by man is considered a free good. If on the other hand it is the product of mans activity, it means that costs were incurred during its production. Consequently, public space in its pure form no longer exists in the



which questions the publicness of this public good. The nature of the good is of fundamental importance in the context of the role and type of economic intervention. In general, it is thought that common ownership of space allows for a larger range of uses which are more limited in the case of a private owner. This is because privately-owned space is subject to market economy principles and rights. Since public space can be thought of as a strategic resource, it is especially important for local authorities to develop it in a way which they deem appropriate to improve the urban experience. There exists an optimum quantity and quality of public space, which allows the sound functioning of a city system. Therefore, Markowski suggested, each city should have its own reservoir of public space that can be used strategically; he subsequently called for a guarantee of such a reservoir to be provided by the state.

Means of intervention

Due to the fact that the use of all urban public space creates externalities, it is thought that internalisation charges should be collected from all territories, even private ones. An urban land tax can be introduced, linking taxes to their market value. This brings the question about the means by which these externalities should be internalised; Markowski noted that it could, for instance, exist in ad valorem taxation. However, calculation of the tax is not straightforward, and very often it is based on a government agreed rate per square meter of real estate. Whereas this fulfils fiscal functions, the compensatory and stimulating functions are not accommodated. Markowski underlined that systems of fiscal and financial interventions need to be analysed from historical and dynamics points of view.

Instruments as a means for shaping and protecting public space

Public service markets and quasi-markets

Conclusion and relevance to affordable housing

Internalisation of the costs associated with externalities can be seen as the role of public authorities, which are able to regulate the public service market (since the users of public goods behave as rational economic actors, weighing the costs and benefits of obtaining them). Public service markets, which are subsequently created, allow for the introduction of modern management forms. However, if the price internalization is only partial then a quasimarket is created, in this situation, regulatory decisions, when implemented, need to be much more sensitive to the prevailing political context. The quasi-markets nevertheless, need a strong public authority to function.

The achievement of an efficient system of urban space management is a difficult undertaking as it needs to integrate numerous legal and economic instruments. Urban planning bodies, being the main agents responsible for regulating public space, need to ensure maximum accessibility to public goods. The internalisation of the costs of externalities can be achieved through taxation systems. Even though Markowski did not directly speak of affordable housing, his predominantly theoretical account of public goods shed light on how taxation mechanisms and fees/charges could be used to raise revenue. Therevenue from those fees/ taxes could be used to create a better living environment for the general public. It could be used to finance public infrastructure and to control behaviour in a way that benefits the society as a whole.


PART I Land and property taxation: policy, legal and institutional frameworks

The discussion following the presentations provided food for thought with regard to innovative taxation systems due to the multi-dimensional mechanisms that were proposed in the individual presentations. Nevertheless, not all participants were in favour of multiple ways of capturing land value believing that full land value tax is the one and only way to finance urban infrastructure and affordable housing, still others thought otherwise. This belief served to create a useful discussion about the role of the state and private entities in financing urban infrastructure. Despite the existence of an enormous fund earmarked for affordable housing, available to newly joined EU countries, the need to look beyond traditional means of financing public goods is especially pressing in times of recession when funds and public expenditures are shrinking. Land value taxation, and the capture of unearned increments via betterment tax were the most commonly discussed means of acquiring funds. However, the participants differed in their rationales. The importance of morality and ethics was strongly argued by the proponents of Georgism, whereas other participants took a less romanticized stance. Most of the participants agreed that undoubtedly, thevaluation of property for tax purposes still remains a serious practical obstacle to the implementation of any new taxation system. As the summaries showed the revenue from taxation can be used for a plethora of purposes including financing of infrastructure, such as roads, to more complex transportation systems, and finally they can provide a means of cost sharing between public and private developers. The main point which was debated was the role of the private sector in co-financing infrastructure and services. Some participants expressed their belief that we rely too often on government funding when it comes to the provision of public infrastructure. This stance was richly illustrated by case studies; as one participant pointed out, we need to think outside the box. Theexample of Dubai Metro, auctioning off the rights to individual stations to private agents, has helped recover some of the construction costs, and will in the future result in an aesthetically pleasing look of the stations, which the private developers will ensure as it will ultimately determine the use of the station and hence their returns. However, such mechanisms were not supported by all.

economies in transition, underwent significant changes, often to the detriment of the quality and quantity of housing stocks as exemplified in CEE countries. The deterioration of housing stocks and the reduction of public expenditure is most commonly associated with the adoption of an open-door economic policy. The retreat of the state for some participants was seen as an opportunity to engage the private sector. They argued that the private sector could be an important partner in co-financing public goods since it is itself the beneficiary of externalities that are produced by public sector developments. The private sector could thus get involved, for example through joint development projects, which implies the need to tap the developers market. NGO participants, however, advocated for a more prominent role of the state which should be both a strong regulatory force as well as an enabler. Hence, a tentative suggestion is that perhaps we should not concentrate solely on the provision of housing but rather on the provision of housing opportunities.
Importance of valuation techniques

The mechanisms used for property valuation were a recurring theme among the presenters. Accurate property valuation is essential to a sound and equitable system; however valuation is fraught with difficulties. It can be subjective and require considerable costs to be properly implemented. Theidea of mass appraisal and mass valuation techniques was, therefore, discussed. Valuation is especially important and at the same time one of the most difficult exercise in post-communist countries which have a history of leasehold systems and market distortions. Cross-regional comparative studies can offer a good starting point as they provide an opportunity to exchange information and may prove to be of considerable value for local and government administrators. The UNECE study offers an insight into the extent to which mass valuation techniques are used in the European context.
Bridging the divide between academics and practitioners

Key ideas and findings

Public versus private responsibilities: the role of the state

The role of the state with regard to the provision of infrastructure and affordable housing was an important topic for all participants and proved to be occasionally divisive. The role of the state (central and local governments), especially in the context of countries with

Several participants pointed to the gap between academia and practice. It is believed that a link should be formed between the academic understandings of taxation systems and the proposed tools and mechanisms which could be used to raise finance and to recover costs. Hence a bridge needs to be formed between academics, who, through their research are highly aware of the implications involved in the use of specific tools in specific contexts, and practitioners at local authorities and governments. The Conference was useful in this regard as it brought together people from both government agencies and the world of academia. Both parties agreed on the importance of this exchange of information and of forging stronger ties between them. Notably, the Conference was a platform to exchange experiences with best practice examples, and despite the understanding that solutions are contextspecific, important lessons could potentially be drawn for countries in the region and globally.


Berlin (Germany) Mennetrier (2008)

Part II

Land and property taxation in practice


Innovations in the Property Taxation System in India

Debolina Kundu

Property Tax (PT thereafter) is seen by Kundu as one of the most important sources of finance for infrastructure and housing. In India, however it is currently under-utilized. Thedynamic growth of Indian cities has meant an increasing pressure for the provision of urban infrastructure; however local municipalities have, thus far, been slow in increasing their revenue base. Thepresenter provided an overview of the current taxation system in India; by focusing on recent reforms, made obligatory under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), she analysed the impacts they had on the revenue bases of governments. The study focuses specifically on Bangalore and Ahmedabad; Kundu concluded that where assessment of property taxes is market-based and where people trust the system, the revenue generated from taxes is higher. Anewly introduced self-assessment component is seen as a fundamental element of the new tax assessment system. Additionally, mapping of properties, rationalized exemptions and improved collection are seen as priorities of the new system.

BOX 5.  Bangalore: Bruhat Bangalore Mahanagar Palike (BBMP) In 2000, an optional self-assessment scheme was introduced in Bangalore; it was known as SAS SelfAssessment Scheme. The new scheme was an experiment. Thecity was divided into 6 zones, which were based on land value. Rental rates were set per square foot. Tax calculation took into consideration the location, type, quality and age of properties. The classification system also distinguished between residential and nonresidential property, which was further subdivided into categories. Acap was placed on the increase of the tax liability; it was set at 2.5 times the existing tax liability. GIS tools were used to map return particulars. In 2002, a Capital Valuation System (CVS) (assessment of future property value using market principles) was introduced in Bangalore, however initially it was not accepted by all municipalities. When, in 2007, the municipalities merged to form BBMP it was imperative that one system be used for valuation. People in some districts resisted the CVS, because they thought it would increase their taxes. The BBMP conceded and now use the UAM system; revaluation is based on ARV; however, assessment is based on CVS. 5% rebates on early pay and 2% penalty interest for late payers were adopted to reduce the number of defaulters. Some findings The BBMP area increased its tax collection significantly; in the first year of usage, the PT collection increased 33%. This was not due to higher rates but to the shifting of properties to higher zones (1520%). Reduction of compliance costs was a huge benefit of the reform. However, only about 70% of assessed properties paid taxes. Slums are exempt from PT, in 20042005 only 1% of slums were assessed, this figure rose to 2.3% in 20072008. Ultimately, transparency and elimination of exemptions were the strengths of the system. Per capita revenue increased more than two-fold in 20042008.

Taxation systems: old and new

PT, is one of the main sources of government revenues, however it is often under-utilized, especially with regard to helping the urban poor. The traditional system, adopted by the majority of municipalities, is called the Annual Rental Value (ARV) system. It is a rent-based system that is defined as the gross annual rent which is calculated at the time of assessment. The system has been accused of being inefficient, inequitable and unfair. The inelasticity of this system leads to a reconsideration of the calculation means. Consequently, many local governments have embraced the JNURM plan to reform taxation systems. Local governments especially face challenges linked to administrative capacity and the collection of taxes. A new system called the Unit Areabased Method (UAM) was introduced. It uses a simple arithmetical model which reflects different characteristics of rental property; rental values are linked to the location, usage and structural quality of the property. Thereform of the Property Tax has thus concentrated on three main issues: legal issues, flexible tax administration, and institutional and policy aspects.

initiatives that have been implemented with regard to housing the poor.

Lessons learnt and policy implications

Case studies: Bangalore and Ahmedabad

Kundu analysed the case of Bangalore and Ahmedabad, using both qualitative and empirical data. Boxes 5 and 6 provide an overview of reforms and their implications for the revenue base, for both cities. The time frame for the study was the period of 20042005 and 2007 2008. In her study, the presenter also considered the

Kundu derived important lessons to be learnt and several policy implications from the two aforementioned case studies, individual findings are enumerated in Boxes 5 and 6. Lessons learnt include:  There is an increase in PT even if prices are constant.  Compliance needs to be assured to achieve sustainability of the system. For instance, introduction of incentives and penalties for tax payers decreased the number of defaulters.

PART II Land and property taxation in practice

BOX 6.  Ahmedabad: Ahmedabad Municipal Corporation (AMC) The AMC administered reforms in a phased manner. 1) Steps were taken to increase PT collection by adding unrecorded properties. 2) All properties were reassessed. 3) PT defaulters faced penalties for non-compliance. Only religious property was exempt from PT and unused buildings had a lowered PT. Slums do not pay PT. AGIS system is used to carry out the new tax system and track payments. The process of valuation was clear and transparent; for instance, property tax calculations were placed on the AMC website for public access. Some of the transparency resulted from the fact that the method of tax assessment relied upon self-assessment. The measures taken to increase PT revenue, such as actions against defaulters, resulted in a significant increase in tax revenue. Some findings The percentage of defaulting taxpayers declined significantly (Figure 6). Per capita tax increased in real terms from 20042005 to 20062007, but declined in 20072008. The drive to increase PT and actions against defaulters led to doubling the tax revenue income within the first two years!

and, therefore, makes it easier to re-assess taxes in case there are any changes. An efficient system would allow for the removal of inequalities, periodic evaluation. Theelasticity of Bangalores system has been pointed out as a desirable example to be followed.

Way forward and relevance to urban infrastructure

Most urban municipalities in India are in favour of the new tax assessment system which is based on a formula

Kundu pointed out several aspects to consider in Indias tax system. It is important that tax rates are not too high in order not to cause resistance from citizens. However, slum dwellers should be exempt from PT due to financial constraints. Furthermore, she promoted implementation of an additional user-charge levy in order to cover for the services provided. Kundu believed that due to the equity factor of UAM, it should be institutionalised. AGIS system could be used to help update and maintain upto-date property information. Nevertheless, all those changes need a political backing. Education of tax-payers is important to achieve compliance. Pro-poor budgeting needs to be considered in municipal development plans. When these factors are taken into account people will hopefully have access to better services and living environments.

Figure 6. Graphs showing characteristics of Assessed Properties in Ahmedabad and per capita revenue receipts of AMC


Per Capita Revenue Receipts of AMC at Constant Prices
37 5.45 2.47

Characteristics of Assessed Properties: Ahmedabad








1600 1400 1200 1283.38 1403.15







in Rupees


1000 800 600 400












200 0 2004-05 2005-06 2006-07 2007-08

Percentage Percentage of assessed properties that paid taxes to number of properties assessed Percentage of assessed properties which defaulted to number of properties assessed Percentage of assessed properties that disputed to total property assessed Percentage of total exempted properties to total properties assessed

Source: Kundu (2009)


India Maartje van Eerd (2007)

 De-linking of PT from the Rent Control Act was an important aspect of the new reform.  Elimination of disputes in assessment procedures was achieved partly by self-assessment. It also curbed corrupt practices which previously burdened the old system.  Under the old system, there were numerous PT exemptions; under the new system there are none.  The new system offered increased flexibility to increase the tax rate every year. The number of litigations decreased to nil.


Taxation and its effects on sustainable development with reference to the UK

Greg McGill

Taxation systems can have an impact on sustainable development; in the UK, according to McGill this effect is adverse. McGill analysed how the current tax system in the UK, which focuses on capital and labour, leads to undesired consequences; the systematical undertaxing of land causes an increase in speculation and land continues to be used inefficiently and unproductively. McGill argued that focusing tax on land would encourage sustainable development; it would also boost urban infrastructure development and service delivery. The current town planning system does not address the problems posed by the existing tax system; it actually perpetuates the problem of unsustainability. In the last 25 years, according to the presenter, prices of land have gone up so much that delivering affordable housing has been simply impossible. Essentially, McGill called for reconsideration of the link between sustainable development and taxation mechanisms in order to deliver desired outcomes, especially in the light of the current recession and the historical environmental consciousness of the British planning system.

development and ultimately to the detriment of the poorest socio-economic groups who are severely disadvantaged by the tax; for instance, affordable housing is especially difficult to deliver in the current economic and fiscal climate. The next section reviews some of the most significant effects of the current taxation system in the UK. Speculation, artificially inflated demand, is one of the most undesired effects of a lack of land tax. Anincreased interest in land leads to its higher value, which has negative effects on the housing and land market. Speculation ensues given the advantages that could be gleaned from under-taxed land. Speculation is further encouraged by deregulation which has resulted in banks overlending against land property. Globalisation and the impact of information technology have made it possible to transfer money freely, resulting in increased foreign investment in property. Additionally, McGill pointed to the inflationary effect of higher investment in land as it causes greater disparity between real wealth and the supply of money in circulation. Lack of taxation has also led to a general increase in the prices of housing which is made more difficult to access for first time buyers. This has led to a greater need to rely on family and friends for financial support. Additionally, there has been a surge in second home buyers at the expense of local residents. Furthermore, an increase in prices is driving away small businesses; for instance, it has been noted that the numbers of small businesses and pubs have decreased in many regions of the UK, currently affected by speculation, which could be partly explained by rising rents. Urban sprawl is encouraged; development often takes place on greenfield sites due to lower development and clean-up costs, putting pressure on the environment. This causes the cost of infrastructure and services to increase due to greater distances between dwellings; a lower density of dwellings also makes it less affordable to set up a business because, due to distance, the consumer base is small. The setting up of services, such as sewerage, water supply and refuse collection is not as cost effective as in more densely developed areas. Transportation problems are another area which is impacted; greater financial expenditures are needed to expand existing infrastructure to reach all residents. However, due to its slow implementation, there is a heavy reliance on the automobile, which further degrades the environment by increasing pollution and congestion. This is especially harmful in the context of climate change.

British land taxation system

Taxation in the UK focuses on three means of production: land, labour and capital, with the bulk of the tax burden resting on the latter two. When considering property tax one needs to understand its two main components; it is crucial to differentiate between the two. The value of property consists of: 1) the land element, which treats land as a natural resource, 2) the capital element, which relates to improvements made on land. Taxing land more heavily than the improvements made on it appears logical since there are no production costs associated with land; hence all returns on land are a surplus. However, there are production costs relating to capital and labour, therefore, raising the tax placed on those two components increases the production cost, thereby decreasing the supply and raising costs. Despite that logic, taxes in the UK target primarily the capital element, leaving the land element under-taxed. In the UK, there is no distinction made between the land and capital elements. The tax rate is calculated based on the combined value of the two; the council tax applies to domestic properties while non-domestic properties are subject to a business tax rate. The tax is normally only paid if the property is occupied and its rates decrease if a building is under-utilized and deteriorating.

Effects of the tax system

The UKs current taxation system leads to many undesired outcomes, which work to the detriment of sustainable

PART II Land and property taxation in practice

The taxation also adversely affects the economy. Firstly, by encouraging speculation and investment in land and property it diverts investment away from jobs, manufacturing, public services and the production of goods and services, making society less productive. Secondly, it requires the costs of new development to be minimised at the expense of aesthetic values, e.g. design, innovation and materials, and the value to be maximised at the expense of location and density. Thirdly, it makes it harder for small firms and businesses to compete, which is reflected in growing numbers of retail vacancies. The current taxation system acts as an obstacle to the effective functioning of the planning system. Town planning is meant to regulate the use and development of land on behalf of the public, however, it cannot overcome the effects of speculation and the withholding of land from improvement nor its inflationary effect. In reality, it actually makes the situation worse by increasing property values and discouraging development through the use of levies on new developments. These factors all work together to further thwart the planning system.

 There is a need to establish a cadastral base, which would help with individual assessments of land value.  All land values will need to be assessed, whether the land is used or un-used.  Appropriate rates of land tax will need to be established; good practice examples might be used to determine what the best rates are. In addition, levies could be put in place for infrastructure improvement.  The labour and capital taxes should be reduced, however, at a later date an increase in land tax would need to compensate for those reductions.  Good understanding of the tax shift needs to be promoted. This is important in planning professions were sometimes the reasons for land value creation are not fully appreciated.  Lastly, a political will is crucial for any reform to take place.

Conclusion and relevance to urban infrastructure

Effect of a new land tax system

McGill enumerated the potential benefits of a new land tax system, which shifts the tax burden to land: reduction of land withheld from improvement; this would apply in particular to run-down and derelict urban areas; tax on land would incentivise development and hence encourage urban renewal.  Creation of new local jobs and a boost to local economies.  Reduction of land speculation; stabilised land and property prices would result in more affordable housing. This would also lead to services being more convenient and affordable.  Reduction of urban sprawl, transport problems and pollution, which together would contribute to environmental improvement. This would also eventually lead to a better quality of life. Reduction of hindrances in town planning. Ultimately, increased sustainability. Nevertheless, the improvements will not happen automatically. McGill proposes several areas of research that need to be further investigated if full advantage is to be taken of the tax shift.

McGill presented a clear overview of the current taxation system of production in the UK, which predominantly taxes capital and labour. He described the negative side effects that this type of tax has had on sustainable development. Taxation, as it stands today, according to the presenter, has a detrimental effect on sustainable development and on the sustainability of planning, which is thwarted by the tax system. At the moment, nearly 1 trillion is invested in property, which diverts investment away from the real and productive economy. A shift to land tax, he argued, would help overcome many unsustainable practices resulting from the current taxation system, and most importantly, would make the provision of urban infrastructure cheaper by breaking the increase in land prices due to speculation. It would ideally also be easier for first time home buyers to enter the housing ladder. Nevertheless, McGill stressed the point that the aforementioned improvements would not happen by themselves; there is a need to carry out more research, especially with regard to value assessment and dissemination of the information about benefits of the proposed land tax. Ultimately, the presenter argued that a land tax system would pave the way toward achieving sustainable development.



Land and property taxation in the countries of former Yugoslavia with a particular focus on Montenegro
Yvonne Mller

Property related taxes and fees account for a major source of local governments revenue; however, their efficient use is made difficult by the legacies of the socialist regime and problems associated with transition. This is especially applicable to land and property ownership. Mller provided an outline of land and property taxation systems in the countries of former Yugoslavia, focusing specifically on Montenegro. She noted the types of real estate taxes that are in place, and the means of valuation that are used. Lastly, the presenter introduced a new tool ETerraPN asoftware for real estate tax assessment, that is used in Montenegro; she described how the tool could potentially increase the efficiency of valuation.

the main local independent source of revenue), specific tax law and general rules for tax administration. Usually, the tax rate is calculated using a percentage of the property value, with the exception of Bosnia and Herzegovina where an area-based property tax exists. In general, the value-based property tax is seen as more efficient because: it shows more accurately the relationship between the use of services and the prices paid for them; it is more affordable because it is correlated to homeowners income. Slovenia is the only country to use a mass valuation system for taxation purposes. Table 3 provides a summary of valuation and taxation methods used in the countries of former Yugoslavia In the countries of former Yugoslavia, the average share of property tax in the GDP stands between 0.3% and 0.47%, with Slovenia leading at 0.6% of its GDP. This is significantly lower than in OECD countries where the figure is 0.9%. The share of local property tax in total local revenues differs across the region. For instance, in 2009, in Montenegro, local property taxes contributed to 9.1% of total local revenues, the figure was 15.7% for the Republic of Macedonia. Except for Slovenia, themost economically developed country in the region, the significance of real estate tax, as a portion of total local revenues, is decreasing, especially in the countries undergoing transition, such as Serbia and Montenegro. The legacy of the socialist period is considered to be a factor limiting the efficiency of property tax. Part of the problem lies in the continued lack of a clear segregation between the status of private and public property. Local

Property tax in the countries of former Yugoslavia

Amongst different fees, charges and taxes, property related taxes are of a significant importance to local governments. This is partly due to their visibility and relative ease of enforcement, according to Mller. After, decentralisation, the countries of former Yugoslavia were able to develop their own sources of revenue. The new framework for modern local governments features property-based taxes; once private property rights were restored, local property taxes were formulated. However, the system is still burdened by inefficiencies, especially with regard to tax administration and social issues that may arise from it. Property taxation exists in all the countries of former Yugoslavia (except for Croatia), which all have real estate tax. Property taxation generally relies on three types of laws: Laws on local self-government finances (defining
Table 3. Valuation methods and tax ranges for property tax Taxation methods Value based property tax Federation of Bosnia and Herzegovina (FBiH) Montenegro Republic of Macedonia Republic of Serbia X X X X (mass valuation) X Area based property tax X

Tax rate range Minimum FBiH, RS set by Cantons: Brcko district: 0.05% 0.08% 0.10% 0.40% Dwellings: 0.10% Premises for rest and recreation: 0.20% Business premises: 0.15% 0.05% Maximum Brcko District 1% 0.80% 0.20% 3.00% Dwellings: 1.00% Premises for rest and recreation: 1.50% Business premises: 1.25% 1.00%


Kosovo Source: based on Mller (2009)


PART II Land and property taxation in practice

governments may impose charges on the use of both public and social property, even that which is not owned by them, which complicates things further. In addition, another inheritance from the socialist period is the growth of informal settlements which developed in the 1970 80s and have further expanded due to ethnic conflicts. Coupled with the incomplete and out-dated register of ownership, the implementation of a real estate tax is a difficult challenge for local governments.

regulations and administrative procedures. Additionally, there is a need to improve the tax database, especially with regard to the quantity and the quality of the data in the Real Estate Cadastre. Mller believed that only when land administration and planning are wellcoordinated may real estate tax decrease speculation and consequently make housing more affordable for low income earners.

Montenegro is one of the youngest states in Europe, and also one of the smallest. In 2001, it initiated a tax system reform as part of an overhaul of the entire financial market andsystem. real estate tax instands, Montenegro As it currently the role of the real estate tax as a means of financing urban infrastructure and affordable housing is limited. The percentage share of local tax in local revenue is actually decreasing, from other 7.0% in 2006 to 4.8% in 2008. equalization fund Also, noteworthy is the assigned revenues property tax; it ranges degree of contribution of local local revenues between 0.9% and 19.8%.
2006 2007

Land market and real estate tax in Montenegro

ETerraPN: software tool

Figure 7. Land market and real estate in Montenegro 2008

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% coastal region central region northern region

other equalization fund assigned revenues local revenues

As mentioned previously, compilation of accurate and up-to-date data is a priority area for Montenegro. It is only then that an inventory of all taxable properties and units could be set up. ETerraPN is a software tool that enables access to information in the real estate cadastre. It was initially developed and implemented by the German Technical Cooperation (GTZ) for the Municipal Management Project. The new software has the purpose of making administrative procedures more transparent and efficient. The software tool transfers information from the property registry; the information includes property descriptions and taxpayer details. It is used to valuate property based on an inbuilt valuation model. Additionally, it serves to bill taxpayers and account for property tax. Lastly, it is used to report to the local assembly and the national tax administration on any problems or discrepancies. About 50% of all Municipalities in Montenegro use that software tool daily.

Conclusion and relevance to urban infrastructure

Source: Mller (2009)

There is considerable regional variation within Montenegro with regard to the role of property tax. Coastal regions have significantly higher real estate revenues. Due to different economic structures (for instance, tourism is a source of revenue in coastal areas) real estate revenue has varied importance as a source of revenue. Coastal regions in particular have a high share of recreational properties. There has been a significant increase in the price of lots and properties in coastal areas. However, a good portion of that investment is not entirely legal and is part of the grey economy. In underdeveloped regions equalization funds may be the main source of revenue (Figure 7). At the moment, priority tasks for Montenegro include improvement of tax collection, which requires better legal


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Similar to other regions undergoing transition, the countries of former Yugoslavia face severe difficulties after decentralisation. Most countries in the region have adopted a real estate tax which is an important source of revenue for local governments. However, communist legacies act as a hurdle in implementing effective property taxation systems. Mller provided an account of Montenegro, which showed how varied local government revenues could be, with property tax in some cases playing only a marginal role. The presenter urged for the improvement of data and administrative capacities of local governments. The ETerraPN software tool, initially developed for a project supported by GTZ, is meant to help make administrative procedures more efficient and transparent. It is only when planning and administration are well-coordinated that, according to the presenter, real estate tax can lead to achieve affordability for low income earners.



Improving public-value capture in urban development: How to improve the involvement of property developers and landowners in the financing of public infrastructure
Demetrio Muoz Gielen
Muoz Gielen provided an overview of public practices of land value capture for the purpose of financing public infrastructure, by focusing on three case studies: England, Spain and the Netherlands. He analysed the process of urban redevelopment on private land in terms of innovative systems of public value capturing. Thepresenter noted significant differences between the regions as regards the involvement of property developers in the financing of public infrastructure, such as affordable housing, sewerage and roads. Additionally, he analysed the role that development and zoning play in increasing public value capturing. Here, Muoz Gielen focused on the concepts of certainty and its impact on land value capture; this is related to flexibility in planning. Secondly, he focused on property rights and the dependence of the public sector on the private sector with regard to infrastructure. The main motivation behind this study was to research the contributions of property developers to the financing of public infrastructure. The funding for public infrastructure has traditionally come from government sources, however with the erosion of those sources there has been a move towards more innovative ways of generating funds. Negotiations are taking place with developers with the aim of internalizing the impact of development. Developers are thus obliged to contribute to public infrastructure, for instance, by building roads. The rezoning of land has led to enormous land value increases, which generally accrue to land owners. Muoz Gielen analysed the capture mechanisms used to capture
Flexibility: room for change and alteration of zoning prescriptions during the planning process. Certainty: depends on whether legally binding zoning plans and tentative zoning plans come into force before or after negotiations and what the contents of the documents are. The two types of certainty are: building possibilities relating to what, where and  how the landowner can build future contributions relate to how much the  landowner will need to contribute

this increase in value and ways in which they could be used for the benefit of the public.

Certainty of minimum contributions

Flexibility in planning is thought to have an impact on land value capture. In order to understand this impact, it is important to understand the concept of certainty in planning. Certainty, according to the presenter, depends on whether legally binding zoning plans and tentative zoning plans come into force before or after negotiations. Zoning plans include land-use plans and planning permissions. Depending on the degree of certainty, the price of land can be lowered; there may be a lower profit margin for the developer. Box 7 and 8 provide an outline of certainty in Spain and England. Theresults of the research suggest that if there is more certainty beforehand, when development possibilities are fixed, then public value capturing is lower. This is because certainty might result in an increase in land prices, which might lead to harder negotiations. Ultimately, the financial buffer for public infrastructure financing is put under pressure. However, certainty as to building possibilities should be analysed together with certainty as to contributions. In this case, it might not result in negative public value capture.

Conclusion and relevance to urban infrastructure

Muoz-Gielen analysed how to increase the contribution of developers toward the provision of urban infrastructure. His detailed account with examples showed how developers can be successfully involved in the provision of infrastructure. He pointed to two factors that play a role in capturing land value increases. One is certainty, which relates to flexibility in planning and the other is property rights. Both together can result in increased investments and higher returns. The case of Spain is an especially good example of how public and private sectors can work together to benefit not only rich residents but also those from poorer socioeconomic groups.

Table 4. Summary of the degree of certainty in Spain, England and the Netherlands Certainty beforehand as to building possibilities Spain (Valencia) England The Netherlands Source: Muoz Gielen (2009) Always, much certainty Sometimes, some certainty Always, some certainty Certainty beforehand as to contributions Always, much certainty Sometimes, some certainty Almost never, and limited certainty


PART II Land and property taxation in practice

BOX 7. Certainty in Spain Certainty in Spain is created through local policy and legal standards. With regard to building possibilities, certainty is high; this is achieved through legally binding General Land-Use Plans which provide a detailed description of land development plans. They are legally binding for citizens and landowners who can ask for a compensation in the event there is a change. With regard to certainty of contributions, in Spain, that certainty is high during early stages. Case of Benala Sur (Alicante) A proposal was made to re-zone a site, which was 8ha and consisted mainly of empty lots and degraded housing, into commercial and residential space. A tender was submitted on behalf of the public, which was agreed upon and signed. Aprivate commercial developer brought a share of the land and contributed to infrastructure provision. Using the General City Plan, specific plans were submitted for detailed regulation. Specific land use plans were based on those regulations. Withregard to property rights, the owners of 60% of the land submitted their proposal; however the initiative was taken by aconsultancy company which owned 15% of the land. Results: The developer provided the entire on-site public infrastructure including roads, public space and a lot for a school; 77% of the development site will be used for public infrastructure, which will be delivered free by landowners. Additionally, landowners need to give 10% of serviced lots to the municipality. Lastly, off site infrastructure and 6ha of land for highway will be built on the land provided free by the landowners. Case of Guillem de Anglesola, Valencia The area renovation (1.2 ha) included construction of 125 new apartments and demolition of old ones. The urbanising agent did not own any of the land at the time of submitting the proposal but bought almost all of it at the end of land readjustment. The fact that the land was not initially owned by the developer was crucial. The urbanising agent, Proara, slowly bought out the land and the landowners were compensated. The Valencian land readjustment regulation successfully separated infrastructure provision from property rights. Results: All the infrastructure was paid for by the developer. 74% of the site was designated for public infrastructure, 2/3 of which were provided by the landowners. Additionally, the developer had to contribute to 3050% of the affordable housing and help fund an adjacent road.

BOX 8. Certainty in England Certainty in England comes from site specific documents i.e. location infrastructure and specific contributions together with a generic obligations policy. Certainty in England with regard to building possibilities is not as high as in Spain. Here, public authorities provide indicative plans, such as local plans and development plans but those are not legally binding, and final plans can easily diverge from them. With regard to contributions, municipalities in England can increase certainty by approving a formal policy on planning obligation. It is thought that if authorities have standard charges they are able to benefit more from more obligations. One can thus conclude that increased certainty of contributions can have a positive impact on land value capture. Case of Harbourside, Bristol Harbourside was part of a former dockland regeneration project. In 2001, an application for re-development was finally accepted, and planning permission was given in 2003. The project contributed to the creation of 700 apartments, 44,000m of office space and 30,000 m of leisure space. With regard to flexibility of planning, there was some certainty. The 1997 Bristol Local Plan designated the whole site as a Major regeneration area; additionally, a Briefing Plan was produced. Those documents were indicative in nature and did not have a legally binding effect. There were slight changes to the plan e.g. originally the number of dwellings stood at 400 and was raised to 700 in the final plan. Contributions caused some problems at negotiations; the developer wanted to lower some of the requirements, e.g. constructing affordable housing. Negotiations often fail due disproportionately high demands in relation to contributions. Results: The developer ended up paying for the majority of the on-site public infrastructure. 50% of the land was to be used for public infrastructure, and the developer had to provide 3/5 of that land and the Local Council the rest. The developer had to build 9% of social housing and also paid 30.5 million to the Local Council for leisure facilities to be built and between 2 and 7million for the construction of an adjacent highway.



Property tax and informal property: an essay on the challenge of the Third World
Martim O. Smolka (in his absence, presented by Acioly)

The relationship between property tax and informality has seldom been addressed. This topic is explored by Smolka in the context of Latin America. He believes that informal settlements are often overlooked for tax purposes, yet this neglect results in the omission of a large proportion of potential taxpayers. Thestudy concentrated on three main issues. Firstly, it challenges the misconceptions about informality; it explores property tax collection under informality and lastly, the possibility of exemptions and their impact on informality. One is often lost in a circular argument: officials ignore informal settlements because their inhabitants do not pay property taxes and do not contribute to public expenditure, therefore, they are ignored. The premise of Smolkas argument is that informality should have no impact on property tax collection; it is just a prejudice that is practiced by public officials vis--vis dwellers of informal settlements. Secondly, Smolka believes that informality should not result in lower tax performance since poorer inhabitants of informal settlements are usually better taxpayers. Lastly, it is argued that property tax has a potential to break the cycle of informality. Nevertheless, he recognized the challenges that are to be faced, especially in a patrimonial society, such as that of Latin America.
Conventional wisdom and myths about informality

Informality relates to: fragile land tenure non-compliance with urban norms and regulations Lack of adequate public services and equipment.  Occupation of improper areas, such as ecologically risky areas, hillside slopes and contaminated brownfields.

(relating to tenureship), 2) irregular (breaking norms and regulations), 3) clandestine (the settlement is hidden). The definition is not straight forward; it is important that illegality not be conflated with informality. A settlement may be illegal but a person might have a legitimate right to be there. Why is informality a problem? Informality, first and foremost, leads to disorganization of the land market; informal developments rarely provide the occupants with services and rights, however they yield a high profit for landowners who often sell lots at a higher price per square meter than on the formal market. The individual is thus faced with higher personal costs, he additionally needs to cover building costs and absorb social costs, such as higher violence rates, which are often experienced in informal settlements. The settlement is thus more costly for the society as a whole which pays for the provision of public services and helps with slum upgrading schemes. Table 5 summarizes the main myths about informality. Most important to note is the false assumption that inhabitants of informal settlements are not willing to pay taxes. In reality, it is often found that poor individuals are better taxpayers than richer residents. This is because by paying property taxes they feel they ensure their tenure; furthermore, they believe that their taxes will finance local infrastructure and services.

The relationship between informality and property tax is an under-research field of academia. This is partly due to lack of data, while the data that do exist are often inaccurate. Thus, this research is explanatory in nature. It specifically concentrates on the case of Latin America which has one of the highest concentrations of informal settlements in the world. Conceptually, the definition of informality is often not clear. With regard to informal settlements, one can differentiate between their three main types: 1)illegal
Table 5. Myths about informality Myth Occupants of informal settlements are all poor Informal settlements are homogeneous, distinct formal areas Occupancy is achieved through other than market transactions

Reality - other: social ties, business, etc. - many types of informality - heterogeneity between and within - similarly to formal property - Invasions no longer a prevalent phenomenon itself - informal markets - operations, transactions, private contracts

Source: based on Smolka (2009)


PART II Land and property taxation in practice

A perfect scenario for efficient collection of property taxes is one where the taxpayer is known and the characteristics of his property are well-defined. In such a scenario, property values should be close to market values, and the occupant has the financial capacity to pay the tax. In addition, there needs to be an effective administrative system, which is relatively cheap to operate. Nevertheless, informal settlements pose several challenges. Firstly, the tenureship is not always clear, furthermore the property is often unfinished and thus property values are fuzzy. Due to low incomes, the occupants are very often financially constrained and are unable to pay property tax. The administrative costs involved are usually high.
Exploring the relationship between informality and property tax

 An evolving tax base: this could be partly overcome by self-assessment and self-declaration.  An inability to pay: exemptions or tax deductions could be provided to the poorest who are unable to pay. Alternatively, progressive rates could be used.  Inadequate and inaccurate information: the cadastre could be updated through self-reporting schemes, partnerships or the involvement of community groups who themselves will benefit.  Assessment of the informal property: ideally the market could be used to value the property, alternatively, self-assessment could be applied.  Fiscal culture: there is a need to establish a fiscal culture; it is important to counteract tax evasions. Even the smallest value should be collected from poorest households. Ultimately property tax has a potential to improve the quality of life of the poorest residents in informal settlements. The main point advanced by Smolka is that conventional wisdom is often contradicted by reality. Informal settlements have a potential to be huge catchment areas for property tax collection, and more importantly, residents of those settlements are willing to pay those taxes. Nevertheless, before effective tax collection is implemented there are numerous challenges posed by informality. However, according to Smolka, it is worth bearing that cost if it helps break the cycle of informality.

The research based on the data from Brazil yields information, amongst other things, about the occurrence of irregular settlements in particular cities in the region, the status of cadastre records and collected tax revenues. It was found that property tax performance and informality have a positive relationship; higher rates of informality correlate to higher property tax performance. Smolka suggested that this might be linked to the idea that more economically dynamic cities have better regulatory frameworks; they also have a larger proportion of informal settlements. Nevertheless, an overriding factor is an effective property tax collection system relying on accurate data and up-to-date cadastre records.

Policy recommendations and relevance to urban infrastructure

Collection of property taxes from informal settlements should be seen as a desirable urban policy. Smolka argued that what needed to change was the attitude towards informality which depends, above all, on a good administration system. Property tax will help counteract market distortions that are the result of informality. Smolka believed that by targeting those issues, we would actually at the same time target the source of informality and thus break its cycle. It is therefore important to increase understanding of the informal market. Furthermore, it is essential to enhance the administrative capacity, especially with regard to tax collection. The poor and potential taxpayers need to be involved in the process; they need to realize their rights and be able to fight for social benefits that they are entitled to. Smolka enumerated benefits of the property tax:  Increased source of local revenues that can be used to service land  Re-orientation of the provision of serviced land to the more needy sections of the city  Reduction of land prices: affordability  Reduction of inefficiency in servicing land  Alternative titling regularization Nevertheless, tax implementation faces numerous challenges arising from informality:


Favela Mata Machado, Rio de Janeiro (Brasil) Acioly (2007)


Urban planning, land taxes and levies the German experience

Janina Kopietz-Unger

Germany has one of the most efficient and equitable taxation systems in Europe; this point was strongly stressed by Kopietz-Unger in her presentation about the laws and regulations relating to spatial planning and taxation in Germany. The presenter provided an overview of how the current system works in order to ensure the provision of urban infrastructure, such as roads and utilities (drainage, sewerage...) to be installed on a site that is undergoing development. The case put forward is richly illustrated with legal documents, codes and regulations used in specific developments. In the latter part of her presentation Kopietz-Unger elaborated on the region-specific idea of perpetual usufruct the Polish version of leaseholds, and the obligations that land users have under such arrangements.

Kopietz-Unger pointed out that all developers need to present their projects to the tax authority which calculates taxes based on the appropriate rateable value. Municipalities collect two types of taxes which need to be differentiated when calculating the rateable value:  Agricultural Land Tax A: levied on agricultural real property.  Building related Land Tax B: levied on improved real property or real property with improvement potential and buildings. The tax amount is based on several calculations. Firstly, on the use rateable values/replacement economic value (the same value is used for built-up and non-built-up areas). A single rateable value is set by the tax authority which bases its decision on the records in urban plans. The tax authority specifies the base amount of tax based on the rateable value. The basic tax rates, which are used to calculate the base amount using rateable value, are:  For properties in the old Federal states between 2.6 and 3.5 per thousand  For properties in the new Federal states between 5 and 10 per thousand  For agricultural undertakings a uniform rate of 6per thousand.

The German attitude and philosophy

In Germany, it is believed that everyone has the right to housing. The quality of housing and the environment of urban settlements impacts directly on the quality of life and hence the social wellbeing of citizens. The housing market and the housing policy work together to ensure that citizens have the possibility to secure tenureship. Local municipalities, private investment and the Federal policy work together to that end. This entails effective legal-political frameworks with regard to the housing market as well as political instruments to support the endeavour. The aim of a housing policy is to ensure that everyone has the right to housing, support the creation of residential property and worry in advance about security at old age. Additionally, it addresses the environmental balance in housing and it constantly strives to reduce the costs of housing provision.

Regulation and fees

Planning Principles

There are two main principles upon which planning in Germany is based:  Urban planning is used to prevent land speculation;  Local municipalities and land owners are involved in the planning process. Revenues of municipalities derive from land tax and charges, fees for utilities and levies. Once a record is made in a spatial development plan there is an automatic change in the level of taxation that is applied to that plot of land. The land tax is governed by Article 106 paragraph 6 of the Basic Law. Therevenue from that land tax goes in whole to the municipalities.

Berlin (Germany) Mennetrier (2008)

PART II Land and property taxation in practice

The proceeds from those taxes must be declared in the municipal budget, together with the rates that are used to calculate their amounts.
Utility fees

urban areas defined by the municipality or the historical conservation office. A mandatory payment is levied when the standard land value increases as a result of redevelopment and is applied once the redevelopment project is completed.

It is the responsibility of individual municipalities to collect initial utility fees. The provision of utilities is a pre-requisite for the development of any plot; the provision of local public infrastructure, which in this case conditions the usability of real property, involves water supply and sanitation, electricity, access to communication networks, such as roads. Only when local public infrastructure is provided may a building permit be issued; prospective building land is transformed into building land.
The procedure The building code regulates utility fees, including land acquisition, adaptation for construction, provision of appropriate utilities (water, sewerage, lighting, roads and paths, parking areas). The owners of the land are responsible for a maximum of 90% of the costs, for the initial provision of utilities. The costs are divided between all the serviced plots; the cost depends on detailed local plans, especially with regard to the type and intensity of construction, the size of the plot and the length of the plot border with a street or road. The municipality decides on the breakdown of the costs. There are three types of roads, and their classification determines the amount of fees: 1) housing estate streets (25% of the cost is borne by the municipality); 2) housing estate streets for collective use (40 to 50% borne by the municipality); 3)Urban streets for collective use (40 to 75% of the costs borne by the municipality thehigher the use of the road the lower the burden to the plot owners). The municipality can levy fees for road expansion; the owners, leasehold users will be required to pay part of the costs of construction. Fees can be collected to improve a degraded road (full redevelopment after 60 years, or at the earliest, 25 years after the provision of utilities) and expand or repair the road or its sections to create parking spaces, to change lighting, etc.

Leaseholds: Perpetual usufruct

From the taxation point of view, there is no difference between a freehold and a leasehold type of land title. Ownership of the land belongs to the municipalities, churches or foundations which grant leasehold rights for periods ranging from 75 to 99 years. After the lease term, the lessee gives the land back to the owner and receives payment for the value of any improvements. Sale of the leasehold or changes to permanent improvements require the owners consent. The annual lease payment is limited to 4% of the property value, with property being reappraised every 3 to 5 years.
Perpetual usufruct: is a term used in Poland for public ground lease. Its historical roots stem from reluctance of the state to give full ownership to private entities. Theuser has many rights with regard to the land; however the state is still its lawful owner. Thelease is usually granted for 40 to 99 years.

Land economy, i.e. the level of rent adjustment

The municipal housing office keeps records of the prevailing rental rates per square meter in a given city area. Landlords and tenants can compare their expectations and make informed decisions regarding a rental agreement. The rental rates available from the municipality are basic rates and do not include the cost of heating, hot water or other services.

Conclusion and relevance to urban infrastructure


Municipalities may also levy infrastructure redevelopment charges. Land refurbishment charges are established in

Kopietz-Ungers account of urban planning and taxation is case-specific; it describes the German system, which has been deemed as an example of good practice. Thesystem is well-developed and its effective administration means that it can be efficiently used to provide urban infrastructure and services; developers contribution is especially significant. Kopietz-Unger asserts that the system guarantees for everyone in the country to be able to enter the housing market and have a fairly good quality of life.




The discussion following the section about land and property in practice gave rise to questions and debates regarding good practice examples and the feasibility of taxation systems in different contexts. Attention was focused on Germany in particular, which was deemed to have one of the most efficient and effective systems of financing urban infrastructure. Participants questioned specific aspects of the German example, and the discussion was focused on how the system works in a specific context. Additionally, questions were raised about informality and the role of the market in the process. Lastly, the UK planning and taxation system proved to be of interest to participants. Informal settlements were analyzed by some participants as a tremendous market failure. Thediscussion elaborated on how informality was understood- it should not be pitched vs. formality, it should rather be viewed as a continuum and how it impacted the operation of taxation systems. Part of the problem with regard to informality is redistribution of land between the public and private sectors and unclear understanding of what constitutes formality in that context. There was a proposition made to see whether taxation had a redistributive capacity in that regard. Good governance and digital communication were seen as important components of a good taxation system and as aspects that need to be worked on. The advantage of legal rights to land was considered by some as a benefit due to the access to credit it permits. With regard to improvement of the conditions in slum settlements it was thought that upgrading was more costly, instead incremental change was proposed as a more viable solution. The case of Germany proved to excite the majority of participants who demanded to know more about the administrative and functional aspects of the system. Participants wanted to know how much the land taxes contribute to Germanys budget. It is estimated that land tax accounts for about 0.4% to 5.8% of the budget. Land tax in areas covered/ developed by the master plan is about 6.2%. German cities compete with one another for residents because income tax is their main source of income, therefore, they set appropriate tax rates in order to attract residents. TheGerman policy was summarised as providing everyone with a right to housing, as reducing speculation and as a general good urban policy. The role of PPP (Public-Private-Partnership) was also inquired about, especially with regard to the use of public land for the property development in Germany. When housing is financed it is very rare for social housing to be built (only in special countrywide initiatives); self financing is promoted. However, the city helps finance housing units even in the most luxurious districts. Housing is, therefore, not isolated and hence there is no formation of poor districts. Only ethnic minorities tend to live in the same districts. The UKs policy for the development of unused lands on city fringes was explained. It was of interest whether

the landowners could be forced to develop their land. It was thought that agricultural land must remain as described in the plans. However, when it is at the edge of a city it can be used for development if there is a willing land owner and a community participating in the decision-making. The British planning policy, however, is vague. Developers would like as many dwellers as possible, which leads to the so called town cramming in suburban areas.

Key ideas and findings

Informality and taxation

The perception of informality is often discriminatory and misguided, however, the phenomenon is widespread in the majority of the developing world. Most beliefs about informality and dwellers of urban informal settlements often turn out to be myths or are not fully comprehended. It was suggested by participants that ignoring informal settlements for tax purposes was unsustainable and actually perpetuated the cycle of informality. Informal settlers are often willing to pay property taxes, which could lead to an improvement of their living environment and give them the feeling of security of tenure. Additionally, it would increase the tax base for local governments. However, informality can also be found in more developed parts of the world, notably in transitional countries, as exemplified by the study of the Balkans. The result of transition has often left a legacy of grey areas which do not fully comply with new regulations. Nonetheless, it is of importance in the context of both developed and developing countries to work with informality rather than against it, for instance by taxing it. This will hopefully help break the cycle of informality and improve living environments in a more equitable and just manner without having to resort to force and evictions.
Sustainability through taxation systems

Overtaxing property can have many undesired effects; it can lead to speculation, urban sprawl, an increase in land prices and an unproductive and inefficient use of land. The case of England exemplifies the unsustainability of taxing property, which has resulted in an increased use of Greenfield sites, sprawl, and made it increasingly difficult to provide affordable housing for the poorest socio-economic groups who are essentially very unlikely to afford a property if the current system prevails. It was thought by some that a shift to land value taxation could act as an effective means of increasing revenue for financing public infrastructure and affordable housing. Other examples point to the possibility of involving the developer to contribute to infrastructure provision, as exemplified by the case of Spain. Here, redistributive and cost recovery mechanisms helped contribute to an overall improvement of the environment, without solely concentrating on the needs of property owners but rather on the general well being of the community. Developers contributed to the costs of building roads and schools making thesystem more sustainable and equitable.

PART II Land and property taxation in practice

Example of good practice: Germany

The system in place in Germany, relying on social benefits, redistribution and cost recovery and regimentation of codes and regulation of any development, was seen as one of the most effective systems to finance urban

infrastructure. Participants wanted to draw lessons about how the German tax system operates, however, for many developing countries, the sophistication of the system makes it unrealistic in the current economic and political climates of many less-developed countries.


Favela Vila Iaia (Brasil) Acioly (2006)

Part III

Land and property taxation and valuation: tools and implementation lessons


Land and property tax: financing towards equality in access to housing, serviced land and infrastructure in post-apartheid South Africa
Moegsien Hendricks
Property taxation and land value capture can be an effective means of financing affordable housing and public services for the poorest segments of South Africas population. The presenter provided an overview of South Africas taxation policy, based on a two-year study carried out by the Development Action Group (DAG). He analysed the rationale and the impact of the new Property Rates Act which has essentially removed land value taxation (hereinafter, LVT). Thus the current regulatory and taxation system serves to increase inequality, poverty and segregation. Hendricks argued for more capacity training, raising awareness amongst public officials and the civil society, and for drawing attention to the merits of LVT. As a representative of an NGO, Hendricks favors a stronger and more pro-active role of the state. Ultimately, the presenter expressed the need to analyse the gap between policy and reality, and what could be delivered. should be shared with the community who is the rightful owner. He specifically looks at local government reforms and property tax. Additionally, the paper discusses the possibility of an agricultural land tax.

Contextualizing South Africa

If one is to understand the current taxation system and the challenges it faces it is necessary to take into account the peculiarities of South Africas context. At the moment, the Republic of South Africa (hereinafter, RSA) is deemed to be one of the most unequal societies in the world; there has been an increase in poverty, despite some economic indicators pointing to impressive growth. The strong neo-liberal macro-economic environment is seen by Hendricks as being instrumental in growing the inequality; this ultimately leads to the dominant problem of informality, labeled by the presenter as a spectacular market failure. That poverty and inequality will probably remain hidden during the FIFA 2010 World Cup. Increasing urbanization puts a growing pressure on land and housing; currently, the urbanization rate is at 56.3%; the high demand for land has pushed prices up concentrating land in the hands of a few, making it out of reach for the poor. Additionally, divisions along race and ethnic lines and other social factors play a crucial role in the current fragmented, unsustainable state of RSA cities; some legacies of the apartheid city remain. RSA is only a 15year old democracy and hence, there is still a debate over what needs to be done and what urban policies should be adopted; in practice, policies which seem effective and just often to do not produce the desired outcome.

The study carried out by DAG addressed key challenges with regard to unsustainability and growing inequality of South African cities. The challenges faced by RSA include limited understanding of the existing policies and regulatory systems, which in reality act against the poor. An increase in land and property prices resulting from the property boom is a major obstacle to affordable housing. It acts to the detriment of the indigenous people, usually poor black farmers who are less able to afford a decent quality life. Currently, about 23% of the population lives in informal housing and the government faces a 2.4 million housing backlog. The increase in land prices, fueled by speculation, makes the construction of affordable housing expensive, thus the poorest often live on the periphery of cities, which encourages sprawl and is environmentally unsustainable. Secondly, it is more difficult for them to enter the labour market which is concentrated in city centres. The results of the study are based on primary and secondary research conducted through extensive literature review, analysis of records and valuation documents from local authorities, interviews with experts and public officials, participatory action research, and lastly, through the study of international examples. The methodology has three main themes: how to make cities more equitable?; the role of local governments; and the issue of land and property markets being seen as untouchable.

Findings: Tax reforms

In 2004, a New Property Rates Act was introduced, which essentially did away with site value taxation and composite rating. The rationale for introducing this flatrate tax was to create a uniform property rate system. However, the current system, which under-taxes land and is geared toward taxing property, acts as a disincentive for an intensive use of land. It fuels speculation and locks land away from the hands of those who need it most. It has been found that local governments have limited expertise in the field of value capture and there is limited space for an effective use of innovative mechanisms. Part of the problem is that most of the discussion about the issues surrounding land happen behind closed doors

Examination of South Africas taxation system

Hendricks explores the possibility of LVT as a source of revenue for municipalities, which according to DAG,

PART III Land and property taxation and valuation: tools and implementation lessons

Site value taxation also known as land value taxation is an ad-valorem tax on land. Composite taxation is calculated using the combination of buildings and land as well as improvements on land. New Property Rates Act was introduced in 2004, it extends property tax to agricultural land, which benefits large land owners but works to the detriment of small farms which pay much higher rates per hectare of land than larger farmers. It taxes improvements made on immovable property, and has essentially done away with the site value taxation and composite taxation.

Policy implications, way forward and relevance to urban infrastructure

Hendricks and the DAG promote lobbying for the flat rate tax to be changed to Land Value Tax due to its numerous advantages, especially for the poor (box 9). The core belief is that urban planning instruments will be used in such a way as to benefit the poorest. This will require value capture mechanisms to be mainstreamed in municipal practices where transparency should be a core element. For a more effective system, there needs to be a synergy between different policy imperatives i.e. housing, land, sustainable development and transport. These changes require a strong political will and support from the government. Officials often do not understand the intricacies of the current system and thus work against the poor. It is hence important to increase the capacity of local authorities; government officials need to be upskilled. Additionally, in order to have a more informed discussion, the civil society should be effectively involved. Lastly, there is a need to analyse the gap between policy and reality. Tools are available but the current policies are inadequate to capture unearned values. Officials are not used to negotiating with developers to benefit the poor because the market is perceived as untouchable. Ultimately, Hendricks on behalf of DAG, argued that it was not enough to have a good housing policy; taxation is just an instrument in facing the urban challenge in the RSA; more importantly, there needs to be a change in attitude and the role of the government must be enhanced.
BOX 9. Benefits of LVT  Reduction of urban sprawl, unused land brought back into the market. Land price inflation controlled. Reduction of speculation.  Encouraged development of both rural and urban land, broadened revenue base for local government.  Streamlining land tenure and cadastral record system.  Streamlining fiscal structure and provision of public services.

and thus the civil society is essentially excluded from the debate. Additionally, there is a general absence of citywide participatory approaches to development, which further makes the debate exclusionary.

Land Value Capture

Currently, South African cities continue to experience high levels of inequality. The basic reason is the ineffectiveness of current fiscal and regulatory land management instruments. Land and property tax policy is still largely under-developed and is insufficiently mainstreamed. The current system benefits the rich and powerful but sidelines the needs of the poorest who are severely disadvantaged by the system. Since the system benefits the most influential and the property boom is bringing in high revenue for the government, the issue of privatisation and socialisation of costs is contentious as the land and property market is seen as a goose that lays golden eggs. Hendricks argued that once the social aspect of land is addressed then the land will benefit a large majority of the South African poor, even before LVT is considered. Despite numerous changes since 1994 very little has been done with regard to looking at land policies and the policies in place at the moment favour those who own property. Local governments simply do not have the capacity nor the political power to manage land and property effectively in the interest of everyone.



Land Value Capture: Case Studies, Policy Implementation and GIS Land Value Mapping
Alanna Hartzok

Land value capture recovers the economic rent of land for public benefit. Within the paradigm and framework of classical economics, rent is a measure of the social surplus generated by locational desirability, population growth and the availability of public goods and services. Research shows that the amount of land rent generated by most cities, towns or regions is sufficient to provision needed public goods without resorting to deadweight taxes on buildings, labour or commercial and industrial activities. Hartzok stated that land value capture is key to attaining a more equitable society in which the interests of the poorest are not sidelined; it is a tool that can result in increased economic opportunity for all, whilst at the same time addressing issues of sustainability and the finite state of the Earths resources. Hartzok presented the case of Harrisburg and Allentown, two of Pennsylvanias 20municipalities that have implemented land value capture to varying degrees and analysed the impact this tool had on those two previously depressed US cities. The presenter then proceeded to describe instruments and models that could be used to value land and property, highlighting the potential that land value maps, theInternet and Google Earth have as transparent and freely accessible sources of information.

the amount of land rent captured until arriving at full land value capture, say within five years. As it currently stands, tax on buildings is a disincentive to construction, while undertaxing land produces vacant land and poorly utilized land sites in high land value areas, thus causing sprawl patterns and minimum property upgrades. Land value capture promotes good land use and building improvements while discouraging land speculation. Consequently, there would be more infill development and more construction, and land would ultimately be put to a better use while retaining affordability.

Cities of success: the case of Harrisburg and Allentown

Hartzok provided a case for land tax using the example of Pennsylvania where an enabling legislation has been passed allowing taxes to be shifted from building, income and sales to land value. The so-called two-rate tax system was implemented, which gradually lowered the tax burden on houses and other buildings while shifting it to land rent capture. Boxes 10 and 11 illustrate the success story of Harrisburg and Allentown which, through the land value tax shift, managed to revitalise their depressed economies.
BOX 10. The case of Harrisburg Harrisburg, with a population of about 50,000, used to be one of the most depressed cities in the US. Since 1981, it began shifting property taxes to land values. Currently, the land value is taxed 6 times more than buildings. Throughout this time, the city has been politically stable, with the same mayor being elected since 1981! Theresults have been spectacular:  The number of building permits increased significantly.  There has been a noted improvement in the state of existing buildings; there used be around 5000 derelict structures in the city, this number went down to 500.  Over $1.2 billion has been attracted in new investment.  The number of businesses has increased and private sector jobs grew in number (in 1980 there were 1908 businesses, in 2002 there were 5976).  The city received multiple awards including, the no. 2 Best Investment City in Eastern USA. The two rate tax-system has been a key local policy that factored in the success or Harrisburg. The steady growth has contributed to a stable tax base and the possibility to address housing needs of the citys neediest and poorest residents, including the elderly.

Land Tax vs. Building Tax

Currently, in most places the major proportion of land rent is appropriated by private individuals and real estate investments of institutional portfolios. This unearned income becomes a commodity for speculation while the tax burden disproportionately falls on production and labour. Capital and private property should, however, be taxed less heavily or ideally not at all in order to promote the creation of wealth through production and to maintain land price stability, thus mitigating the economic bust/boom cycles. Following tenets of classical as compared to neoclassical economics, Hartzok stated that the land rent should belong to the community as a whole and should thus be captured and used to benefit everyone. She described one proven way to implement land value capture via a revenue neutral step by step shifting of taxes away from buildings, wages and production toward land rent based on assessed land value. Cities and towns without any current form of property tax can simply begin with a land value only tax and gradually increase
Land rent is a measure of the social surplus generated by locational desirability, population growth and the availability of public goods and services.


PART III Land and property taxation and valuation: tools and implementation lessons

BOX 11. The case of Allentown In 1994, a two-rate tax system was voted on in Allentown; the voters adopted a home rule charter with regard to the government. This in reality meant that citizens could vote on their own form of local public revenue; they chose to freeze all taxes on business, to lower taxes on buildings ( of properties have seen a tax decrease) and to raise revenue by increasing tax on land value only. Even though there was a decrease in taxes for homeowners there was still money for the provision of services. Currently, therates are at 3.62% for tax on land values and 0.77% for tax on land. The results of land value taxation were equally remarkable as in Harrisburg:  There was a 32% increase in dollar value in construction (in the last 3 years).  Building permits have increased; the policy was especially effective with regard to encouraging infill development, and curbing urban sprawl. This approach provided sufficient funds for needed public services. Employment rate increased as well.

can be used for the purpose of accurate land value assessment, which is key to an effective and fair land value taxation system. Collecting accurate data and assessing land values are essential components of a good land value capture system (Box 12). Hartzok said that information technology had a huge potential to help create up-to-date land registration systems, along with site value estimates. She believed that Geographical Information Systems (GIS) could in the future become useful tools to create Land Value Maps. Such maps would be important in that they would make information about land assessment available for everyones use. The land value capture public revenue system would thus be highly transparent. Thepresenter suggested that Google Earth has the potential to be used for such purposes. People could study value maps of areas and learn information relevant to a specific site; such data would include information about zoning, regulations and ownership and most importantly, the assessed land value.
BOX 12.  Components of a good value capture system

Land value assessment

One useful general tool/model to roughly determine land value is the Von Thunens Curve (Figure 8). Hartzok enumerated several factors that contribute to land values, including physical attributes of land, such as shape and size, topography; ease of access; legal forces, such as type and amount of taxation, planning, zoning and restrictions; social and demographic factors, such as population dynamics, education levels and age structure; and lastly, economic factors, such as income levels, vacancy and availability of land and growth. Easily understandable models and mass appraisal techniques
Figure 8

1. Up to date and complete land registration. 2. Spatial definition of legal land parcel units. 3. Clearly defined legal restraints on land use. 4. Trained and certified assessors to conduct valuation. 5. Geographic information systems. 6. Designated public authority to determine land value capture methodology, collection of funds, monitoring and public education. 7. Land value assessment appeals process and compliance system. 8. Participatory Peoples Budget.

Conclusion and relevance to affordable housing and urban infrastructure

Von Thunen Land-Rent Curves is a standard model generally helpful in estimating the spread of land rent. The rationale is based on profits that can be made with regard to distance to the market. Profits are calculated when transport costs (based on distance) are subtracted from production costs. Certain distance makes the production of specific products more profitable. Source: Hartzok (2009)

Hartzok made a case for land value taxation as a tool for establishing full incentives for the provisioning of affordable housing and financing of urban infrastructure, education and other public goods. She explained the classical economic tenet that the increase in land values was socially generated and, therefore, belonged to everyone and should be used for everyones benefit. The presenter saw Land Value Taxation as cutting across many political lines; environmental, economic and that of winning the support of citizens. She illustrated the strength of this tool using two success case studies, notably Harrisburg and Allentown, both of whom managed to revitalize their depressed economies by a shift to land value taxation. Hartzok detailed the factors that should be taken into account in land value assessment, ranging from physical attributes and legal forces to social and economic factors. She emphasized the potential of information technology tools such as GIS. Ultimately, thesystem is seen as instrumental in ensuring equitable and sustainable cities.


Space Syntax as a Tool to Assess Land Value

Ahmed A. H. Saeid

Saeid used a new theory of urban planning, space syntax to analyze the relationship between spatial structure and accessibility. He used the duality concept of urban economic models, monocentric and polycentric, to understand the relationship between urban morphology theory and urban economic theory. Saied used the accessibility index analyzed from the perspective of space syntax to investigate the effects of spatial characteristics on land prices. He subsequently produced hedonic regression models that can be used to analyze correlation among urban spatial characteristics, which can be used to assess property value. Saeid, has produced a model based on the urban structure of the city of Wroclaw, Poland. He used his model to analyze spatial characteristics of the whole Wroclaw city area and the spatial characteristics of a Wroclaw sub-centre called Lesnica. The findings suggest that spatial characteristics have an important role in determining land value. His model has the potential to aid real estate agents, developers and investors in making informed decisions which require knowledge of land values and the factors influencing them.

been proposed that a more effective way to measure distance within the spatial structure would be to measure accessibility.

The concept of Accessibility

Accessibility relates to the connectivity of two places; with regard to the duality of a city, there are two types of accessibility that can be distinguished; global and local. In his study, Saeid used accessibility as a measure of distance to the CBD and sub-centres; metric distance is thus a measure of opportunity of accessibility. Nevertheless, Saeid argued that those measures did not take into account the effect of urban structure on the opportunity of accessibility. Space syntax is used to create a configuration of urban structure in order to explain why spatial configuration results in certain human behaviours and activities. From that perspective, space syntax becomes a useful tool to measure accessibility; however, there is a need to reconfigure the model before this could be done. Patterns of accessibility need to be measured against the aspects of appeal.

Evolution of the city model: Location, Location, Location

Methodology: Space syntax theory

Urban land value is determined by a bundle of urban components. There are two models of the urban spatial structure of a city: monocentric and polycentric. The spatial structure and economic value of sites in a city are captured using the monocentric model, based on the distance to the Central Business District (hereinafter, CBD). A new polycentric model has recently arisen to explain the spatial structure of modern cities; it is used to measure the distance to the CBD and sub centres. There is a competition between the two models and a duality of the urban spatial structure arises. Hence, it has

Figure 9 summarises the space syntax methodology used by Saeid. Space syntax is based on two main principles, open space vs. closed space, and large space vs. small space. In graphic representations, open space relates to roads and closed space describes urban plots and blocks. Space syntax parameters that are used to analyse land values include global choice, global integration, mean depth, local integration and connectivity. The configurability of urban spatial structure of a city depends on the natural movement of pedestrians and vehicles, with time this results in a multiplier effect which

Monocentric model is the most influential urban theory model. The main premise of the model is the concept that land values are concentrated in one urban centre, the CBD. Employment and the population are also found in highest densities in the core. The CBD is thus the most attractive part of the city. The land rent costs are theoretically offset by transport costs. Polycentric model is a new model, the product of expansive and dynamic growth of cities. The old centre, the CBD, is unable to accommodate the increasing demand for space. Consequently small, sub-centres form. Space syntax is a set of theories/ techniques that are used to analyse spatial configuration. The technique used is relevant to the analysis of space where human activity takes place, notably cities. It is used extensively in planning, transport and urban design. Accessibility is the connectivity of two places. Global accessibility can be defined as all the travel trips which are located in the CBD or in a large regional centre. Local accessibility can be defined as all the travel trips to local activities which are situated within small centres or neighbourhood centres.


PART III Land and property taxation and valuation: tools and implementation lessons

Figure 9. Space Syntax Methodology

Space Syntax Methodology

Urban Spatial Structure

Space Syntax Principles

Open Space

Closed Space

Convex Space Convex Map

Axial Lines Axial Map

Space Syntax Concepts Connectivity Graph

biggest impact. On the other hand, sub centres, part of the polycentric model, work as a socio-economic process according to the presenter; most significantly the local process is impacted by local characteristics, such as local integration and connectivity which have the biggest impact on the value of land prices according to hedonic regression models used by Saeid. The urban structure thus (local to local, and local to global) has a high influence on land value, due to the different spatial characteristics that it entails.

Space Syntax Parameters

Global Choice

Global Integration

Mean Depth

Local Integration


Conclusion and relevance to land management

Spatial Characteristics of Urban Structure

Source: Saeid (2009)

makes specific areas more attractive thus increasing the land value in those locations. Thedifferent spatial characteristics are measured looking at the global and local scale.

Results and findings

Saeids sophisticated model has a potential to be a useful land value assessment tool. In his model, he considers two kinds of networks that are generated by the urban structure: local to local and local to global. By using hedonic regressions, the presenter asserts that land value is influenced by the type of network within which the land is located, and hence specific spatial configurations play a significant role in increasing the land value. The spatial characteristics of an urban structure thus impact upon the valuation process of land. The assessment of land values by space syntax can provide investors, real estate actors and developers with the knowledge to realise economic vitality for successful urban development. The findings suggest that natural movements of people can act as an economic multiplier for urban development and can serve to increase prices of land. The investor can thus use space syntax to make informed decisions.

Saeid conducted an analysis of the urban structure of Wroclaw city as a whole, followed by concentrating on the sub-region of Lesnica. The findings show that Wroclaws urban structure can be understood from the perspective of a monocentric model which, according to Saeid, may be seen to work as a micro-economic process. The global process is most significantly affected by global characteristics, with mean depth having the




The discussion was used by participants as an opportunity to ask the presenters more in depth questions about their presentations and findings. Thediscussion was explanatory rather than argumentative in nature, participants wanted to get a better understanding of the tools and implementation mechanisms. Discussion focused around topics of data collection techniques, the case of Pittsburg and US land value taxation policies, and peculiarities of service provision and taxation in the case of South Africas enclosed communities. Participants were interested in the theoretical model behind the space syntax data and how it could be used to assess land values. It was thought that the syntax model was a land value study which looked only at spatial characteristics but which, in the future, needed to take in other features, such as transport and neighbourhood attributes. However, it was stressed that before its popular utilisation as an urban modeling application, the syntax model had to be tested in various economic and urban environments. Further questions regarding the presented models concerned the source of data. In general, the data used by the presenters came, among others, from government sources, however, often it was not free, which was seen as a problem. One of the participants brought up the point that land value taxation was removed from Pittsburg and the impact of that move was discussed. This Pennsylvania town was initially chosen to implement land value taxation because it was the second most depressed city in the USA so its mayor wanted to try something new. During that time Pittsburg had a high rate for affordable housing; hence, the move away from land value taxation was seen as surprising. The reason for it was, among other things, that Pittsburg hired an outside company to reassess land value, which resulted in higher values of land. Overcoming that problem could have entailed lowering tax as opposed to abolishing it. When land prices are inflated, taxes may be used to lower land value, and vice versa (regulatory effect). As a result of tax abolition, the amount of affordable housing decreased. Theimportance of assessing land was also underlined by another participant who stated that data from an assessor office may not be accurate. Hence the use of market methods to assess land value was suggested;

however, those methods cannot be used to value land in all parts of the city. Lastly, the case of gated communities in South Africa was discussed. Participants wondered whether enclosed communities needed to pay higher taxes since they locked the infrastructure just for themselves. In reality, the inhabitants of those communities do not pay higher taxes for their services; it was explained that gated communities arise as a result of high inequality, which leads to high levels of crime and hence a need for such an exclusion. However, occasionally the infrastructure is private and the residents have to contribute to the construction cost.

Key Ideas and Findings

Information dissemination and education

Land value taxation can be a very effective tool to finance urban infrastructure and the provision of affordable housing, as shown by the example of Pennsylvania. The example points to the importance of public support in order to carry out a reform moving tax from buildings and labour to land. Citizens and public officials should be taught the potential of that transformation and show active participation in the decision-making on the use of public finance, which could make the tool more effective. Importantly, avalue capture program needs to work within agreater urban framework, linking it to development and management of the whole urban system.
The potential of innovative tools and the importance of data

Tools such as space syntax have the potential of being used as valuable and effective aides in informed decision making for city planners, real-estate agents and developers. They are likely to permit accurate land valuation, however, more research is needed to make them more reliable and trustworthy. It is important that innovative modeling tools use transparent data sources, and that information from those models be accessible to everyone. This could help clear any inconsistencies and uncertainties for owners especially, who may think that they are taxed unfairly. Information technology thus holds a huge potential with regard to modeling, information dissemination and transparency.


Lublin (Poland) Korysheva (2008)

Part IV

Conclusions and recommendations


Summary of key issues/ challenges/ lessons

Presentations and discussions touched on many aspects of land and property taxation and its potential to contribute to the financing of housing and infrastructure development, and also extended the scope of land and property taxation to encompass pertinent cross-cutting issues. Key issues, challenges and lessons are summarized below.
Local solutions for a global issue

adequate intermediary responses and practical options to finance land development.

Multifaceted issues require the engagement of various players

Various approaches and tools implemented in different parts of the world were presented and discussed. Nobody is wrong, nobody is right. Good practises, such as the German system, were also underscored. However, all participants stressed the need to specifically consider tools in the local context (e.g. Montenegro) and to determine the approach and the related type of taxation mechanisms in light of the political, institutional, economic and social framework. The need of transferability of instruments calls for going beyond simple transposition.
Property and land valuation: potential and limit

Central and local authorities are traditionally mandated to provide or support the provision of urban infrastructure and affordable housing. In the current urbanisation/ budgetary context, some presentations have shown that an active involvement of the private sector in the provision of public goods and services would help close the gap. Some innovative mechanisms in the transport sector, such as joint development projects, were put forward to that end.
Direct vs. indirect taxation instruments

Different rationales, mechanisms and tools for valuing property and land were put forward and extensively discussed. It was admitted that some promising tools, such as space syntax, needed to be further developed and experimented with. It was said expressly that selected mechanisms should be adapted to the administrative capacity in place to implement the valuation techniques and allow increased tax revenues. The need to develop and maintain accurate land and real estate records was also emphasized, especially with the aim to effectively define the tax base. It was also noted that correlation between increased tax revenues and capital investment programmes, aimed to improve urban living conditions, was required in order to demonstrate the legitimacy of such valuation and taxation methods. On the other hand, some participants strongly advocated for a shift to land value taxation/ capture as a method having the intrinsic dynamics to generate further revenues for municipal infrastructure projects and to support sustainable urban management. For all options/ mechanisms that may be considered, participants agreed that strong political support and involvement of the civil society/ taxpayers were a pre-requisite of any win-win strategies for sustainable and equitable urban development.
Bringing informal settlements into city planning processes

In the same vein, some participants confirmed that indirect instruments were more suitable for financing affordable housing because they were more flexible in adapting to changing needs and the taxation level could, therefore, be adjusted according to the degree of need and public support. Lessons learned from developed countries have to be analyzed carefully as a guidance for policy-makers.
Bridging the divide between academics and practitioners

It emerged from the discussion that there was a need for processes that bring education, research, practice and policy together through a framework of interaction and knowledge management so that the findings of university research on taxation systems and related tools could be further mainstreamed amongst urban practitioners. Regional research and professional support initiatives may be seen as a way to strengthen linkages between the academia and practitioners, and to support innovative solutions on the ground.

Contribution of the Conference to the debate on land and property taxation

Financing urban development requires the application of mixed means

Informal settlements generally do not contribute to the local taxation base, and are thus excluded from tax redistribution. However, research and practises have sometimes shown that occupants of informal settlements would accept paying taxes as long as substantial improvements to access to urban services were offered. Such a practise would increase the tax base for local governments and concurrently support the integration of informal settlements into the citys strategic planning effort. Case studies have demonstrated that simplified methodologies for raising taxes in a context where adequate valuation data were not available and the local administrative capacity was limited could constitute

All participants seemed to come to an agreement that urban development should be financed with uncaptured land value increment. That agreement is a positive sign in itself. The challenge then is how to do it. Of course, the Conference concentrated on property taxation, land and building tax, but this is not the only means to contribute to funding infrastructural and housing development. It was made clear that the important thing was not to confuse means with ends. It was also said that various mechanisms existed to capture the lands value to finance infrastructure and the need to broaden the perspective of what the mechanisms were was strongly emphasised.
One common problem, some locally-tailored responses for further inspiration

A positive aspect was that participants offered a range of approaches and instruments. Although participants admitted that there was not a single tool that could

PART Iv Conclusions and recommendations

be simply transferred from one country to another, some made it clear that exchanging experiences and information created hunger for more. The value added was also a better understanding of the issue of land value capture and concrete approaches were put forward. It was finally agreed that there was now a need to test the models and put them in specific political and economic contexts. One recommended path would be to start from small innovative initiatives.

require at that stage, raising awareness among both central and local governments and the civil society. Government officials have to be part of the discourse while the civil society needs to take an interest in the debate. The need to properly label the tax was again emphasised as that clearly influences the behaviour of taxpayers. Steps towards greater urban equality could be certainly made as a result of further awareness-raising efforts and integrating the human rights dimension into the debate on land and property taxation.
Leading the way to reform with innovative and sustainable solutions

Recommendations and way forward

Further exchange and communication on land and property taxation

Learning from others remains crucial. All participants stressed the need to further strengthen the exchange of information and experiences in the area of land and property taxation at global and regional levels. In this perspective, it was recommended to establish dialogue mechanisms, such as platforms/ fora with the aim to promote and disseminate knowledge, tools and practices, case studies, successes and failures and also to map further actions. Those platforms/ fora would involve a wide range of stakeholders interested in the field of land and property taxation, not only the academic sector but also practitioners, not only central authorities but also local governments, not only institutional partners but also the private sector, the civil society, etc. Although a global exchange is generally extremely positive, it was additionally suggested that a dialogue within regions facing similar challenges should be promoted. Participants emphasised the need to better involve local authorities as the main implementing partner at the local level. While exchange platforms/ fora could contribute to enhance knowledge for the benefit of all actors and make it relevant for local authorities, lessons learnt from the field should also guide and enrich the development of new approaches and related tools and instruments. At that stage, the transferability of instruments was also mentioned as a much needed debate and exercise.
Raising awareness and involving the civil society in the debate

The Conference has pointed to the need for a certain paradigm shift and to go beyond the conventional use of certain instruments. Further study of what did and did not work in specific contexts, and a comparison of instruments and related implementation scales and mechanisms has become a pressing requirement. An important point here is that evidence is needed to formulate a well-informed decision. Data collection and analysis and documentation of land and property taxation remain insufficient in some countries, although they are crucial to the design of suitable strategies and policies. Better information could then result in policy/ institutional/ fiscal and political reforms. Each country is in a unique situation, tools cannot be transferred like that from one country to another but comparisons could be very useful. Participants agreed on the necessity of having their mind open to different approaches, instruments, etc. and of developing a framework within which one could compare instruments systematically in specific contexts and at different scales. In that regard, some participants advocated for the development of a comprehensive and analytical database of land and property taxation systems addressing both the range of land and property taxation policies/ tools and other local government urban financing resources and instruments, such as fees, cost recovery and costsharing fees, adjacent fees, planning fees etc. This could serve as a source of comprehensive information for local governments to initiate tax reforms. Proposals of follow-up activities stemming from the plenary discussion and the evaluation forms filled out by participants are summarised in Box 13.

Some participants stressed the importance of further exploring and testing LPT instruments that address specifically urban inequalities. There is a need to see what works for the urban poor and to further identify mechanisms/ tools that could correct market failures and prove conducive to a more redistributive land and property tax system. This brings another dimension into the debate; theneed to also consider instruments from an ethical perspective. Some argued that land value capture could be an effective mechanism. It was also said that it needed to be established what that means in practice; especially for the poor. On the other hand, it was stated that acting on LPT instruments and redistribution modalities further would

Closing remarks

Krzysztof Mularczyk, Director of the Warsaw Office of UN-Habitat, thanked all participants for their active contribution, excellent papers and stimulating discussion. He reiterated his acknowledgement of the precious support provided by the Ministry of Infrastructure of the Republic of Poland and the GLTN. He said that the Conference demonstrated further the need to develop innovative solutions that had to be tested and politically accepted. He also emphasized the need to decide on the balance between the different


BOX 13.  Proposals for the way forward at a glance Continue exchanging and debating  Further networking and interactions with other networks, such as the European network of housing researchers, the International Federation of Housing & Planning, etc. and those affiliating international lenders, developers and central and local authorities.  Additional meetings/ workshops addressing land and property taxation issues, particularly land value capture, local applications and transferability of instruments. Keep in touch and get organized  Creation of an expert group involving organisations/ individuals interested in taxation systems, its main task would be to inform local communities and others on LPT.  Planning a follow-up Conference to see where we are in one-two years. Promote good practices  Further document land and property taxation practices/ instruments, incl. regional comparisons, and disseminate innovative solutions (this may take the form of a policy guide and the proceedings of the Conference).  Raise awareness and further integrate the human rights dimension into the debate on land and property taxation.

taxes and the necessity to anticipate future problems, such as the erosion of the current tax base due to aging populations and an increase in spending. Krzysztof Mularczyk confirmed that a report from the meeting would be produced and circulated among participants and follow-up activities would be further developed. Clarissa Augustinus, Chief, Land, Tenure and Property Administration Section/ GLTN, UN-Habitat, pointed out as a key take away challenge the necessity to take up social impacts along with the market approach and also the need to engage in a broader ideological debate as opposed to a solely technocratic approach. As far as land is concerned, she reiterated the need to work across the silos and to document success in order to disseminate those examples for future learning. She congratulated all participants for sharing and debating, which reflected the GLTNs goal and spirit. Clarissa Augustinus finally invited participants to consider becoming a GLTN partner/ member and indicated that the GLTN website (www.gltn.net) constituted a platform where members could upload their documents and continue debating and exchanging. Magorzata Kutya, Director of the Department of Property Management, Ministry of Infrastructure, Republic of Poland, assured that conclusions/ recommendations from papers and the 2-day discussion were a valuable feedback for the Ministry which was currently in the process of identifying appropriate instruments for funding urban infrastructure and preparing related legislative changes.


Warsaw (Poland) Romanowicz (2009)



Annex 1 Programme of the conference

08:0009:00 09:0009:30 09:3010:00 10:0010:30 10:3012:30 12:3013:30 13:3015:30 15:3016:00 Registration Opening and Welcome remarks UN-Habitat (Warsaw Office, Mr. K. Mularczyk) Global Land Tool Network (Ms. C. Augustinus) Ministry of Finance, Republic of Poland (HE Maciej H. Grabowski, Undersecretary of State) Ministry of Infrastructure, Republic of Poland (HE Olgierd Dziekon ski, Undersecretary of State) Purpose of the Workshop and Programme of work UN-Habitat/GLTN (Mr. R. Sietchiping) Coffee/tea break Session 1: Policies, legal and institutional frameworks Chair: Ms. C. Augustinus, UN-Habitat 1. Housing sector reform in Central and Eastern Europe: regulatory framework and policy development (Mr. C. Acioly, UN-Habitat, Kenya) 2. Taxing Public Leasehold Land in Transitional Countries (Mr. Y. Hong, Lincoln Institute of Land Policy, USA) 3. An increase in the value of land as a prerequisite of imposing adjacency levies critical analysis (Mr. M. Gdesz, Administrative Court, Poland) 4. Can the unearned increment in land values be harnessed to supply affordable housing? (Ms. R. Alterman, Center for Urban and Regional Studies, Israel) Discussion/clarification Lunch Session 2: Policies, legal and institutional frameworks (contd) Chair: Mr. C. Acioly, UN-Habitat 5. Land Value Tax as an Investment Mechanism for Public Transport Assets (Ms. F. Medda, University College London, Great Britain) 6. More than a tax: some ethical implications of land value taxation (Mr. R. Giles, Association for Good Government, Australia) 7. Public Space and its Uncontrolled Appropriation in the Light External Effects Theory Recommendations and Direction for Public System Intervention (Mr. T. Markowski, Lodz University, Poland) 8. UNECE Working Party on Land Administration (Mr. A. Ivanier, UNECE Environment, Housing and Land Management Division, Switzerland) Discussion/clarification Coffee/tea break

16:0017:30 Session 3: Land and property taxation in practices Chair: Ms T. Roskoshnaya, UN-Habitat 9. Improving public-value capturing in urban development (Mr. D. Muoz Gielen, Radboud University Nijmegen, The Netherlands) 10. Improvement of land and property taxation in Montenegro as part of municipal land management and in relation to other countries in South-East Europe (Ms. Y. Mller, German Technical Cooperation GTZ, Montenegro) 11. Innovations in Property Taxation System in India (Ms. D. Kundu, National Institute of Urban Affairs, India) Discussion/clarification 18:3020:30

Reception hosted by GLTN


09:009:30 09:3011:00 11:0011:30 11:3013:00 13:0014:00 14:0015:30 15:3016:00 Recap and feedback of day 1 Rapporteur Session 4: Land and property taxation in practice (contd) Chair: Ms. R. Alterman, Center for Urban and Regional Studies, Israel 12. Property Taxation and Informality: Challenges for Latin America (Mr. M. Smolka, Lincoln Institute of Land Policy, USA) [in his absence, presented by C. Acioly, UN-Habitat] 13. The system of land use charges in the Federal Republic of Germany. The lessons for the transition countries (Ms. J. Kopietz-Unger, Karlsruhe University, Forum for cross border cooperation in Europe, Germany) 14. Taxation and its effects on sustainable development with reference to the UK (Mr. G. McGill, Planning and Development Consultant, Great Britain) Discussion/clarification Coffee/tea break Session 5: Land and property taxation: implementation and tools Chair: Ms. C. Augustinus, UN-Habitat 15. Space Syntax as a Tool to Assess the Property Value (Mr. A. Saeid, Wroclaw University of Technology, Poland) 16. Land Value Capture: Case Studies, Policy Implementation, and GIS Land Value Mapping (Ms. A. Hartzok, Earth Rights Institute, USA) 17. Land and property tax: financing towards equality in access to housing, serviced land and infrastructure in post-apartheid South Africa (Mr. M. Hendricks, Development Action Group, South Africa) Discussion/clarification Lunch Session 6: Plenary discussion: Main lessons and Way forward Summary by the Rapporteur Discussion facilitated by Ms. J. Kopietz-Unger, Karlsruhe University, Forum for cross border cooperation in Europe, Germany Session 7: Summary and Closings Closing Statement, UN-Habitat (Warsaw Office, Mr. K. Mularczyk) Closing Statement (GLTN, Ms. C. Augustinus) Closing Statement, Republic of Poland (Ministry of Infrastructure, Ms. M. Kutya)



Annex 2 List of participants

No. Country


Function / Institution
Secretary / Association for Good Government Professor / Karlsruhe University Associate Professor / National Institute of Urban Affairs Head / Center for Urban and Regional Studies at the Technion Israel Institute of Technology Project Manager / GTZ Ph-D candidate / Radboud University Nijmegen Director / Institute for Urban Development IRM Krakow Dr. / Warsaw University of technology Specialist, Urban Fees Unit, Department of Property Management, Ministry of Infrastructure Member of the Board / Union of Polish City Planners Student / University of Warsaw Inspector / Office of city planning, City of Warsaw Specialist / Main Office of city planning, Warsaw Undersecretary of State, Ministry of Infrastructure Specialist / Office of city planning, City of Warsaw Administrative Court, Warsaw, Poland


1. Australia Mr. GILES Richard 2. Germany Ms. KOPIETZ-UNGER Janina 3. India Ms. KUNDU Debolina 4. Israel Ms. ALTERMAN Rachelle 5. Montenegro Ms. MLLER Yvonne

janina.kopietz-unger@ arch.uni-karlsruhe.de dkundu@niua.org


yvonne.mueller@gtz.de demetrio@urbsadvies.nl

6. Netherlands Mr. MUOZ GIELEN Demetrio 7. Poland Mr. ADAMSKI Jerzy SKI Jacek 8. Mr. BOBIN 9. Ms. BRZESKA Anna 10. Mr. BUCZEK Grzegorz 11. Ms. CZARNECKA Danuta




czarnecka.d.e@gmail.com bmarczak@ warszawa.um.gov.pl

12. Ms. CZARNOWSKA Jolanta 13. Ms. DMOWSKA Eliza SKI Olgierd 14. Mr. DZIEKON 15. Ms. GAJEWSKA Graz yna 16. Mr. GDESZ Mirosaw


ggajewska@ warszawa.um.gov.pl miroslaw.gdesz@ warszawa.wsa.gov.pl



17. Mr. GRNICKI ukasz 18. Mr. GRABOWSKI Maciej SKI Andrzej 19. Mr. GRUDZIN 20. Mr. KOWALEWSKI Adam 21. Ms. KOWALSKA Magorzata 22. Mr. KOZOWSKI Edward 23. Mr. KROPIWNICKI Jerzy

Director / Department of marketing PKO Undersecretary of State / Ministry of Finance Member of the board / Forum of revitalization Chair/ Central Committee for Architecture and Urban Planning Specialist / Main Office of city planning, Warsaw Partner / Real Estate and Property in Poland (REAS) President / City of dz Head of the Urban Fees Unit / Department of Property Management, Ministry of Infrastructure Department of Property Management, Ministry of Infrastructure Director / Department of Property Management, Ministry of Infrastructure Vice Director / Office of city planning, City of Warsaw Specialist / Office of city planning, City of Warsaw Deputy Director / Property Management Department, Ministry of Infrastructure President / Polish Federation of valuers associations


apgrudzinski@gmail.com adam.kowalewski@ windowslive.com mpppsr@wp.pl edward.kozlowski@ein-epi.eu sekrprez@uml.lodz.pl gkubaszewski@mb.gov.pl

24. Mr. KUBASZEWSKI Grzegorz 25. Mr. KUCICKI Jan 26. Ms. KUTYA Magorzata 27. Ms. LATAA Jolanta SKA Anita 28. Ms. LIPIN 29. Mr. MAJCHERCZYK Grzegorz 30. Mr. MAECKI Zdzisaw




ggajewska@ warszawa.um.gov.pl gmajcherczyk@mb.gov.pl

zdzislaw.malecki@ aimproperty.pl bmarczak@ warszawa.um.gov.pl tamarko@uni.lodz.pl maxmendel@hotmail.com malgorzata.mikiciuk@ poczta.onet.pl marta.modelewska@gmail.com diana.polkowska@gmail.com

31. Ms. MARCZAK-WACAWEK Beata Office of city planning, City of Warsaw 32. Mr. MARKOWSKI Tadeusz 33. Mr. MENDEL Maksimilian Chairman / Union of Polish City Planners Residential advisor / REAS Doctoral Student / Warsaw School of Economics Student / Warsaw School of Economics Student / Warsaw School of technology

34. Ms. MIKICIUK Magorzata 35. Ms. MODELEWSKA Marta 36. Ms. POLKOWSKA Diana



37. Mr. PORAWSKI Andrzej 38. Ms. PRZEKOPIAK Justyna 39. Mr. SAEID Ahmed 40.

Director / Association of Polish Cities Director / department of local taxes, Ministry of Finances Urban Planner & Architect, Ph-D candidate / Wroclaw University of Technology

biuro@zmp.poznan.pl justyna.przekopiak@ mofnet.gov.pl aasaeid@gmail.com

LIWA Renata Ms. S Researcher / Institute of Spatial Planning and Housing President / Polish Federation of valuers associations Dr. / Cracow University of Economics Head of department / planning policies at the office of city planning, City of Warsaw Consultant, Ministry of Infrastructure Programme Manager / Development Action Group

renatasliwa@gmail.com eswietlik@poczta.onet.pl

WIETLIK Elz bieta 41. Ms. S CZYK Krzysztof 42. Mr. URBAN 43. Mr. WALAG Piotr 44. Ms. WISZOWATA-BACZEWSKA Jolanta 45. Mr. WAZ Pawe 46. South Africa Mr. HENDRICKS Moegsien 47. Ms. TONKIN Anzabeth 48. United Kingdom Mr. BOORER Malcolm

pfva@pfva.com.pl piotrwalag@gmail.com jwiszowata@ warszawa.um.gov.pl

pawel_waz@o2.pl moegsien@dag.org.za

Research Programme Leader / anzabeth@dag.org.za Development Action Group Independent Consultant Planning and Development consultant / Greg McGill & Associates Centre for Transport Studies, University College London International Union for Land Value Taxation Co Director / Earth rights institute Senior Fellow / Lincoln Institute of Land Policy malcolm.llaneli@virgin.net greg.mcgill@btopenworld.com

49. Mr. MC GILL Greg 50. Ms. MEDDA Francesca 51. Ms. WILCOX Carol 52. USA Ms. HARTZOK Alanna 53. Mr. HONG Yu-Hung UNECE 54. UNECE Mr. IVANIER Ariel UN-Habitat 55. UN-Habitat Nairobi Mr. ACIOLY Claudio

f.medda@ucl.ac.uk carol.wilcox@labourland.org earthrts@pa.net hong@lincolninst.edu

Associate Economic Affairs Officer / Environment, Housing and Land Management Division


Chief / Housing Policy Section





UN-Habitat Ms. AUGUSTINUS Clarissa Nairobi

Chief / Land, Tenure and Property Administration Section Inter-regional Adviser / Eastern Europe and Countries in Transition, Technical Advisory Branch Land Tenure Specialist / Land, Tenure and Property Administration Section Director of the Warsaw Office

clarissa.augustinus@ unhabitat.org

57. UN-Habitat Ms. ROSKOSHNAYA Tatiana Nairobi 58. UN-Habitat Mr. SIETCHIPING Remy Nairobi 59. 60. 61. 62. 63. 64. 65. UN-Habitat Mr. MULARCZYK Krzysztof Warsaw

tatiana.roskoshnaya@ unhabitat.org


krzysztof.mularczyk@ unhabitat.org gwendoline.mennetrier@ unhabitat.org julia.korysheva@unhabitat.org

UN-Habitat Ms. MENNETRIER Gwendoline Human Settlements Officer Warsaw UN-Habitat Warsaw Ms. KORYSHEVA Julia Programme Assistant

UN-Habitat Ms. ROMANOWICZ Katarzyna Intern Warsaw UN-Habitat Ms. EDELMAN Sabina Intern Warsaw UN-Habitat Warsaw UN-Habitat Warsaw Ms. OSAS Magorzata Intern

katarzyna.romanowicz@ unhabitat.org.pl sabina.edelman@ unhabitat.org.pl m.osas@wp.pl

Mr. WIKTOR Tomasz

UN-Habitat Consultant




Annex 3 List of Acronyms

ARV: Annual Rental Value AMC: Ahmedabad Municipal Corporation BBMP: Bruhat Bangalore Mahanagar Palike CBD: Central Business District CEE: Central and Eastern Europe CVS: Capital valuations system DAG: Development Action Group FBiH: Federation of Bosnia and Herzegovina GIS: Geographical Information systems GLTN: Global Land Tool Network GTZ: German Technical Cooperation JDM: joined development mechanisms LPT: Land and Property Taxation LVC: Land Value Capture LVT: Land value taxation MDG: Millennium Development Goal NGO: non-governmental organisation PT: Property tax RS: Republika Srpska RSA: Republic of South Africa TIF: tax increment finance UAM: Unit Area-based Method


UN-Habitat Warsaw Office ul. Krucza 38/42, 00-512 Warsaw, Poland Tel: +48 22661 97 23 Fax: +48 22661 97 24 E-mail: office@unhabitat.org.pl Website: www.unhabitat.org.pl

Global Land Tool Network (GLTN) UN-Habitat P.O. Box 30030 Nairobi 00100, Kenya E-mail: gltn@unhabitat.org Website: www.gltn.net