1. Land Based Taxes and Land Regularization
Presentation by: David Amborski,
Centre for Urban Research and Land Development Ryerson University,
Toronto, Canada
To: UN Habitat/ Jamaica
Date: December 12, 2018

2. Seminar Outline Land Based Financing and Land Value Capture
Theory (Economic) of Land Value Capture
History of Land Value Capture
The Range of Land Value Capture Tools
Applying Land Value Capture Tools to Land Regularization
Summary and Conclusions
Provisos

3. Land Based Financing and Land Value Capture
Land Based Financing Success depends on strong increasing land values
Consequently, revenue opportunities can be enhanced by increasing land values
What are the conditions or policies that support increasing land values
Land based tools can be used to capture the values

4. Theory of Land Value Capture
Methods to Capture “Unearned Increments”
Theory underling ‘Unearned Increments” identified by neoclassical economist David Ricardo
Ricardo and “economic rents”
19th Century Policy Controversy

5. US and Canadian Context
Legislation Regulating Urban Areas is undertaken at the sub-national levels of government
United States: 50 States
Canada: 10 Provinces
State or Provincial Legislation
City Charters or Planning Documents
Public Involvement at the Local Level

6. Actors in the Policy Process
Government (Local and-or Provincial)
Development-Building Industry
Municipalities (via their municipal associations)
Public (individual or groups)
Business Organizations (Chamber of Commerce)

7. Two Aspects of Land Value Capture
Land Value Creation
Land Value Capture

8. Land Value Creation and Capture
Supply
Enhancing the Public Realm
Infrastructure Investment
Demand
Increasing Population and Incomes Increasing Population and Incomes
Capture
By either the Public or Private Sector
Public Sector Capture requires use of “the tools”
Increasing Population and Incomes

9. Why Use Land Value Capture?
Theoretically Sound !
Application of the ‘Benefit Principle’
Generates revenue for the Public Sector
Example: The Henry George “single tax movement”…… “Site Value Taxation”

10. Overview of Land Based Financing Tools
Property Tax Applications
Site value taxation
Tax Increment Financing
Betterment Taxes
Developer Exactions
Development Charges/Impact Fees
Density Bonuses/ Linkage Fees
Inclusionary Zoning/Housing
Special Assessments/Taxes (Transit)

11. Overview of Land Based Financing Tools continued
Other Applications
Transfer of Development Rights
Public Land Leasing
Community Land Trusts
Land Readjustment
Public Private Partnership/ Joint Development
Sale of density/building rights

12. Objectives of Land Regularization
To provide residents with long term security of tenure for their homes
To ensure that the homes/communities have adequate urban services

13. Long Term Security of Tenure
Fee Simple Ownership
Long Term land Leases
In each case different land based financing tool may be used to help finance services

14. Provision of Urban Services
Provided by Local Municipalities
Which services are essential/most important?
Hard Services…… Property Related Services
Soft Services……..People Related
When will they be provided?
Which Services are necessary as soon as possible/essential?
Which Services can be phased in over time?
Implications for Financing
How will they be Financed?

15. How will services be financed?
Contributions by local municipalities
Contributions by senior levels of government
The use of land based/land value capture tools to help finance the services
Different tools to be applied depending on the form of security of tenure
Fee simple ownership
Long term land leases

16. Ownership: Land Based Tools
Property Tax
Special Assessments
Capital Gains/Betterment Type Taxes

17. Property Tax Property Tax = Assessment x Tax Rate
Tax Rate: Political Decision Annually
Rates may vary by property type or use
Assessment System: Policy Decision
A number of options for assessment base

18. Assessment Base Options
Property Characteristic Based
“Unit Value” Assessment
Property Value Based
Market Value (of Property) Assessment
Split Rate (land and improvements_
“Site Value Assessment” (Land Only)

19. Special Assessments Based on the Benefit Principle
Imposed on Benefiting property once services are installed
Questions must be addressed upon the quantum and structure of the assessment/charge
The revenue generated should be used to defray the cost of the services provided

20. Capital Gains/Betterment Taxation
A tax could be imposed upon sale of a property
This would be based on the increased value of the property
Government permission and services contributed to the increased value
A percentage of the increased value would be earmarked to pay for service provision (repay bonds)

21. Security Via Land Leasing
Public Land Leases
Community Land Trusts
Government Owned Land
Owned by NGO

22. Public Land Leasing The land is retained in government ownership
The government may issue bonds to finance the provision of services
The lease revenue is then used to repay the bond
Lease rates and terms are determined by the government agency: term, rates, increase, etc.

23. Public Land Leasing: MassPort (Boston)
Massachusetts State Agency had surplus land in the waterfront
They issued bonds to finance the provision of infrastructure in the area
The bond was secured and repayment based on future lease revenue
Very successful, Non-residential and residential property

24. Community Land Trusts Two Options/models Government owned and managed
Similar to Public Land Leasing except registration of land
Managed by an NGO
Community owned and more democratic
In both cases financial contributions may be required to help finance services

25. Community Land Trusts
Broadly used in the US and growing interest in Canada
There are many variations on the model
Community Based Process to set up
Democratic Management ( Board)
Fees can be required for numerous purposes including repayment for services

26. Summary/Conclusions
Land Based Financing Tools have the potential to support service provision for land regularization.
Each tool is a generic name that can be applied in a variety of ways and jurisdictions
Each tool must be considered in the context of it legal basis, market conditions and political context

27. Summary/Conclusions continued
Land based financing is not a “silver bullet” in this application, it can help support/finance regularization objectives
The financial contribution will relate the to “ability to pay” of the property owners/occupants
An important part of the context is the senior government policy disposition toward supporting regularization including financial support

28. Summary/Conclusions continued
Also important in the context is the local municipalities fiscal capacity to subsidize and/or front end the financing of services