Financing A City's Vision (Case Study)

The Social Mobilization of Land Values in São Paulo
March 2022
English
Lincoln Institute of Land Policy

Case Outline:

Introduction

Topics

Land value capture, social housing, infrastructure

Timeframe

1970–2018

Learning Goals

  • Identify the economic and social forces that led to the establishment of the Água Espraiada Urban Operation in São Paulo.
  • Examine the national and local policy reforms that created the framework for the design and implementation of solutions.
  • Explore the tensions resulting from conflicting interests and motivations of residents, real estate developers, and city officials involved in redeveloping informal settlements.
  • Compare and contrast the benefits and limitations of traditional strategies (i.e., local taxes and fees) versus land value capture strategies (i.e., sale of development rights) for raising revenue to fund large-scale infrastructure projects.
  • Evaluate the outcomes of the Água Espraiada Urban Operation and identify ways the program realized or did not realize its original vision.

Primary Audience

  • Municipal officials and administrators from cities confronting challenges and opportunities for large-scale infrastructure projects involving real estate development pressure and informal settlements.
  • Staff of NGOs and community organizations involved in providing social housing and upgrading informal settlements.
  • Policy makers and advocates interested in using land value capture to help finance public infrastructure and social housing. 

Prerequisite Knowledge

None.

Summary

Financing A City’s Vision: The Social Mobilization of Land Values in São Paulo is a four-part documentary series created by the Lincoln Institute of Land Policy that explores a large-scale infrastructure project called the Água Espraiada Urban Operation in São Paulo, Brazil. Urban operations allow Brazilian cities to recapture the land value generated by land use changes and public investment. São Paulo employed a unique financing tool, certificates of additional construction potential (CePACs), which are tradable development rights sold at public auctions. Featuring the voices of favela residents, city officials, real estate professionals, and a range of academics, the series examines the Água Espraiada Urban Operation from multiple perspectives. 

These videos contain dialogue in both English and Portuguese. Subtitles are available in English, Portuguese, and Spanish. Click the “CC” button in the video player to enable subtitles. 

 

Chapter 1: Development and Displacement

The first chapter of this four-part series covers the decades leading up to the creation of the Água Espraiada Urban Operation—a large-scale infrastructure and densification project in São Paulo, Brazil. The video highlights three forces shaping the city during the 1970s, 1980s, and 1990s: the growth of informal “favela” communities, traffic congestion, and growing interest in the area’s real estate. When Mayor Paulo Maluf initiated a project to build a road along the Água Espraiada stream in 1991, a decade before the urban operation was established, thousands of favela residents were evicted and the city was plunged into debt. From this context, the idea for the Água Espraiada Urban Operation emerged. How might a city accomplish large-scale urban interventions without displacing residents or taking on debt? 

 

Chapter 2: An Innovative Solution

The second chapter of the series explains what an “urban operation” is, how CePACs work, and the inspiration behind these unique tools for major urban development projects. Community activism and a receptive administration in City Hall allowed a provision for social housing and services to be included in the list of interventions. A legal tool called special zones of social interest, or ZEIS, gave favela residents the right to housing on specific pieces of land.

 

Chapter 3: The Fight to Stay

In the third chapter of this four-part series, residents of the Jardim Edite favela community fight for their right to stay as powerful economic forces threaten to displace them. The first auctions of CePACs are held, raising money for the famous cable-stayed Estaiada Bridge, but it’s unclear whether money will be spent on the community’s promised social housing units. 

 

Chapter 4: Reflection and Renewal

The final chapter of the series brings us to the present. The video reflects on the dramatic transformation that has taken place since the urban operation was established in 2001, much of it funded through CePACs. The urban operation still has much to do to achieve its ambitious goals: the road needs to be extended and social housing for thousands of families needs to be built. As the city contemplates holding more CePAC auctions, social housing advocates work to ensure that funding is available. 

 

Exhibits

References

Barbosa, Eliana Rosa De Queiroz, et al. 2019. “Expectant Territories and Urban Instruments: The Case of Urban Operation Água Branca.” Rev. Bras. Estud. Urbanos Reg. 21(2) (Maio-Ago): 451–71. https://www.scielo.br/j/rbeur/a/ffchSrgY6CPMTdnjfQhXw4c/?lang=en

Biderman, Ciro, et al. 2006. “Large-Scale Urban Interventions: The Case of Faria Lima in São Paulo.” Land Lines (April), Lincoln Institute of Land Policy: 8–13. https://www.lincolninst.edu/publications/articles/large-scale-urban-inte...

Caldeira, Teresa, and James Holston. 2005. “State and Urban Space in Brazil: From Modernist Planning to Democratic Interventions.” Global Anthropology: Technology, Governmentality, Ethics. London: Blackwell: 393–416.

Fernandes, Edésio. 2011. Regularization of Informal Settlements in Latin America. Policy Focus Report. Cambridge, MA: Lincoln Institute of Land Policy. https://www.lincolninst.edu/publications/policy-focus-reports/regulariza...

Kim, Julie. “CePACs and Their Value Capture Viability in the U.S. for Infrastructure Funding.” 2018. Working Paper No. WP18JK1. Cambridge, MA: Lincoln Institute of Land Policy., https://www.lincolninst.edu/publications/working-papers/cepacs-their-val...

Mahendra, Anjali, et al. 2020. “Urban Land Value Capture in São Paulo, Addis Ababa, and Hyderabad: Differing Interpretations, Equity Impacts, and Enabling Conditions.” Working Paper No. WP20MA1. Cambridge, MA: Lincoln Institute of Land Policy (January) https://www.lincolninst.edu/publications/working-papers/urban-land-value...

Marcio, Fortes, and Billy Cobbett. 2010. The City Statute of Brazil: A Commentary. Cities Alliance and Ministry of Cities. Brazil., https://www.citiesalliance.org/sites/default/files/CA_Images/CityStatute...

Ribeiro, Silvio Cesar Lima, et al. 2016. “ZEIS Maps: Comparing Areas to Be Earmarked Exclusively for Social Housing in São Paulo City.” Land Use Policy 58(44667): 445–55. Amsterdam, Netherlands: Elsevier. (December 15) doi:10.1016/j.landusepol.2016.08.010

Sandroni, Paulo. 2011. “Urban Value Capture in São Paulo Using a Two-Part Approach.” Working Paper No. WP11PS1. Cambridge, MA: Lincoln Institute of Land Policy., https://www.lincolninst.edu/publications/working-papers/urban-value-capt...

Sandroni, Paulo Henrique. 2011. “Recent Experience with Land Value Capture in São Paulo, Brazil.” Land Lines (July): 14–19., https://www.lincolninst.edu/publications/articles/recent-experience-land...

Siqueira, Marina Toneli. 2019. “New Urban Policies, New Forms of Social Participation? The Challenges of the Água Espraiada Urban Consortium Operation in São Paulo, Brazil.” Cadernos Metrópole 21(45) (May/August): 417–38.

Smolka, Martim O. 2013. Implementing Value Capture in Latin America: Policies and Tools for Urban Development. Policy Focus Report. Cambridge, MA: Lincoln Institute of Land Policyhttps://www.lincolninst.edu/publications/policy-focus-reports/implementi...

Somekh, Nadia, and Cintia Marino. 2012.“São Paulo Planning History: From Sanitarism to Strategic Project.” Paper presented at the 15th International Planning History Society Conference, São Paulo, Brazil. http://www.usp.br/fau/iphs/abstractsAndPapersFiles/Sessions/31/SOMEKH_MA...

SP Urbanismo and Cidade de São Paulo. 2020. Operação Urbana Consorciada Água Espraiada Sumário. https://gestaourbana.prefeitura.sp.gov.br/wp-content/uploads/cadernos_ou...

Yu-Hung, Hong, and Gregory K. Ingram. Municipal Revenues and Land Policies (proceedings of the 2009 Land Policy Conference). Cambridge, MA: Lincoln Institute of Land Policy. https://www.lincolninst.edu/publications/books/municipal-revenues-land-p...

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