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The Lincoln Institute’s China Program was established several years ago, in part to develop training programs on property taxation policy and local government finance with officials from the State Administration of Taxation (SAT). The Institute and SAT held a joint forum on international property taxation in Shenzhen in December 2003, and more than 100 participants attended another course held in China in May 2004. In January 2005, 24 Chinese tax officials from 15 provinces visited the United States for additional programs; many of them are developing property tax systems in six pilot cities. The Institute also supports the Development Research Center (DRC) of the State Council to research property tax assessment in China, and they jointly organized a forum in February 2005.
Economic growth and institutional reforms in China over the past two decades have created profound changes within the society. The central authorities now need to set forth new policies and procedures for modern governance to address devolution of certain authority to local governments, rapid urban and rural development, and changes in land uses and land and fiscal policies. The national government’s commitment to further modernization is most evident in the effort to develop and implement a new property taxation system.
This article describes the current system and discusses issues and challenges that must be overcome to implement a successful property tax policy in China. Given the complexity of this endeavor and the huge variation in economic development across the country, a gradualist approach, which has proved effective in China’s modernization process, may be the best way to initiate property tax reform and development.
Current Taxation System
China collects 24 types of taxes. The central and local governments share the value added tax (VAT) and business tax revenues; the former tax is the primary revenue source for the central government, whereas the latter is the most important tax for local governments. Two other important tax sources for the central government are the consumption (excise) tax and the personal income tax. Twelve taxes are related to land and property, but most do not generate significant revenues. The business tax accounted for 14.41 percent of total central and local government revenues in 2002, but only a small portion of that amount was generated from property-related sources. The reason is that business and income taxes are collected only when land or property is rented or sold, and thus do not provide a steady stream of revenue. It is hard to imagine that any of the 12 property-related taxes could play a key role in resource allocation and local government finance over the long term.
An evaluation of the current tax system reveals additional concerns.
The shortcomings in the current taxation system have resulted in major fiscal problems for the central government, such as declining revenue mobilization and ineffective use of tax policy to leverage macroeconomic policy (Bahl 1997). When the government conducted tax reform in 1993 to overcome some of the problems, one of the largest initiatives shifted responsibility for urban and public services to local governments.
This measure was successful in improving the central government’s fiscal condition; however, the revenue share for local governments was not increased at a level commensurate with their increased responsibility. Consequently, many local governments face increasing budgetary deficits. Figure 1 illustrates the financial deficit for local governments after the 1993 tax reform. More than one-third of county-level governments have serious budget problems and over half of the local governments directly below the provincial level have budgets that merely cover the basic operations of public entities.
Public Land Leasing
One of the means by which local governments increase revenues in the absence of an effective taxation system is through public land leasing. In the late 1980s and early 1990s, the state introduced market principles into the decision-making process regarding land use and allocation by separating land use rights from ownership. This separation promotes the development of land markets, which in turn have created tremendous impacts on real estate and housing development, urban land use and land allocation. Except for a short yet dramatic drop in the early 1990s due to a macroeconomic policy designed to prevent the national economy from overheating, the prices for access to land use rights and public land leasing rates have been increasing steadily.
Despite the significant number of land leasing transactions, the government closely regulates and controls the amount of land being leased by maintaining a monopoly on land supply (Ding 2003). Most land in rural areas still belongs to the collectives, and urban construction is prohibited on rural land unless it is first acquired by the state. Land developments that occur on collectively owned rural land are considered illegal, and administrative efforts such as monitoring and inspecting have been implemented to eliminate these violations.
General land use plans and regulations to preserve cultivated land further control the amount of land available for urban development. The land use plans determine the total amount of land that can be added to existing urbanized areas through an annual land supply quota. At the same time, China’s preservation policy for cultivated land influences both land supply and the location of land available for urban development. The Land Administration Law specifies that at least 80 percent of cultivated land should be designated as basic farmland and prohibited from land development. Land productivity is the dominant factor used to delineate the boundaries of basic farmland. Since most cities are located in areas with rich soil resources, farmland protection designations commonly exist in urbanizing areas. Thus farmland protection inevitably results in urban sprawl and leapfrog development patterns requiring costly infrastructure investments and land consumption.
Financing Local Government. As a result of the government’s regulations and monopoly on selling land use rights, local authorities use the public land leasing system to increase their revenues through land use conveyance fees. For instance, Hangzhou City, the capital of Zhejiang Province with a population of almost four million, is among the top five in per capita national income and GDP. The city generated land conveyance fees of more than six billion YMB in 2002, more than 20 percent of the total municipal government revenues.
Interestingly, these fees were generated largely from selling to commercial users the right to access the state-owned land, yet commercial land development represented only 15 percent of total land uses in newly developed areas. The rest of the land was allocated to users through negotiation in which the sale price either barely covered the costs of acquiring and improving the land, or land was offered free to generate competition for businesses and investments.
Local governments can raise enormous revenues from limited-market transactions of land use rights, in part because land conveyance fees represent lump-sum, up-front land rent payments for a leasing period and in part because local governments exercise their strong administrative powers to require farmers to sell their land at below-market rates. When the government later resells the land at market rates, the price could be more than 100 times the purchase price. After considering the costs of land improvement, however, net revenues may be only ten times the total cost of the land.
Rising land prices resulting from the government monopoly allow local governments to use the land as collateral to borrow money from banks. These loans plus the revenue generated from conveyance fees accounted for 40 to 50 percent of the Hangzhou municipal government budget in 2002. In turn these revenues were used to fund more than two-thirds of the city’s investments in infrastructure and urban services.
Hangzhou City specializes in textiles, tourism, construction and transportation, and generates substantial revenue from business and value-added taxes, although the city’s share of income generated through the public land leasing system is also large. Many smaller cities and towns with fewer commercial and business resources use land leasing directly through land conveyance fees or indirectly as collateral to support up to 80 or 85 percent of their total investments in urban initiatives. These smaller cities must turn to land to generate revenues to fuel economic growth, launch urban renewal projects, and provide infrastructure and urban services that were neglected for a long time prior to the reform era. Land-generated revenue is also used to improve the overall financial environment, attract businesses and investments, and support the reform and reallocation of state-owned enterprises.
Negative Consequences. Despite the importance of public land leasing for income generation, the practice of using this tool to finance local governments may have serious consequences in the long run. The fiscal incentives that compel local governments to control and monopolize the land markets will negatively impact real estate and housing development, industrialization and land use. Furthermore, land is a fixed resource and ultimately there will be no more land left to lease for revenue.
Increasing pressure to protect the rights of farmers also makes it more difficult and costly to acquire land from farmers. As a result, local governments must increase land prices or face reduced revenues from land leasing. Finally, not only does land scarcity and farmer compensation pose a challenge to income generation, but recent policy reform now permits land owned by a collective to enter the land market directly. This change will prevent local governments from acquiring collective lands and exacting conveyance fees for these transfers.
Taxation Reform: Principles and Challenges
The fiscal deficits experienced by local governments and the problems with the resulting public land leasing system provided the impetus for the central government to restructure the entire taxation system. That reform is based on four guiding principles: (1) simplify the tax system; (2) broaden the tax base; (3) lower tax rates; and (4) strictly administer tax collection and management. The central authorities in charge of tax policy and administration offer several specific goals with respect to property-related taxes.
Considerable debate exists over the merits of the proposed property-related tax reform. Despite the lack of consensus as to the best option, the costs and benefits must be assessed to effectively guide the development and implementation of a new property tax system. In addition, several outstanding issues need to be resolved in order to implement the proposed land and property tax reform.
The implementation of a value-based tax also will require the assembly and cataloguing of massive quantities of data, which historically have not been collected systematically. Furthermore, the data that have been collected are stored in different locations and in paper format. The Ministry of Land and Resources records and handles land-related data and information, whereas the Ministry of Construction is in charge of structure-related information. Matching related records from different ministries and digitizing this data will take years if not decades and will require a huge investment of resources.
The Chinese public has limited understanding of property taxation systems, so education will be required to avoid potentially significant political resistance. Capacity building within the Chinese government also will require professional training in appraisal, evaluation, appeals and collection to achieve effectiveness and efficiency in the new tax system.
Conclusions
Despite these unanswered issues and challenges, the Chinese government appears committed to implementing property taxation reform. The application of the widely used and successful gradualist approach for implementing policy and institutional reforms will ensure that the development and institutionalization of the property tax system proceeds on course. For example, data for industrial and commercial structures is more complete and of higher quality than data for residential structures. Furthermore, newer structures tend to have better records than older structures, and records are more complete for structures in urban areas than in rural areas. Thus, applying the property taxation system first to commercial and industrial structures, newly developed land with residential structures, and urban areas will allow the system to take hold before attempts are made to implement change in the areas with greater obstacles to overcome.
References
Bahl, Roy. 1997. Fiscal policy in China: Taxation and intergovernmental fiscal relations. Burlingame, CA: The 1990 Institute.
Development Research Center. 2005: Issues and challenges of China’s urban real estate administration and taxation. Report submitted to the Lincoln Institute of Land Policy.
Ding, Chengri. 2003. Land policy reform in China: Assessment and prospects. Land Use Policy 20(2): 109-120.
Liu, Z. 2004. Zhongguo Suizi Gailan. Beijing: Jinji Chuban She. (China’s taxation system. Beijing: Economic Science Publisher).
Lu, S. 2003. YanJiu ZhengDi WenTi TaoShuo GaiKe ZhiLu (II). Beijing: Zhongguo Dadi Chuban She. (Examination of land acquisition issues: Search for reforms (II). Beijing: China Land Publisher.)
Chengri Ding is associate professor in the Department of Urban Studies and Planning at the University of Maryland, in College Park. He specializes in urban economics, housing and land studies, GIS and spatial analysis. He is also special assistant to the president of the Lincoln Institute for the Program on the People’s Republic of China.
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Report from the President on Property Rights
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As a city grows in size and building density, improvements to the land supporting the new development are usually part of the growth process. However, the combination of demand for additional construction sites and the limited amount of physical land available for development often results in land price increases.
This land scarcity is caused by three primary factors: the ability of landowners to retain serviced land from the market (attributed to a concentration of land ownership and legal and other institutional constraints); difficulties in accessing areas not yet prepared for occupation due to a lack of infrastructure; and restrictions imposed by zoning. Each of these factors has its own dynamics, but they are not necessarily present at the same time. Such is the case in Brazilian cities, particularly São Paulo, where these restrictive factors do not always operate in the same way with regard to land price.
For example, building regulations may reduce the land price of individual plots, but increase the overall price when the regulations affect all plots and thus restrict housing supply. A large stock of vacant land controlled by a few owners can cause price increases, while the lack of accessibility can result in lower prices. Land price also depends on the nature of the land regulation. As the city grows, the greater demand for buildable urban land generally results in added values if the existing infrastructure supports a more intense occupation of land and the zoning regulations (or changes thereto) also permit higher building density.
To examine these issues, we must consider first how the investment in infrastructure that provides or intensifies the means of access and use of land is financed; and second how the benefits and costs from the land improvements are distributed. Generally the cost of public services (e.g., streets, bridges, sewers, lighting, water) is paid with public funds, whereas the improvement or added value to the land created by the public investment in infrastructure, with few exceptions, is reaped by the owners of the improved property entirely free of charge.
Increases in property value also may result from simple changes in the use of land that is already accessible, for example when land previously considered rural is redefined as urban. Changes in potential densities due to new zoning regulations can create great benefits for the affected properties, although in this case as in the previous one future pressure on the infrastructure will require substantial public investment.
The Legal Framework
Owners of improved property in Brazil, as in most countries, traditionally appropriated the added value generated by public sector investment and zoning changes. The notion that owners should not be the only beneficiaries of such improvements was introduced in Brazil gradually during the 1970s, and this principle was incorporated in articles 182 and 183 of the 1988 Federal Constitution. These articles were subsequently regulated by Federal Law No. 10,257 of 2001, also known as the Urban Development Act or City Statute (Estatuto da Cidade).
Since 1988 urban development has been a matter of federal law. In practice, the federal legis-lation ratified the principle of the social function of urban land ownership and the separation of the right to own land from the right to build. Based on the 2001 act, the City of São Paulo approved its Strategic Master Plan in 2002 and Land Use Law 13,885 in 2004. These laws introduced the mechanism of Charges for Additional Building Rights (Outoga Onerosa do Direito de Construir–OODC), established minimum, basic, and maximum coefficients of land use (or floor area ratios), and limited the supply of buildable area. These tools, utilized together, enabled the municipality to improve land management efficiency, promote socially desirable outcomes, and increase revenues.
The minimum coefficient or floor area ratio (FAR) refers to the minimum use expected from a plot to comply with its social function; the basic FAR refers to the buildable area that any owner has the right to develop by virtue of ownership; and the maximum FAR is the amount of development that could be supported by the existing in-frastructure and zoning regulations. The charges associated with the OODC are imposed on the difference between the maximum FAR and the basic FAR of a plot.
The Administration of Building Rights
The OODC is the monetary compensation paid by those who receive new building rights (buildable area) from the government. This development con-cession (provided by articles 28, 29, 30, and 31 of Federal Law 10,257 of 2001 and defined in articles 209 to 216 of the 2002 Strategic Master Plan) is one of the regulatory instruments used to administer building rights in the city, except in areas designated for large-scale urban operations that use a special legal instrument to encourage public-private interventions (Biderman, Sandroni, and Smolka 2006).
The basic FAR of land use established in 2004 varies between 1 and 2, depending on the area of the city considered. The maximum FAR can be 1, 2, 2.5, or 4, also depending on the area. In some urban areas these new regulations reduced building rights by establishing a basic FAR of 1 for land that had been designated 2 or more under prior legislation. In parallel, the municipality of São Paulo used the OODC to extend the building potential or the maximum FAR up to 4 on land that previously could be developed up to only 1 or 2.
As a result, in certain areas where the FAR was reduced from 2 to 1, developers could submit projects using the former FAR 2, or even the maximum FAR 3 or 4, as long as they paid the government for the additional buildable area corresponding to the difference between the basic FAR and the FAR used in the project. This instrument favors developers, assuming they find the charges cost-effective, because it allows them to build up to FAR 4 in areas where formerly the maximum was FAR 2. Typical landowners do not always find this tool advantageous, however, since the building potential of their land may be reduced and a charge may be imposed on what they previously perceived as a right to build, free of any charges.
Landowners of small lots and low-density housing may not notice what they could be losing when the FAR is changed because they typically view their property as combining the land, building, and other improvements. It is difficult to separate the value of land from that of improvements, so an eventual land value decrease is not perceived immediately. Furthermore, the expansion of the real estate market in São Paulo coincided with the approval of this new legislation in 2004, and the overall increase in land prices may have compensated the eventual price decline associated with changes in FAR. It is also necessary to note that the expansion of government credit for house financing since 2006 contributed to an increase in demand for land and consequently the rise of land prices.
For the developers, the increase in FAR to 4 in areas where the maximum had been 1 or 2 constituted a favorable situation. They could invest more capital in land and make more profitable undertakings, thus compensating for the extra payment they made for the difference between the basic and the maximum FAR. Gradually, developers were convinced that it was better to pay this land value increment to the government than to private owners because the government converted the payments into improvements that frequently benefited the developers’ projects.
The 2002 Strategic Master Plan and Law 13,885 of 2004 also limited the supply of residential and nonresidential building potential in all city districts by establishing a total additional buildable area of 9,769 million square meters (m2): 6,919 million m2 for residential use and 2,850 million m2 for nonresidential use (table 1). This potential did not include the buildable areas inside the perimeter of São Paulo’s 13 urban operations. The additional areas were distributed among the 91 out of 96 city districts, excluding five environmentally protected areas. This definition and demarcation of the potential building stock introduced a new element to the real estate market.
Once the maximum building area was known, developers anticipated land scarcity in those districts where the supply was low and the real estate dynamic high, thus unleashing a trend in higher land prices. The lack of buildable area, in turn, lead to pressures from real estate developers for the government to increase the supply—that is, to change the building area limits in some districts during the 2007 revision of the master plan—but their efforts were not successful. By October 2010 the land supply had been exhausted, or was very close to it, for residential use in 17 districts and for nonresidential uses in 5 districts (figure 1).
Planning and Social Interest Factors
The formula to calculate the OODC charge adopted in São Paulo’s 2002 Strategic Master Plan takes into account planning and social interest factors in addition to the characteristics of the parcel and the actual economic benefit allocated to the property as a result of the OODC.
The planning factor is an instrument that seeks to encourage or discourage higher densities in certain areas, depending on the existing infrastructure, especially public transport and mass transit. The planning factor is also used to obtain greater financial compensation from the sale of building rights for businesses in improved areas of the city, as the coefficient varies according to whether the land use is residential or nonresidential.
The social interest factor establishes exemptions or reductions in the financial charge, depending on the type of activity to be developed on the parcel. The coefficient ranges from zero to one and is applicable to a variety of activities. For example, the coefficient for affordable or social housing is zero, which means that developers of this type of housing do not pay compensation for additional building rights. Similarly, nonprofit hospitals, schools, health and infant care clinics, cultural facilities, sports and leisure institutions, and houses of worship have a coefficient of zero.
These factors act as incentives for desirable social outcomes, since the smaller the planning and social interest factor coefficients applicable to a given area, the smaller the charge to be paid, and the greater the incentive for projects to be developed in the area.
Revenue Impact and Allocation of Funds
Total revenues from OODC payments reached R$650 million (US$325 million) in approximately five years, in spite of the global financial crisis that constricted credit by end of the period (table 2). These funds are deposited into the Urban Development Fund (FUNDURB), which was created to implement plans and projects in urban and environmental areas, or other interventions contemplated in the 2002 master plan.
As of September 2008, the number of projects approved to be financed by FUNDURB included 15 linear parks (R$42.5 million), sidewalk and street improvements (R$21.2 million), drainage and sanitation (R$108 million), community facilities (R$ 21.1 million), regularization of informal settlements (R$50 million), and restoration of culture heritage buildings (R$37 million).
Concluding Remarks
After the City of São Paulo approved the 2002 Strategic Master Plan, the principle of development concessions and buildable land was applied throughout its territory. When a real estate project exceeds the basic FAR and the developer wants to build up to a maximum of 4, payment of financial charges to the government is required. Since the OODC was introduced, revenues have increased annually. One should keep in mind that these revenues are net of the more than US$1 billion generated from 2 of the city’s 13 Urban Operations (Faria Lima and Agua Espraiada) where major zoning and density changes are occurring (Biderman, Sandroni, and Smolka 2006). In those areas the new building rights are priced through the auction of CEPACs, and the revenues must be invested in the area corresponding to the urban operation instead of going to the FUNDURB fund to benefit the city as a whole (Sandroni 2010).
The charge for building rights in São Paulo does not seem to have affected the profitability of developers. On the contrary, increasing the maximum FAR to 4 in some areas of the city contributed to enhancing the developers’ rates of return. However, setting a maximum reserve for building rights seems to have caused an upward trend in land prices, especially in districts where the supply of buildable area is low. In some districts developers proceeded to deplete the supply of residential building rights quickly. This type of response will probably intensify in the future, thus putting pressure on the city government to raise the maximum stock of buildable area and/or the maximum FAR. If this happens, there is a risk that the motivation to increase municipal revenue may outweigh urban planning criteria and the limitations of infrastructure, especially public transportation and mass transit.
Moreover, the flow of financial compensation will not be continuous. Unlike property tax revenues that recur annually, revenues from the sale of building rights will fade in time as the additional building potential is exhausted. In some sectors of the city the supply of buildable area has already been depleted, and the city has achieved its defined goal for building density. However, future changes in the master plan may provide greater building potential for these areas, depending on technical recommendations and the political conditions for the change to take place.
In sum, the application of the principle of the social function of property, embedded in the 2002 Strategic Master Plan for São Paulo, enabled the enactment of municipal legislation that clearly separates the right of ownership from the right to build. As a result, the traditional notion of all-encompassing property rights is no longer sustained, and land ownership cannot override the public interest or take precedence over the social function of property. Consequently, existing building rights can be reduced without landowners being entitled to monetary compensation simply because their hopes have been dashed.
About the Author
Paulo Henrique Sandroni is an economist who served as director of urban planning and public transportation for the City of São Paulo from 1988 to 1993, and for a short period he served the federal government as vice-minister of administration. He has published articles and books on economics, including a dictionary considered a primary reference on economics in Brazil. Sandroni is also a professor at the Economics and Business School at the Getulio Vargas Foundation in São Paulo, a private consultant on urban development and transportation issues, and a lecturer in programs sponsored by the Lincoln Institute of Land Policy.
References
Biderman, Ciro, Paulo Sandroni, and Martim O. Smolka. 2006. Large-scale urban interventions: The case of Faria Lima in São Paulo. Land Lines 18(2): 8–13.
Prefeitura Municipal de São Paulo, Secretaria de Financas. www.prefeitura.sp.gov.br/cidade/secretarias/financas
Sandroni, Paulo. 2010. A new financial instrument of value capture in São Paulo: Certificates of additional construction potential. In Municipal revenues and land policies, Gregory K. Ingram and Yu-Hung Hong, eds., 218–236. Cambridge, MA: Lincoln Institute of Land Policy.
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Antonio Azuela, a fellow of the Institute for Social Research at Mexico’s National University, holds law degrees from the Universidad Iberoamericana (Mexico) and the University of Warwick (England), as well as a Ph.D. in sociology from Mexico’s National University (UNAM). Since the late 1970s, he has been engaged in research and teaching on urban and environmental law from a sociolegal perspective. His book Visionarios y pragmáticos: Una aproximación sociológica al derecho ambiental (Visionaries and Pragmatists: A Sociological Approach to Environmental Law), Mexico: UNAM, 2006, is a sociological reconstruction of his experience as General Attorney for the Environment in the Mexican Federal Government, from 1994 to 2000. He has recently edited the book Expropiación y conflicto social en cinco metrópolis latinoamericanas (Expropriations and Social Conflict in Five Latin American Metropolises), published by UNAM and the Lincoln Institute of Land Policy in 2013.
Land Lines: How did you get involved with the Lincoln Institute of Land Policy?
Antonio Azuela: In 1991, I met several of the Institute’s officers while they were on an exploratory trip to Mexico. I stayed in touch, because I was interested in the Institute’s approach to urban policy. My relationship grew stronger in 1998 through a meeting in Cairo organized by the International Research Group on Law and Urban Space (IRGLUS), where the Institute expressed interest in a sociolegal approach to urban land problems. In 2000, I was honored with an invitation to join the Institute’s Board of Directors. Since then, I have been in permanent contact with the Lincoln Institute staff and programs.
Land Lines: Why has the public acquisition of land become such a critical issue, particularly in Latin America?
Antonio Azuela: Expropriation, also known as eminent domain (i.e., the compulsory acquisition of land by the state) is an important subject all over the world, because it is a way of procuring land for public urban projects. But in Latin America it is even more critical, due to the weak nature of the state regarding urban matters. Before the democratic transition in the region, it was easier for governments to procure land using mechanisms that would be questionable in a democracy. But the transition has strengthened the judicial branch, which is generally unsympathetic to government interventions in the marketplace. Now, it’s increasingly possible for private owners to interfere with the public acquisition of land in the region (with the notable exception of Colombia, where a wide-ranging coalition of professionals, judges, and social organizations supports the doctrine of the social function of property). This trend can be seen, for example, in the exorbitant compensation that some courts have granted for land expropriations in Mexico City and São Paulo.
Land Lines: What are the main watershed issues?
Antonio Azuela: The first is the adoption of economic policies that advocate a lesser role for the state. The second pertains to the legal status of property rights. When constitutional reforms empower judges to limit the power of eminent domain, this restriction is not necessarily bad, because it can lead to higher quality public administration, but in the short term it has interfered with government power to purchase urban land for public projects. There are two notable exceptions: In Brazil and Colombia, constitutional reforms have established urban policies inspired by ideas of social justice—though only in Colombia do we find a new generation of judges who act in accordance with these principles. In Brazil, the courts are dominated by the classic liberal view of private property, which interferes with the ability to implement the social function of property—an idea that has been circulating in Latin America for almost a century.
Land Lines: Many jurisdictions prefer to acquire land in the open market instead of using instruments such as eminent domain.
Antonio Azuela: Eminent domain should not be the first option for acquiring land. The challenge is for governments to regulate a variety of instruments in order to achieve a general goal, which is to reduce the land component of the total cost of urban development. The use of eminent domain must be guaranteed by a strong legal framework that can establish an adequate balance between the power of the state and the power of the landowners, and it should be the last option when acquiring land for public urban projects.
The big problem is the cost of land, but the mechanisms of government intervention can inflate prices. For example, if the use of eminent domain is not expected to increase land value, and the judges determine it’s the right approach, it can have a positive impact on land markets. At the very least, we can expect from governments that their acquisition of land does not raise prices.
Land Lines: What are the main outcomes of your research on the use of eminent domain for urban development in the region?
Antonio Azuela: While there is a general trend to strengthen property rights, which interferes with the power of eminent domain, this trend shows several variations, depending on the relationship between the judicial and executive branches in the post-authoritarian governments of the region. The process of institutional change depends less on global trends than on domestic and even local forces, as certain cities follow different paths from others in the same country. Even if all local governments were to adopt the same strategy, the courts in one region will protect landowners more than the courts in other regions. The metropolitan area of Buenos Aires, for example, illustrates how the institutional system of eminent domain is not homogeneous, even within the same metropolitan area. In the Autonomous City of Buenos Aires, for example, people who live in informal settlements (villas miseria) have gone to court and prevented evictions. In the Province of Buenos Aires, however, the political climate is such that there is no threat of eviction; eminent domain is used to ensure that settlers can remain where they are.
Another important lesson is that there is no authentic dialog in Latin America on the significance of eminent domain or on the various ways the courts have tackled the dilemmas it presents. While the constitutional thinking in the region is very rich in ideas about certain legal issues, such as the rights of indigenous people and the elderly, urban policies—in particular, eminent domain—have not triggered deep discussions among legal scholars. Unfortunately, these issues seem to be viewed as exceptions, despite the enormous number of people who live (suffering or enjoying) in large urban centers.
Land Lines: Are eminent domain compensations arbitrary or unfair? If so, for whom?
Antonio Azuela: Inadequate compensation is, no doubt, one of the great challenges for the future development of eminent domain as a land policy instrument. In some cases, governments may take advantage of the powerlessness of certain social groups and offer them ridiculously low compensation for their land or homes. In other cases, however, the landowner’s economic power and influence can result in exorbitant compensations. Beyond these two extremes, in which the affected landowner is either very vulnerable or very powerful, it is difficult to discern a dominant trend.
A precise answer to your question would require a market study of a large number of eminent domain cases in order to determine if the compensation is high or low when compared to preestablished criteria. The existing research has shown, however, that in general the courts do not possess clear and widely shared criteria for determining whether compensations are fair. Moreover, courts lack the capacity to understand what is at stake during the process of urban transformation in which eminent domain is used. Consider, for instance, the case of a prominent family from Ecuador that received a very high compensation for the expropriation of agricultural land on the periphery of Quito. What is remarkable is that this case was decided by the Inter-American Court of Human Rights, and it was obvious that the court did not establish clear criteria to determine the amount of compensation; it simply averaged the assessments submitted by the different parties. The compensation was the highest ever awarded by this high court, which was created to address violations of human rights committed by dictatorships yet ended up benefiting private property owners at the expense of the public interest. The fact that this case did not create a scandal among constitutionalists in the region indicates how marginalized urban legal issues are in Latin America.
Land Lines: What are some changing trends you have observed?
Antonio Azuela: I observe, with some optimism, that many courts and local governments in the region are undergoing a learning process, trying not to repeat prior judicial mistakes. Unfortunately, these lessons rarely transcend the affected local area and become incorporated into the common regional juridical knowledge.
Land Lines: What sort of education or training would you recommend?
Antonio Azuela: Logically, we need to intensify exchanges among different disciplines and countries, placing the courts at the center of the discussion, as they will make the final decisions. These decisions should express the best possible synthesis of a body of knowledge that we need to build around the urban dynamics of the region. In the contact we have had with the courts, with the support of the Lincoln Institute, we have found that once a dialog is established, judges understand the need to learn more in order to grasp the effects of their decisions. In other words, while the courts do not seem to show a great interest in urban problems, as evidenced by the routine attitude shown in their day-to-day decisions, they can see new perspectives for their own professional development in the context of a critical analysis of urban issues.
Land Lines: What are the critical issues that need to be investigated more deeply? What is it that we do not yet know?
Antonio Azuela: We should try to understand the logic of court decisions in the region. We frequently make a simplistic interpretation of the actions taken by the courts, because the media tend to amplify the worst cases. However, many judges make an effort to find the best possible solution to each case. Under what conditions do they operate? One of the challenges of investigating these issues in Latin America is to understand the real world in which these decisions are made, apart from the common but always relevant themes of corruption and incompetence. We need to analyze statistical information to observe general trends, combined with an ethnographic approach to the functioning of the courts. Only then will we be able to understand what needs to be reformed in order to improve the court performance in urban conflicts. While it is important to ascertain who is being favored by the court decisions—which can be done by analyzing the contents of judicial decisions—we need better understanding of the conditions under which these decisions are made. In order to do that, we need to get closer to the courts themselves.
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Una versión más actualizada de este artículo está disponible como parte del capítulo 2 del libro Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.
En países subdesarrollados, la mayoría de los programas y propuestas de gestión urbana han requerido adoptar un criterio de orientación social a los derechos de propiedad, lo que garantiza una intervención estatal de amplio alcance sobre el control del uso y desarrollo del suelo. Ése es el caso particular de los programas de regularización del suelo.
Sin embargo, la adopción generalizada de políticas de liberalización y esquemas de privatización ha promovido una interpretación individualista y tradicional de los derechos de propiedad, que dificulta los intentos progresivos de disciplinar el uso y el desarrollo de la propiedad urbana.
Se trata de una paradoja aparente que revela la brecha entre una definición más progresiva de los derechos de propiedad y la tendencia actual en pro de la privatización. ¿Son estas tendencias mutuamente exclusivas, o pueden conciliarse hasta cierto punto?
Estas preguntas fueron el tema central de dos talleres de trabajo que tuvieron lugar en Johannesburgo (República Sudafricana) a finales de julio, dirigidos a legisladores, gestores urbanos y académicos. El Sexto Taller de Trabajo de “Legislación y Espacio Urbano” fue patrocinado conjuntamente por el Grupo Internacional de Investigación sobre Legislación y Espacio Urbano (IRGLUS) y el Centro de Estudios Jurídicos Aplicados (CALS) de la Universidad de Witwatersrand. El Instituto Lincoln contribuyó a la realización de este taller y también patrocinó un seminario sobre seguridad de tenencia del suelo en la República Sudafricana, los países subsaharianos, Brasil y la India.
Marco de trabajo conceptual para la legislación y el espacio urbano
IRGLUS, un grupo de trabajo del Comité de Investigación en Sociología Jurídica de la Asociación Sociológica Internacional (ISA), se propone organizar debates sobre la dimensión jurídica del proceso de urbanización, con la idea de promover ese diálogo tan necesario entre los estudios jurídicos y los estudios ambientales urbanos. La mayoría de los estudios urbanos han reducido el aspecto legal —incluidas las estipulaciones jurídicas, las decisiones judiciales y la cultura jurídica en general— a su dimensión instrumental: una corriente rechaza la ley como si fuera nada más que un simple instrumento político de discriminación social y exclusión política, mientras que otra la da por hecho, como si se tratara de un simple instrumento técnico que puede brindar soluciones fáciles e inmediatas a los crecientes problemas urbanos y ambientales.
Para expertos y profesionales urbanos, no están claras las razones de las crecientes prácticas ilegales identificadas en zonas urbanas, particularmente las que se refieren al uso y desarrollo del suelo. Según los datos existentes, si se toman en cuenta los patrones de acceso al suelo y de construcción, pareciera que entre el 40 y el 70 por ciento de la población de las principales ciudades de los países subdesarrollados está, de uno u otro modo, al margen de la ley, y ese número no está limitado a la población de bajos recursos.
Muy pocos estudios se han preguntado el porqué de este fenómeno de ilegalidad urbana, por qué importa y qué puede hacerse. Los observadores, en general, no han podido visualizar la aparente división que hay entre las llamadas ciudades “legales” e “ilegales” como una intrincada red de relaciones muy cercanas y al mismo tiempo contradictorias entre las reglas oficiales y las no oficiales, y entre los mercados formales e informales de los suelos urbanos.
En la mayoría de los países subdesarrollados, la inexistencia de una política habitacional eficaz, en combinación con fuerzas comerciales descontroladas, despoja de soluciones habitacionales adecuadas a la vasta mayoría de la población urbana. Lejos de ser un fenómeno restringido a los pobres urbanos, la ilegalidad urbana necesita atención urgente, dadas sus graves consecuencias sociales, políticas, económicas y ambientales para la sociedad y la estructura urbana como un todo.
Sin embargo, si bien la ilegalidad urbana es un reflejo de la poderosa combinación de los mercados del suelo y los sistemas políticos, también es resultado del sistema jurídico elitista y de exclusión que impera en los países subdesarrollados. La combinación de instrumentos jurídicos que no reflejan las realidades sociales que afectan el acceso a la vivienda y al suelo urbano, junto con la falta de leyes adecuadas, ha tenido un efecto sumamente nocivo y agravante, si no determinante, del proceso de segregación socioespacial.
Definiciones de los derechos de propiedad
Uno de los mayores problemas de la gestión urbana es la falta de soporte del sistema jurídico vigente para las políticas ambientales urbanas. Ciertamente existen provisiones retóricas, pero las provisiones básicas del sistema —especialmente las de naturaleza constitucional— no ofrecen apoyo jurídico alguno a dichas políticas. En este contexto, el punto central de atención es el de los derechos de propiedad, específicamente de inmuebles urbanos. En muchos países, las políticas urbanas con sesgo progresivo y social que amplían la acción estatal suelen estar reñidas con la definición constitucional de los derechos de propiedad.
En varias ponencias del taller del trabajo de IRGLUS/CALS se habló de cómo el abordaje tradicional a los derechos de propiedad individuales, imperante en muchos países subdesarrollados y típico del liberalismo clásico, ha favorecido intercambios económicos que han menoscabado la función social de la propiedad. Muchos intentos importantes para promover el uso y control del suelo, incluso la protección jurídica del ambiente y la herencia histórico-cultural, se han visto mermados por acciones que reducen fuertemente la intervención estatal en el dominio de los derechos de propiedad individuales. En repetidas ocasiones, los intentos para promover la regularización del suelo han enfrentado la oposición de terratenientes y tribunales conservadores, incluso en situaciones en que la ocupación del suelo ya había estado consolidada durante largo tiempo.
Mientras que la retención excesiva y especulativa del suelo urbano privado ha contado con un beneplácito tácito, la tan esperada ejecución de una política habitacional social eficaz ha sido más difícil debido a la necesidad de indemnizar a los propietarios de tierras vacantes a los precios del mercado. En muchos países, el sistema de derechos de propiedad individuales heredado de la época de la colonia no suele considerar los valores habituales tradicionales en la definición de los derechos de propiedad. Dado que dichos países han fallado considerablemente en reformar los cimientos del liberalismo jurídico-político, la discusión del llamado neoliberalismo no tiene sentido en este contexto.
Los participantes del taller de trabajo hicieron énfasis especial en las condiciones jurídico-políticas para que se reconozca la seguridad de la tenencia. Se hizo notar que agentes tan diversos como movimientos sociales, organizaciones no gubernamentales y de finanzas internacionales han planteado cada vez más argumentos diferentes, si bien complementarios, de tipo humanitario, ético, sociopolítico y, más recientemente, económico para justificar la necesidad de adoptar políticas públicas en esta materia. También es necesario adoptar argumentos jurídicos, entre ellos las viejas provisiones de la ley internacional y los principios fundamentales del estado de derecho referente a los derechos de vivienda y los derechos humanos, de forma de abrir paso a una nueva interpretación de los derechos de propiedad que tenga sesgo social y ambiental.
Gran parte de la discusión se centró en determinar si la seguridad de tenencia puede sólo y/o necesariamente alcanzarse al reconocer los derechos de propiedad individuales. En este sentido, el análisis de varios casos sugirió que la mera atribución de los derechos de propiedad no lleva por sí sola a la meta principal de la mayoría de los programas de regularización, o sea, a la completa integración de las zonas y comunidades ilegales al marco más amplio de la sociedad y estructura urbana. El consenso general fue que debe considerarse una amplia gama de opciones jurídico-políticas, desde la transferencia de propiedades individuales a algunas formas de tenencia absoluta y/o control de alquileres, hasta formas novedosas (aún sin explorar) de propiedad colectiva u ocupación con varios grados de control estatal.
Se argumentó que el reconocimiento de los derechos de tenencia del suelo urbano debe ocurrir dentro de un marco más amplio, integrado y multi-sectoral de planificación de la ciudad y del uso del suelo, y no como una política aislada, a fin de evitar distorsiones en el mercado del suelo que conduzcan al desalojo de los ocupantes tradicionales. Ejemplos de casos de estudios en Brasil, la India y la República Sudafricana han demostrado que, sea cual sea la solución adoptada en un caso particular, sólo funcionará bien si es resultado de un proceso de decisión democrático y transparente que incorpore eficazmente a las comunidades afectadas.
Por encima de todo, se aceptó que es necesario promover la redefinición de los derechos de propiedad, y de allí, el reconocimiento de la seguridad de tenencia, dentro de un contexto más amplio que concilie la reforma urbana con la reforma legislativa. La reforma legislativa es función directa de las autoridades urbanas. Requiere nuevas estrategias de gestión urbana basadas en nuevas relaciones entre el Estado (especialmente a nivel municipal) y la sociedad; relaciones intergubernamentales renovadas; y la adopción de nuevas formas de sociedad entre los sectores público y privado dentro de un marco de trabajo jurídico-político claramente definido.
La reforma legislativa requiere renovar el proceso general de toma de decisiones a fin de combinar mecanismos tradicionales de democracia representativa y nuevas formas de participación directa. En los últimos años, muchas municipalidades de varios países han introducido nuevos mecanismos que fomentan la participación de la población urbana en varias etapas de los procesos de decisión que afectan la gestión urbana. A nivel ejecutivo se observan ejemplos tales como la creación de comités, comisiones, etc., mientras que a nivel legislativo figuran los referendos populares, el reconocimiento de iniciativas individuales y/o colectivas en los procesos de legislación, como también la formulación de enmiendas populares a proyectos de ley. Una de las experiencias más interesantes y promisorias ha sido el “presupuesto participativo” adoptado en varias ciudades brasileñas, que permite la participación de organizaciones comunitarias en la elaboración de los presupuestos municipales.
Para finalizar, no podemos seguir haciendo caso omiso a la necesidad de promover reformas jurídicas y revisiones judiciales globales, especialmente aquéllas que incentiven el reconocimiento de derechos colectivos, amplíen el acceso colectivo a los tribunales y garanticen el cumplimiento de la ley. Países como la India y Brasil ya han incorporado una cierta noción de los derechos colectivos en sus sistemas jurídicos, habilitando la defensa judicial de los llamados “intereses difusos” en materias ambientales y urbanas por ciudadanos y organizaciones no gubernamentales.
En otras palabras, la reforma urbana y el reconocimiento de la seguridad de la tenencia no son cosas que van a conseguirse solamente a través de la ley, sino también a través de un proceso político que apoye el tan aclamado “derecho a la ciudad” como noción política y jurídica. Una función muy importante de este proceso deben ejercerla agentes diversos como abogados, jueces y fiscales del gobierno. No obstante, para poder garantizar la promulgación de leyes con sesgo social, y más importante, su cumplimiento, es imperativa la acción colectiva de organizaciones no gubernamentales, movimientos sociales, organizaciones nacionales e internacionales, y ciudadanos que formen o no parte del entramado estatal.
Si es cierto que vivimos en tiempos democráticos, la época de los derechos tiene también que ser la del cumplimiento de los derechos, especialmente de los derechos colectivos. Sólo a través de procesos participativos podrá la ley convertirse en un escenario político importante para promover la integración espacial, la justicia social y el desarrollo sostenible.
Sobre el autor
Edésio Fernandes es abogado y fellow de investigación del Institute of Commonwealth Studies de la Universidad de Londres. Es coordinador de IRGLUS (Grupo Internacional de Investigación sobre Legislación y Espacio Urbano), y coeditor (junto con Ann Varley) de Illegal Cities: Law and Urban Change in Developing Countries (Zed Books, Londres y Nueva York, 1998).
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The shift to a multi-racial government in South Africa is as pronounced and dramatic a transition as that of the new independent states of Central and Eastern Europe. In the past five years, South Africa has adopted a new constitution, elected a new government, redrawn state and municipal boundaries, and undertaken basic reform of its legal and political system. Land policy is central to this transformation, for “since the 1913 Natives Land Act, rights to own, rent or even share-crop land in South Africa depended upon a person’s race classification.” (1) Among the major land-related issues currently under scrutiny are property tax reform, restitution of land rights, and improvements in tenure security and access to landholding.
Land and Property Taxation
South African real property taxes take a number of forms, including “site rating,” a tax on unimproved value alone; “flat rating” on land and structures uniformly; and “composite ratings,” which tax land and improvements at different rates. Multiplicity and change are the norm, as Cape Town has recently decided to adopt site rating, Durban is considering replacement of its composite rating system with site rating, and Pretoria has introduced a temporary tax on improvements to supplement its site rating system.
The property tax in South Africa is not at present applied to rural land, although its potential extension to non-urban areas is the subject of intense debate. It is in the cities, however, that the struggle to transform the country will succeed or fail. In 1995, the urban sector accounted for about 65 percent of South Africa’s population and more than 80 percent of its GDP. Property taxes are an important source of revenue for cities to meet the cost of providing services within their newly redrawn boundaries.
These new boundaries are another index of the pace and variety of change in South Africa. Efforts to consolidate wealthy residential and commercial areas with impoverished townships and settlements have taken different forms in different regions. The central business districts of Johannesburg and Durban have been divided among several taxing jurisdictions that extend beyond their city limits. By contrast, the most of Cape Town’s business and residential regions were combined this summer with a set of neighboring townships in a new administrative region. It consists of 19 former administrations consolidated into 7, involving a transfer of more than 10,000 municipal staff and many assets. These measures have extremely important political and fiscal implications, bringing together as they do residential areas with living standards equal to or even surpassing European norms and settlements without electricity, paved roads or running water.
From a land policy perspective, perhaps the most dramatic legacy of past racial policies is the imbalance between white and non-white landownership. Under apartheid, 87 percent of the country’s land was reserved for white residents, who in 1995 constituted only 13 percent of South Africa’s population. Under these circumstances, property taxation takes on special importance as a potential means for expanding access to the land market. Roy Bahl and Johannes Linn have written:
[A]n equity argument may be at the heart of the matter: urban land prices are frequently so high that low-income groups cannot afford to purchase land…. To the extent that the revenue from property taxes is capitalized into lower current land values (since the tax reduces the expected future private yield on the land), it partially expropriates landownership rights from the present owner and also constitutes a loan to future owners, who can now acquire the land at a lower price but will have to pay property taxes in the future. If low-income groups cannot buy land because they lack liquidity and access to capital markets, property taxation may be one of the policy instruments to improve their access to landownership. (2)
Tax Collections and Tax Revolts
The government faces the challenge of reversing a “culture of nonpayment” for municipal services among township residents. During the apartheid era, the African National Congress (ANC) encouraged its supporters to refuse payment of water and utility charges as a means of contesting the legitimacy of the state-sponsored black local authorities. The resulting arrears were a major financial burden on all levels of government. Now the ANC seeks to promote voluntary payment for these same services, and as well as payment of real property taxes by those who now are able to hold title to their property.
Ironically, one tax protest that received wide publicity took the form of a property tax revolt in one of the nation’s wealthiest white residential areas, the Sandton suburb of Johannesburg. When property tax rates doubled and tripled there in 1996, many local property owners withheld payment in protest. This situation illustrates one of the most paradoxical aspects of the fiscal challenge to the new South Africa: the need to redress the enormous imbalance in resources across racial groups while commanding support from white citizens who feel over-taxed.
On the one hand, the disparities in needs and resources are overwhelming. Households falling below the official poverty level include only 0.7 percent of the white population, but 65 percent of the black population. At the same time, many white taxpayers feel overburdened by taxes-income tax rates, for example, can reach 45 percent on earnings over $22,000-and resentful of nonpayment by some township residents. In Alexandra, a black township inside Sandton, last year’s tax collection rate was only 3 percent. Any effort to meet the pressing fiscal needs of the new South Africa must take into account the vastly different perceptions of contribution and entitlement across its diverse population.
Perspectives on Future Directions
In July, a conference at the University of South Africa in Pretoria brought together governmental officials, policy analysts, academics and international experts to consider local government design and fiscal capacity. Brief overviews of two of the more than 30 presentations at that conference give a sense of the range of issues debated there, from concrete points of physical engineering to theoretical questions of intergovernmental fiscal relations.
At the most basic level, the definition of revenue needs depends on a prior decision as to the scope of local services to which all citizens are entitled. Given that large township areas have grown up without standard infrastructure, what goals should the government set for provision of water, electricity and roads?
Peter Vaz of the official Financial and Fiscal Commission outlined an approach to the monumental task of estimating the cost of providing the minimum services that each citizen can expect. The South African constitution enumerates 27 guaranteed rights, including the right to equality, to human dignity, to life, to freedom of expression, to a healthy environment, to housing, to health care services, to sufficient food, water and social security, to education, to information. The Commission is considering attempts to identify three levels of services-basic, intermediate and full provision. It is also looking at the cost of extending six services to urban and rural areas: water, sewerage, solid waste, roads, stormwater, electricity. For example, the basic level of water provision might be a communal standpipe, the intermediate level a yard tap, and full provision a house connection. The capital cost of each service package then provides a first estimate of the revenue necessary to meet the guarantees relevant to local government activities.
The broadest fiscal questions concern the allocation of taxes and functions among levels of governments. Rudolph Penner of the Barents Group stated that his general support for decentralization in transition economies was tempered in the case of South Africa. The model of voters as consumers choosing a set of local services in exchange for payment of local taxes is not necessarily applicable or desirable in this context. The strong ideological background to politics in South Africa means that voters are not primarily making a local electoral choice on the basis of economic policy. Moreover, the history of apartheid makes self-selected homogeneous groupings unacceptable if they lead to segregation by income class or race. Penner concluded that fiscal decentralization in South Africa must be of a more restrained variety than might be appropriate elsewhere.
These considerations serve only to highlight the sweeping reconsideration of all public institutions and their mandates that has accompanied the initiation of a new era in South African history. Improvements in land policy and taxation may play a significant role in assisting this immense task of national self-transformation.
Joan Youngman is a senior fellow of the Lincoln Institute, where she directs the Program on the Taxation of Land and Buildings. She and Martim Smolka, senior fellow for Latin America Programs, served on the faculty of the July conference at the University of South Africa.
Notes:
1. South African Department of Land Affairs, Our Land: Green Paper on South African Land Policy (1996), p. 9.
2. Roy W. Bahl and Johannes F. Linn, Urban Public Finance in Developing Countries (Oxford: Oxford University Press, 1992), p. 168.
What are the names of South Africa’s official languages?
A recent newspaper trivia puzzle gives a startling perspective on the enormity of the political, legal and cultural changes experienced by South Africa since 1993, and the difficulty foreign observers face in grasping the scope of these transformations.
The original answer to the question about official languages was given as English and Afrikaans. One week later, a correction noted that South Africa’s major tribal languages should also be included. So the full answer lists ten official languages:
English
Afrikaans
Ndebele
Northern Sotho (Sepedi)
Southern Sotho (Sesotho)
Swati
Tsonga
Tswana (Setswana)
Venda, Xhosa
Zulu
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In the past quarter century, the People’s Republic of China has achieved remarkable progress in economic growth, social advancement, and political and administrative reforms. These achievements are largely attributed to the commitment of the Chinese government to improve its people’s welfare through adherence to a free market economy. The interrelated forces of economic growth and policy reform are stimulating rapid and fundamental transformation, especially in Chinese cities, where infrastructure projects, urban renewal, housing development and reform of state-owned enterprises are taking place at an unprecedented pace and scale.
The catalyst for this surge in urban development has been the widespread adoption of the Land Use Rights System (LURs) in which land ownership and use rights have been separated. Its impacts are two-fold. First, it promotes the development of markets for land use rights in which land prices and market mechanisms begin to affect land use and land allocation decisions. Second and more important, it creates an institutional capacity for local governments to raise much-needed revenues to finance urban redevelopment and economic reforms. This revenue-raising ability is rooted in the land ownership structure and power of Chinese government, since the state owns virtually all land in cities and towns. Users are required to pay upfront leasing fees for 40- to 70-year periods, depending on the type of use.
Along with its fiscal impacts, the LURs has created several problems that have drawn increasing attention. First, revenues from leasing state-owned land are not sustainable from a long-term perspective; leasing of existing urban land has been the primary revenue source for financing urban projects, and sooner or later cities will run out of urbanized land available for leasing. For example, Hanzhou City will collect 6 billion RMB (US$732 million) in 2003 from the sales of land use rights, most of them on existing urban land, but land sale revenues have already reached their peak and have started to decline.
Second, Chinese governments lack instruments to capture their share of the increases in land value that are driven up by the combined forces of urbanization, public investment in infrastructure and private efforts. Based on the proposition that one should be rewarded only for one’s own effort, government should capture the increased land value resulting from public investment, rather than having it accrue to the private landowner.
Third, laws do not specify concrete measures for implementing lease renewals. It will be more difficult to collect leasing fees in the renewal period since local governments will have to deal with thousands of households compared to a small number of developers in the first round of leases. Finally, some local government officials have been politically motivated to create an oversupply of land and overheated real estate activity, thus diminishing the central government’s efforts to institutionalize land management and urban planning.
Compulsory Land Acquisition
The other major source of land revenues for local governments is the leasing of former farmland. Both the Chinese Constitution and the 1999 Land Administration Law (LAL) specify that the state, in the public interest, may lawfully requisition land owned by collectives, thus setting the stage for compulsory land acquisition. The local government is thereby able to acquire land cheaply from farmers and sell it to developers at much higher prices. This is a complicated process because it requires first acquiring the land, then converting it to state ownership, resettling the displaced farmers and providing urban infrastructure before finally leasing the land to developers. The law requires that peasants’ lives should not be adversely affected by land acquisition. However, this requirement is difficult to implement, in part because measures of life changes for peasants are multifaceted; financial compensation is only one of the considerations.
Since there is no market data for farmland prices, the government pays collectives and peasants a compensation package that includes three components: compensation for the land itself; resettlement subsidies; and compensation for improvements to the land and for crops growing on the requisitioned land. The law stipulates that compensation for cultivated land shall be six to ten times the average annual output value of the acquired land for the three years preceding the requisition.
The amount of the resettlement subsidies depends on the number of people living on the land, but each person’s subsidy shall not exceed six to ten times that of the annual yield from the occupied land. Recognizing diversity of local conditions in terms of socioeconomic development status, productivity, and per capita income, the local government is permitted to raise the sum of the resettlement subsidies and land compensation up to 30 times the previous three years’ average output value on the acquired land.
Emerging Issues
Several significant issues are emerging from this land acquisition process. The first relates to the ill-defined concept of property rights and development rights: who is entitled or empowered to acquire land from peasants for urban development? Currently any entity can acquire land from peasants as long as it can justify public interest or purpose. This public interest requirement was easy to fulfill in the 1990s, since there were many state-owned enterprises that provided services and/or goods to the public. They could acquire land to launch profitable commercial, housing, entertainment and industrial development projects. Individual developers also can acquire land if they have strong political connections. However, these profit-making and political motivations for land acquisition are responsible for increasing corruption in real estate and housing developments and creating chaotic and uncoordinated urban development patterns. Recent economic reforms and privatization have begun to diminish the roles of state-owned enterprises, so it is time to reexamine the concept and definition of public interest and public projects.
The interactions of multiple players in land acquisition (including individuals, corporations and governments) create several problems in land management and planning: (1) it becomes extremely difficult, if not impossible, to coordinate land development so that infrastructure and transportation facilities are used efficiently; (2) it voids many urban planning efforts; and (3) it is blamed for “villages in the city” (cheng zhong chun), a phenomenon in which villages and farmland are surrounded by developed land, making the city unattractive, disrupting the continuity of economic, social and cultural functions, and significantly increasing transportation costs.
The second issue is who is entitled to compensation and at what level. The village collective is the basic socioeconomic organization in rural areas, and its largest asset is the land collectively owned by the members. Even though laws recognize that both the collective and its members should be entitled to sharing compensation, there are no specific policy guidelines or regulations on how to divide the shares in different situations. The collective’s share is supposed to enhance its capacity in farmland productivity and social welfare, thus benefiting all its members. However, the role of the collective is diminishing, in part because its membership is decreasing as some farmers leave to become urban residents following acquisition of communal land, and in part because of socioeconomic changes due to advancing urbanization. The revenue sharing scheme reflects this transformation.
To make matters worse, different levels of governments take a cut out of the monetary compensation that is supposed to go to the farmers. For example, the Chinese government built a pipeline that transfers natural gas from the western to the eastern part of the country. This was a national project, so compensation to peasants was paid by the state, but the amount of compensation varied from province to province. The state gave 20,000 RMB (US$2,500) per mu (one mu=666.67 square meters) to peasants in Henan province for their land. Given the fiscal structures between governments, these funds were allocated downward to lower levels of government (from state to province to city to county to township, respectively). At each transfer point, a portion of funds was retained for that level of government to finance their own public goods and services. The peasants received only 5,000 RMB in the end.
The situation here is similar to the concept of value capture in which governments are entitled to retain a portion of land value increases in exchange for their efforts in urban development and infrastructure provision. In a case like Henan it is legitimate to ask if the state’s compensation reflected the true market value of the land. If it did, then local governments should be entitled to their shares. Alternatively, if the state captures the entire land value increase, then the state should reimburse at least the costs of infrastructure provisions supplied by the local government.
The third issue is the equity of compensation, which involves both the level of compensation as well as variations in payments in different situations. Since there are no market data that can truly reflect the price of farmland, compensation hardly reflects market conditions and it varies dramatically from case to case, mainly depending on who plans to develop the land. For instance, profitable projects such as commercial housing and business developments can afford to pay higher prices for land than public transportation and infrastructure projects such as highways, railroads, airports and canals. If these different types of projects, private and public, occur in one village at different times or in neighboring villages at the same time, peasants who are less well compensated feel unequally treated by the government. Many complaints have something to do with this inconsistency in compensation. Such inequity contributes to rising tensions and distrust between peasants and the government and adversely affects subsequent planning and implementation of land management policies.
Finally, it is becoming increasingly difficult and costly to resettle peasants. The LAL requires that the quality of life of farmers shall not be adversely affected by compulsory land acquisition, but does not specify concrete measures to achieve this goal. As a result, many peasants end up living under worse conditions several years after their land was taken than they did before. This situation is not difficult to imagine. Farming does not make peasants rich, but it generates sufficient income to support a minimum level of livelihood and security. Without appropriate training and skills in managing their lump sum payment and without appropriate investment channels (if their compensation is sufficient to make any investment at all), it is common for peasants to end up with no land to farm, no income stream to support themselves, and no job skills to compete in the tight urban job markets.
Land Policy Challenges
China is facing many challenges in its efforts to supply land for new development as rapid urbanization continues. First, it is becoming more difficult for local governments to acquire land for true public works and transportation projects, since they cannot offer peasants as much compensation as developers of more profitable commercial projects.
A second challenge is to fairly compensate peasants when their farmland is acquired. As governments capture a greater proportion of the land value increases, the low level of compensation to peasants imposes a serious long-term threat to sustainable development in China. The number of people who live in poverty after land acquisition continues to rise. For instance, Zhijiang province alone has more than 2 million farmers who have lost their farmland. In 2002, more than 80 percent of legal cases filed by peasants against governments in the province were related to land acquisition.
This situation is a potential source of instability and is likely to escalate in the future as increasing urbanization puts even more pressure on the need for new land for development. According to the General National Land Use Comprehensive Plan, China needs 18.5 million mu of land for nonagricultural uses in the first decade of the twenty-first century, and 90 percent of that land will be acquired from farmers. It is estimated that 12 million farmers will lose their land through this type of acquisition. Without fair compensation or other efforts to assure their social security over the long term, these farmers will impose enormous socioeconomic problems on China for years to come.
The third challenge is associated with the rate of urbanization. According to the report of the 16th Communist Party Convention in 2003, the total population of China is estimated to be 1.6 billion to1.8 billion by 2020, with more than 55 percent living in cities, compared to the current population of 1.3 billion with 38 percent in urban areas. Migration from rural areas to cities is expected to be around 15 million annually, after taking into account the rate of natural urban population growth. Sustainable and affordable urban economic development is urgently needed to absorb these large numbers of rural immigrants.
A final dilemma is how to achieve a balance between farmland preservation and urban spatial expansion. Farmland preservation will inevitably increase land costs, which in turn will slow down urban development. At the same time, it is necessary to promote urban economic growth to provide sufficient job opportunities. This in turn leads to urban encroachment into rural areas to take advantage of less expensive land.
To address these challenges, Chinese officials need to ask some fundamental questions:
Land Acquisition Reform
It is hard to anticipate how Chinese officials will address these questions, but rapid urbanization and massive infrastructure provision will inevitably increase land values over the next two decades. Recognizing the enormous problems associated with land acquisition, several cities have adopted different approaches to protect farmers’ rights and interests so their lives will not be adversely affected. These approaches include:
The Chinese government is taking other measures, such as attempting to make the land acquisition process more transparent so farmers know where and when their land will be acquired and how much they will be compensated for it. This transparency will also help to reduce corruption and improve land management. There is also an urgent need to establish legal channels for farmers to file appeals and protests against governments in compulsory land acquisition cases. The development of farmland markets may challenge land acquisition and also may have substantial impacts on fiscal policy and government financing.
All of these efforts will change both the way land will be taken from farmers and how the issues and challenges of land acquisition will be addressed. Although it is too early to predict how and to what extent these measures and reforms may affect urban and rural development, China is certain to be one of the most fascinating and dynamic places for continuing research and study of land policy reform and societal transformation.
Chengri Ding is associate professor in the Department of Urban Studies and Planning at the University of Maryland, in College Park. He specializes in urban economics, housing and land studies, GIS and spatial analysis. He is also special assistant to the president of the Lincoln Institute for the Program on the People’s Republic of China.
Note: RMB is the Chinese currency; US$1=8.20RMB.
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The Pawcatuck Borderlands illustrates what is fast becoming one of the major puzzles in land use policy—how to plan across boundaries. Countless examples across the country (and arguably the world) demonstrate two fundamental points (Foster 2001; Porter and Wallis 2002; McKinney et al. 2002). First, the territory of many land use problems transcends the legal and geographic reach of existing jurisdictions and institutions (public, private, and other). In the Borderlands area, the spatial dimension of the problems created by increasing population growth and demand for municipal services cuts across multiple jurisdictions.
This mismatch between the geography of the problem and the geography of existing institutions leads to the second point: the people affected by such problems have interdependent interests, which means that none of them have sufficient power or authority to adequately address the problems on their own, yet self-interest often impedes cooperation.
These observations are not new. The history of regionalism in America dates back to at least the mid-nineteenth century and the writing of John Wesley Powell (McKinney et al. 2004). As we move into the twenty-first century, there seem to be two basic responses to this planning puzzle. The first is to create new regional institutions or realign existing institutions to correspond to the territory of the problem, and the second is to start with more informal, ad hoc regional forums.
Some of the more notable examples of regional land use institutions include the Lake Tahoe Regional Planning Authority (1969), Adirondack Park Agency (1971), New Jersey Pinelands Commission (1979), and the Cape Cod Commission (1990). The impetus to establish such entities requires a significant amount of political commitment upfront, or sometimes legal pressure from influential court cases. Once the regional organizations are established, they tend to require a great deal of effort to sustain. This largely explains why there have been so few proposals to create such institutions in the past few decades (see Jensen 1965; Derthick 1974; Robbins et al. 1983; and Calthorpe and Fulton 2001).
Rather than create new institutions, leaders in more than 450 regions across the country have realigned existing institutions to form regional councils, which generally do not have the authority to make and impose decisions per se, but are designed to foster regional cooperation and the delivery of services. In New England, these organizations have evolved to fill the vacuum left by weak county government, and their boundaries often follow county boundaries, which may or may not correspond to the territory of the problem.
The second response, which is more common these days, is to bring together the “right” people with the best available information in tailor-made, ad hoc forums. This approach, which might be termed “regional network governance,” is more bottom-up than top-down, and depends largely on the ability of the participants to build and sustain informal networks to get things done. In some cases these ad hoc forums lay the groundwork to create more formal regional institutions in the future.
Obstacles to Regional Networks
Of course, building and sustaining regional networks is easier said than done. Our research and experience suggest there are four primary obstacles to planning across boundaries. First, the very nature of thinking and acting like a region raises questions about the participants and scope of the problem: Who should take the lead in organizing and convening regional conversations, and who else should be involved? What issues should be on the agenda? How should the region be defined? How can multiple parties—public, private, and nonprofit—share the responsibilities and costs to achieve identified goals? Even where regional planning councils exist, the rules governing or guiding such efforts are not clear.
Second, the value of working together is not always apparent or shared. As with other forms of multiparty negotiation, it is difficult to mobilize and engage people unless and until they believe that they are more likely to achieve their objectives through regional collaboration than by acting independently. Public officials may be reluctant to engage for fear that such efforts will undermine their authority, and business leaders and real estate developers may view collaboration as something not worth their time. Local citizens often cringe at the idea of regional planning, thinking that someone who does not live in the local area will be making decisions about their land. Other stakeholders may simply have different priorities or a better alternative to satisfy their interests.
Third, many people are unfamiliar with the process of regional collaboration, and that uncertainty makes them feel uncomfortable and reluctant. In addition, people may lack the skills to organize and represent their constituency, deal with scientifically complex issues, and negotiate effectively in a multiparty setting. Others may be uneasy with the organic nature of ad hoc regional forums, and how they should be linked to formal decision-making processes.
Even if participants can overcome these obstacles, their effectiveness at regional collaboration is often limited by a fourth factor: lack of resources. In an assessment of about 75 established regional initiatives in the West, nearly all participants said that “limited resources” was the primary obstacle to more effective collaboration (McKinney 2002). Among the resources cited were time, money, information, and knowledge. People trying to initiate and support regional land use projects in three recent projects (in the San Luis Valley in south-central Colorado, the Flathead Valley in northwestern Montana, and the Upper Delaware River Basin) reported struggling due to a lack of financial resources and staffing capabilities.
In sum, the challenge of addressing multijurisdictional land use issues is not primarily a scientific or technical challenge, nor is it simply about managing land use more effectively and efficiently. At its core, regional land use is a sociopolitical challenge. It is a question of whether we can integrate the needs, interests, and visions of multiple jurisdictions, sectors, and interests. It is also a question of how society addresses shared and competing interests—in this case, land use.
An Emerging Framework
During the past few years, the Lincoln Institute has taken a leadership role in studying and evaluating regional collaboration on land use issues through policy and research reports, educational programs, and regional land use clinics. This collective body of work suggests at least three overarching lessons.
First, regional initiatives vary greatly in terms of who leads the project, as well as its scale, purpose, issues, activities, and structure, including funding and time frame. While some initiatives augment existing government institutions, others are more ad hoc in nature, filling gaps in governance at different levels. Whether formal or ad hoc, regional initiatives create public opportunities that would not otherwise exist to address land use issues that cut across multiple jurisdictions.
Second, regional collaboration includes both a procedural element (how to plan across boundaries) and a substantive element (policies, programs, activities, and other outcomes to address a particular regional land use issue). The Lincoln Institute’s work on the procedural aspects of regional collaboration complements and builds on its land use dispute resolution program, although it is different in two fundamental ways: regional collaboration deals primarily with multiple jurisdictions, which raises the key question of convening diverse stakeholders; and it has more to do with designing new systems of governance (both formal and informal) than with resolving disputes per se.
Third, there is no single model for planning across boundaries, but rather a set of principles to guide regional collaboration (see Figure 1). This “theory of change” posits that the implementation of something like this set of principles leads to better informed, more widely supported, and more effective solutions to multijurisdictional land use issues (see www.umtpri.org).
Guiding Principles for Regional Collaboration
Some Outstanding Questions
Who should take the lead in organizing and convening regional conversations?
In many professional circles there is an ongoing debate about the role and ability of government to convene effective collaborative processes. Many people argue that government cannot successfully organize and convene such efforts given its built-in institutional resistance and lack of responsiveness. Citizens, by contrast, often can provide more effective forums through organic, grassroots initiatives. Throughout the West, there is a growing movement where citizens, frustrated by government’s lack of responsiveness, are convening place-based groups to address a variety of land use issues—ranging from growth management to endangered species to water allocation (Kemmis 2001). In the Northeast, citizens in adjacent towns and states are recognizing their shared resources, values, threats, and opportunities. They are committing to joint planning projects, regional economic development campaigns, and applications for official designation for their regions.
Recent studies indicate, however, that participation by one or more levels of government is essential to the effectiveness of the more ad hoc, citizen-driven processes (Kenney 2000; Susskind et al. 1999; Susskind et al. 2000). Governments not only provide financial and technical assistance, but also become critically important if the intent of a regional initiative is to shape or influence land use policy. Official government institutions, after all, constitute the formal public decision-making processes in our society.
Neither top-down nor bottom-up approaches are inherently superior, and in the final analysis the two ends of the spectrum need to come together to facilitate positive change. Whether a regional initiative is catalyzed and convened by citizens, nongovernmental organizations, businesses, or public officials, it is most effective when the people initiating the process exercise collaborative leadership. Such leaders facilitate development of a shared vision by crossing jurisdictional and cultural boundaries; forging coalitions among people with diverse interests and viewpoints; mobilizing the people, ideas, and resources needed to move in the desired direction; and sustaining networks of relationships. In this respect, regional collaboration is more like organizing a political campaign than preparing a regional plan.
Three vignettes—the first two based on regional clinics sponsored by the Lincoln Institute—illustrate the need to have the right convener and to employ the characteristics of collaborative leadership. In the Upper Delaware River Basin, two government agencies initiated a regional conversation, but they framed the problems and solutions prior to consulting with other stakeholders or citizens. Not surprisingly, many people who were not part of the initial process criticized both the definition of the region and the scope of the project.
In the San Luis Valley in Colorado, citizens and interest groups tried to organize a regional land use planning effort, but the local elected officials dragged their feet and characterized the participants as “rabble rousers.” This experience shows what can happen when citizens get ahead of decision makers, that is, when civic will outpaces political and institutional will.
On a more encouraging note, leaders from the public, private, and nonprofit sectors, as well as academics, the media, and others, have jointly convened Billings on the Move—a conversation on what is needed to promote and sustain the economic vitality of the region in and around Billings, Montana. One of the primary reasons for this project’s success is that all of the key stakeholders bought into the project from the beginning, and they jointly identified problems and framed solutions.
Is it possible to mobilize and engage people “upstream” in a proactive, preventive way, rather than “downstream” after a crisis, threat, or regional land use dispute has emerged?
In the San Luis Valley, citizens and leaders from all walks of life came together some years ago to fight and defeat a proposal to export precious groundwater out of the valley. This effort clearly demonstrated sufficient civic will and political capacity to organize regionally in response to a real external threat. However, the same people are now struggling to organize around land use issues when there is no immediate crisis. Some observers believe that if they do not act soon, however, the valley will eventually become another expensive tourist destination like Aspen, Sun Valley, or Jackson Hole.
In response to this concern, we are working with the Orton Foundation to determine if the use of technology—in particular the visualization and scenario-building software known as Community Viz—may provide the necessary leverage to mobilize and engage people, to help them see what is at stake, and to evaluate how regional collaboration can help to address issues of common interest. The challenge here is not only to focus on a tangible problem, but also to build the social and political capacity of the region to think and act more proactively.
How do we measure the success of regional collaboration?
The question of what criteria or metrics should be used to evaluate efforts to plan across boundaries takes us back to the distinction between the procedural and substantive aspects of regional collaboration. If one agrees with this distinction, then any framework to evaluate success should include metrics that focus on both process and outcomes.
A recent study evaluated the success of 50 community-based collaborative initiatives in the Rocky Mountain West that were regional in nature, encompassing two or more jurisdictions (McKinney and Field 2005). Twenty-seven indicators measured participants’ satisfaction with the substantive outcome of the effort, its effect on working relationships, and the quality of the process itself. The evaluation framework also allowed participants to reflect on the value of community-based collaboration relative to other alternatives.
The people who responded to the survey were generally satisfied with the use of community-based collaboration to address issues related to federal lands and resources. Seventy percent of the respondents said that all 27 indicators were important contributors to their satisfaction with both the process and its outcomes. Eighty-six percent of participants stated they would recommend a community or regional process to address a similar issue in the future.
Participants tended to rank “working relationships” and “quality of the process” as more important than “outcomes,” suggesting that people are at least as interested in opportunities for meaningful civic engagement and deliberative dialogue as in achieving a preconceived outcome. These results also support the value of community-based or regional collaboration—particularly when compared to other forums to shape land use policy and resolve land use disputes. Future evaluation research is necessary to affirm or refine these findings, and to clarify the impact of regional collaboration on various social, economic, and environmental objectives.
Conclusion
Planning across boundaries—or regional collaboration—is slowly emerging as an essential component of land policy and planning in the twenty-first century. For example, the 2005 White House Conference on Cooperative Conservation—only the fourth White House conference ever held on conservation—convened several sessions on reaching across boundaries to promote shared governance. Whether the issues to be addressed in such forums focus on rapid growth and its consequences or the need to retain and expand the local economic base, these problems are often best addressed by planning across the boundaries created by government jurisdictions, economic sectors, and academic disciplines. Indeed, in many cases, this is the only way these problems will be resolved effectively.
The Pawcatuck Borderlands
The Pawcatuck Borderlands on the Connecticut and Rhode Island state line is part of a largely undeveloped region within the megalopolis that stretches from Boston to Washington, DC. This landscape is one of the largest intact, forested areas in southern New England, and its abundant wildlife ranges from bears to songbirds. The remarkable diversity of the Borderlands includes hardwood forests, pitch-pine woodlands, wetlands, lakes, and rivers, as well as numerous small, rural communities where people have lived and worked for centuries.
Nearly 40 percent of the Borderlands is protected by the Pachaug State Forest and the Arcadia Management Area, and the relatively undisturbed natural character of the region creates a high quality of life for its residents. However, this open space in the heart of the northeastern megalopolis is also popular with visitors for its recreational opportunities and world-class tourist attractions. Located between Providence and Hartford, the Borderlands faces increasing demands for housing, roads, and shopping centers. Unlike many other rural areas, the opportunities for employment and investment are good, making this a financially attractive location for families and businesses.
Between 1960 and 2000, the population of Borderlands towns grew by more than 95 percent. Traffic is escalating on local roads and highways, and finite water resources are being overused, impacting both the quality and quantity of water in local watersheds. This increasing activity is eroding the existing infrastructure and requiring local residents to pay for additional roads, schools, and other essential services. All of these trends threaten longstanding social, historic, and environmental values.
Choices about the rate and pattern of future land conservation and development in the Borderlands must be addressed by decision makers in two states and ten towns. As in much of New England, each town retains land use authority and is governed through town meetings and the decisions of numerous local commissions and boards. Each of these jurisdictions has historically tackled land use issues independently, but the nature of existing trends and emerging challenges calls out for a different approach.
About the Authors
Matthew McKinney is director of the Public Policy Research Institute at the University of Montana, Helena. He was founding director of the Montana Consensus Council and has taught many courses for the Lincoln Institute on both regional collaboration and land use dispute resolution.
Kevin Essington is director of the Pawcatuck Borderlands Program for the The Nature Conservancy in Connecticut and Rhode Island. He works on land acquisition, land and watershed restoration, planning, and consensus building.
References
Calthorpe, Peter, and William Fulton. 2001. The regional city: Planning for the end of sprawl. Washington, DC: Island Press.
Derthick, Martha.1974. Between state and nation: Regional organizations of the United States. Washington, DC: The Brookings Institution.
Foster, Kathryn A. 2001. Regionalism on purpose. Cambridge, MA: Lincoln Institute of Land Policy.
Jensen, Merrill. 1965. Regionalism in America. Madison: The University of Wisconsin Press.
Kemmis, Daniel. 2001. This sovereign land: A new vision for governing the West. Washington, DC: Island Press.
Kenney, Doug. 2000. The new watershed sourcebook. Boulder: The University of Colorado Natural Resources Law Center.
McKinney, Matthew, et al. 2002. Regionalism in the west: An inventory and assessment. Public Land and Resources Law Review: 101–191www.ars.org.
———. 2004. Working across boundaries: A framework for regional collaboration. Land Lines 16(3): 5–8.
McKinney, Matthew, and Pat Field. 2005. Evaluating community-based collaboration. Submitted to Society and Natural Resources.
Porter, Douglas R., and Allan D. Wallis. 2002. Exploring ad hoc regionalism. Cambridge, MA: Lincoln Institute of Land Policy.
Robbins, William G., Robert J. Frank, and Richard E. Ross. 1983. Regionalism and the Pacific Northwest. Corvallis: Oregon State University Press.
Susskind, Lawrence, Ole Amundsen, and Masahiro Matsuura. 1999. Using assisted negotiation to settle land use disputes: A guidebook for public officials. Cambridge, MA: Lincoln Institute of Land Policy.
Susskind, Lawrence, Mieke van der Wansem, and Armand Ciccarelli. 2000. Mediating land use disputes: Pros and cons. Cambridge, MA: Lincoln Institute of Land Policy.
Una versión más actualizada de este artículo está disponible como parte del capítulo 7 del CD-ROM Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.
Nuevas evidencias de Brasil indican que la regulación del uso del suelo y las normas de construcción pueden reforzar otros factores que contribuyen a la ocupación informal e irregular del suelo urbano. No es posible explicar del todo la magnitud y la persistencia de la informalidad en las ciudades de América Latina con los índices de pobreza (en descenso), la insuficiente inversión pública en vivienda social o en infraestructura urbana (en aumento), ni siquiera por la tolerancia del gobierno ante determinadas prácticas oportunistas de urbanizadores y pobladores (The Economist 2007). Si bien estos factores son sin duda importantes, el uso inadecuado del suelo y la regulación de la construcción también parecen jugar un papel en la persistencia del problema. Se puede aducir como corolario que un marco regulador alternativo puede ayudar a paliar la informalidad en los mercados del suelo urbano.
La relación entre informalidad y normas de vivienda excesivas no es nueva en la bibliografía (Turner 1972); y la relación económica entre la regulación del uso del suelo y la elasticidad de la oferta de vivienda fue propuesta por Ellickson (1977). La novedad es la aplicación del mismo marco utilizado para entender la dinámica del precio de la vivienda en los Estados Unidos a los países en desarrollo. Los pocos trabajos empíricos en economía que tratan de relacionar la regulación y el uso del suelo no han trazado de manera formal un modelo de la sustitución entre los mercados formales e informales. En consecuencia, no utilizaron las diferencias entre los dos mercados como sus variables principales.
El alcance del problema
La informalidad y la precariedad de la vivienda son grandes preocupaciones en los países en desarrollo. Según estimaciones de las Naciones Unidas, más de mil millones de personas viven en asentamientos informales, que representan un 32 por ciento de la población urbana de todo el mundo (UN Habitat 2006). En América Latina, el porcentaje de vivienda irregular medido por indicadores observables como el régimen de propiedad o la conexión con el sistema de alcantarillado está disminuyendo en algunos países, si bien en proporción desigual. Sin tener en cuenta la disputa continua sobre la forma correcta de medir la informalidad, en la mayoría de las ciudades de América Latina el problema sigue siendo de proporciones considerables, y es necesario comprender mejor su dinámica a fin de recomendar una política de vivienda razonable.
En la práctica, los indicadores conmensurables de informalidad que se basan en la ausencia de títulos de propiedad o el acceso a infraestructura y servicios son más fáciles de obtener que los basados en la falta de cumplimiento de la regulación del uso del suelo o las normas de construcción. La pobreza (en todas sus dimensiones) y la inversión pública insuficiente (en vivienda social, infraestructura y servicios) son las explicaciones más comunes de la persistencia de la informalidad. Pero también aumenta la percepción de que los mercados del suelo urbano en general y las normas y la regulación urbanística en particular son factores relevantes que contribuyen a ella.
El elevado costo de las transacciones en los mercados del suelo urbano se incrementa debido a la burocracia, la falta de información o su poca claridad, y las prácticas discriminatorias, así como por otras discordancias funcionales del mercado derivadas de la estructura de propiedad del suelo, las prácticas especulativas y de monopolio, y la regulación del uso del suelo y de la construcción, que dificultan el cumplimiento de las normas por parte de las familias con bajos ingresos. Estos factores aumentan la ineficacia del mercado y sostienen la informalidad.
En este artículo argumentamos que la regulación del uso del suelo y de la construcción administrada por los planificadores urbanos y por los funcionarios a nivel local puede contribuir efectivamente a la incidencia de la informalidad. Entre el 20 por ciento de municipios brasileños que redujeron la pobreza en mayor medida a lo largo de los últimos nueve años, un 23 por ciento también redujo drásticamente el número de viviendas sin título de propiedad, pero el 24 por ciento aumentó la informalidad en más de un 3,2 por ciento, el ritmo más rápido observado en todo el país (IBGE 1991; 2000). Tales diferencias de rendimiento del mercado de la vivienda en el segmento de bajos ingresos no puede explicarse únicamente por la incidencia de la pobreza, el ritmo de la urbanización y el crecimiento de la población u otros medidores a nivel macro.
Las ventajas e inconvenientes de la regulación urbana
La regulación urbana beneficia a las políticas de vivienda porque soluciona un problema de derechos de propiedad. Regular la distancia entre viviendas, por ejemplo, ayuda a proteger los derechos de privacidad de los demás. La regulación ayuda además a solucionar problemas de externalidad o efectos indirectos. Por ejemplo, no regular las anomalías de vivienda podría dar lugar a problemas de salud pública debido al aumento de humedad, la falta de luz o a problemas graves de seguridad. En este caso, la regulación elimina las efectos indirectos negativos y aumenta el bienestar general de los residentes.
La regulación puede tener también un efecto beneficioso al reducir el vacío de información en el mercado. Si no existen normas de construcción previamente definidas, los urbanizadores pueden aprovecharse de los compradores inexpertos y cobrarles en exceso por una vivienda que es insegura, o podrían venderles un terreno en una nueva urbanización que no proporciona servicios adecuados, como ocurre con frecuencia.
No obstante, la regulación también tiene aspectos potencialmente negativos. Una consecuencia es el inconveniente de procedimientos complicados que pueden conducir a la corrupción. Por ejemplo, no es poco frecuente que se tarde más de cuatro años en emitir una licencia de subdivisión. En su estudio clásico, Mayo y Angel (1993) asocian el complicado marco regulador de Malasia con funcionarios corruptos que intentan capturar rentas de la población a cambio de relajar las normas, agilizar la concesión de licencias o permitir excepciones al reglamento.
En segundo lugar, algunas regulaciones − como por ejemplo las ordenanzas de zonificación − pueden dar lugar a una segregación por ingresos en determinados vecindarios al establecer niveles mínimos que elevan los precios y disuaden efectivamente a las familias con ingresos más bajos de competir en el mercado formal. Los precios elevados de la vivienda pueden deberse a la gran demanda, pero también a la poca elasticidad de la oferta provocada por tales regulaciones y restricciones exclusivas. Malpezzi (1996) ha resaltado el aspecto de exclusión que tiene la regulación del uso del suelo en los Estados Unidos, que limita la integración de residentes con altos y bajos ingresos con la intención específica de evitar las subvenciones para las escuelas y otros servicios públicos locales.
Biderman (2008) ofrece evidencia sobre Brasil para apoyar el argumento propuesto de que las familias pobres a menudo eligen viviendas informales (sin título) por encima de las formales (con título) como respuesta a las regulaciones que exigen costos adicionales o “credenciales” para poder acceder al mercado formal y/o que reducen la flexibilidad del diseño en la construcción de viviendas. Este aspecto exclusivo de la regulación urbana es real en Brasil en cuanto a la infraestructura y los servicios públicos porque en cualquier caso rara vez se facilitan éstos en los asentamientos informales. De hecho, hasta 1988 la ley impedía oficialmente a los municipios facilitar servicios a los terrenos ocupados de forma irregular, aunque en la práctica algunos sí los facilitaron.
La economía política en la que se basan los aspectos de exclusión de la regulación tiene un precedente duradero en la historia de Brasil. El sistema Sesmarias de derechos de propiedad del suelo, instaurado por el rey Fernando I de Portugal en 1375, proporcionaba un régimen de propiedad mediante otorgamiento real (para la élite) o mediante una prueba de uso productivo del suelo (para quienes tenían medios de explotación del mismo). Los municipios de Brasil siguen aplicando las regulaciones urbanísticas en algunas partes de la ciudad, pero no en otras (Rolnik 1997). La retirada en lugar de la mejora de los asentamientos informales en los vecindarios del centro de la ciudad, con alto nivel de ingresos, es un caso oportuno. Este doble estándar permite alojar a los pobres en determinadas zonas sin invertir en infraestructura y provisión de servicios.
Otras razones de la presencia de regulaciones poco razonables en las ciudades de Brasil son la búsqueda de rentas por parte de los funcionarios que provoca la resistencia a la reforma reguladora, y la respuesta del regulador a la presión de los urbanizadores para mantener a las familias con bajos ingresos alejadas de ciertas zonas. Existen muchos ejemplos ilustrativos de esa corrupción y connivencia en Brasil en la bibliografía sobre planificación urbana.
Asimismo, los reguladores tienden a ignorar los efectos no intencionados de las ordenanzas sobre el uso del suelo y la construcción. No es poco frecuente que un municipio adopte simplemente las normas y las regulaciones urbanísticas de otro municipio con el fin de cumplir las órdenes federales sobre planes maestros, por poner un ejemplo. Esta práctica sólo aumenta la probabilidad de que se produzcan efectos negativos en el mercado de la vivienda porque permite que se perpetúen las políticas reguladores inadecuadas.
Un ejemplo del impacto de las regulaciones urbanísticas en el costo de la vivienda y potencialmente en la informalidad en Brasil es el Urbanizador Social, una iniciativa pública ideada para tentar a los urbanizadores informales para que cumplan con las regulaciones sobre el uso del suelo. El primer caso llevado a cabo con éxito en São Leopoldo en 2008, el urbanizador solicitó al municipio la reducción del tamaño mínimo de parcela de 300m2 a 160m2 con el fin de ofrecer opciones de vivienda más asequibles. A cambio, el urbanizador aceptó algunas imposiciones del municipio en forma de inversión directa en infraestructura y servicios urbanos (Damasio et al., próxima publicación).
Efecto de la regulación sobre la informalidad
En la década de 1990 los municipios de Brasil promulgaron diversas regulaciones sobre el uso del suelo y la construcción que pueden agruparse en cuatro tipos principales: normas de parcelación, zonificación, límites del crecimiento urbano y códigos de construcción. Algunos municipios adoptaron algunas de estas regulaciones en la década de los ochenta o incluso antes, otros lo hicieron durante la primera mitad de la década de 2000, y muchos otros aún no han adoptado todas o ni siquiera una de ellas. Estas diferencias temporales en cuanto a su adopción ofrecen una oportunidad analítica única para intentar aislar el papel desempeñado por la regulación de otros eventos que afectan al mercado de la vivienda.
Idealmente, el impacto de la regulación en el mercado de la vivienda debería evaluarse comparando municipios que son idénticos a excepción de que uno de ellos adopta una regulación particular mientras que el otro no. Sin embargo, encontrar municipios idénticos no siempre es factible. Un procedimiento estándar para solventar parcialmente este problema es utilizar los resultados de los municipios que no han adoptado la regulación a fin de estimar lo que habrían experimentado los municipios que sí la adoptaron si no hubieran introducido una regulación. La diferencia entre el resultado de adoptar o no adoptar una regulación sugeriría una estimación superficial del impacto de la regulación en la variación en la proporción de la informalidad.
Nuestro estudio aprovechó las oportunidades que ofrecía el caso de Brasil. En primer lugar, la diferencia cronológica en la adopción de regulaciones entre los municipios permite establecer comparaciones entre ellos. En segundo lugar, la información disponible en el censo y otros estudios a nivel nacional es extensa, e incluye la fecha de promulgación de la regulación, el estado de régimen de propiedad declarado por los propietarios de viviendas, y una cifra generosa de variables de control que incluyen la población, los ingresos y el nivel de pobreza. En tercer lugar, hay datos disponibles sobre más de 2.000 municipios, lo que permite realizar un análisis estadístico significativo. Tener una oportunidad como ésta de investigar los asentamientos informales es poco común, y es una de las principales razones por las que es tan difícil encontrar en la bibliografía pruebas contundentes sobre los factores determinantes de la informalidad.
Dada la naturaleza duradera de una vivienda, tanto las viviendas formales como informales se miden como proporción de todo el conjunto de viviendas, en lugar de como un número designado de viviendas. La medida de la informalidad utilizada en este estudio es la proporción de viviendas sin título de propiedad, que se define como la ocupación del terreno sin ostentar un título de propiedad declarada por propietarios de vivienda que respondieron a una pregunta en un estudio del censo sobre si eran o no propietarios del terreno en el que está ubicada su vivienda.
Según esta definición, la proporción de viviendas sin título de propiedad en las ciudades brasileñas descendió en la década de los noventa, debido en parte a los cambios institucionales asociados a la Constitución de 1988, que redujo de 25 a 5 años el tiempo necesario para legitimizar el derecho de posesión adversa de la ocupación de un terreno urbano no reclamado. Los terratenientes se volvieron menos condescendientes con respecto a tolerar la ocupación del terreno, tal y como se observa en la disminución de las invasiones de terreno y el aumento de las adquisiciones de mercado (aunque por medios informales) como la forma predominante de adquirir terrenos utilizada por los pobres. El descenso en la tendencia a la informalidad también se asocia a la estabilización económica, el fortalecimiento de las finanzas municipales locales, la revitalización del mercado hipotecario y el lento descenso de los índices de pobreza observados durante la década. El impacto de los programas de regularización, aunque su alcance es limitado, es otro factor que influye en la reducción de los asentamientos informales.
La Figura 7.2.5.1 (en anexo) presenta proyecciones utilizando parámetros estimados que comparan la disminución en el porcentaje de viviendas sin título de propiedad, que comienza en un 17,5 por ciento en 1985, con unos límites superior e inferior basados en una desviación estándar. La línea negra (naranja) de la cifra representa la tendencia exponencial en los municipios que no han promulgado regulaciones sobre el uso del suelo o sobre la construcción. Las líneas de color gris (morado o azul verdoso) representan los límites superior (más regulación) e inferior (menos regulación) de los municipios que promulgaron regulaciones en 1991, cuando la proporción de viviendas sin título de propiedad alcanzó el 14 por ciento.
Una forma de interpretar estos resultados es fijar un objetivo deseado en términos de proporción de viviendas sin título de propiedad, y después evaluar cuánto tiempo se necesita para alcanzar este objetivo dados los cambios regulatorios en los municipios. Si el objetivo es reducir la proporción de viviendas sin título de propiedad del 14 al 12 por ciento, entonces una ciudad que no promulgara regulaciones que afectaran al mercado formal de la vivienda habría alcanzado este objetivo en el año 1996, mientras que una ciudad de iguales características que promulgara regulaciones en 1991 habría tardado, en promedio, de dos a diez años más en alcanzar el mismo objetivo. En otras palabras, el plazo de tiempo será mayor en los municipios más regulados.
Los resultados muestran claramente un impacto significativo de la regulación sobre la informalidad y refutan la noción de que los mercados de vivienda formales e informales son independientes. Parece que la informalidad puede ser provocada por las mismas regulaciones que se aplican a los mercados formales, lo que significa que es incorrecto diseñar políticas circunscritas a las zonas informales. Aunque los resultados no siempre se estiman con gran precisión, las medidas de la regulación siempre tienen señales esperadas y sus niveles de confianza están siempre por encima del 81 por ciento. Asimismo, cuando comparamos los municipios que promulgaron regulaciones urbanas más cerca del año 2000, el impacto estimado sobre la informalidad disminuye como se esperaba, lo que demuestra coherencia con los resultados (Biderman 2008).
Perspectivas de futuro
El argumento y la evidencia presentados en este artículo sugieren que la regulación inadecuada en los países en desarrollo puede reducir las alternativas residenciales de las familias, incitándolas o presionándolas para buscar opciones informales. Las subvenciones podrían proporcionar una compensación adecuada a fin de mitigar los efectos de exclusión o las consecuencias imprevistas de determinadas regulaciones necesarias, al hacerlas aplicables a cada ciudadano. Pero en ausencia de tales subvenciones, los niveles de urbanización indebidamente elevados y las restricciones al uso del suelo podrían excluir a un grupo bastante numeroso. Por ejemplo, una norma de parcelación muy elevada (por ejemplo, un tamaño mínimo de parcela de 300m2 cuando los terrenos de 50m2 no son poco comunes) puede dar lugar a que existan grupos que viven en parcelas más grandes y otros en parcelas mucho más pequeñas. En lugar de garantizar niveles mínimos para todos, una norma como esta podría exacerbar las desigualdades.
Evidentemente, no se puede deducir que deberían eliminarse las regulaciones sobre la construcción y el uso del suelo. Las regulaciones desempeñan un papel importante en la creación de un entorno urbano mejor. No obstante, es necesario afrontar las consecuencias no deseadas de la inducción a la informalidad producto de los elevados precios de la vivienda. Una política de vivienda sensata debería tener en cuenta estos efectos indirectos. El desafío actual es cómo conservar los efectos indirectos positivos de las normas urbanísticas estimulando a la vez la construcción de viviendas asequibles. También se debería tener en cuenta el tema de cuántos efectos indirectos positivos pueden extraerse realmente de una regulación determinada.
Por ejemplo, el valor social del efecto indirecto externo generado por una restricción de la densidad podría no ser necesariamente mayor que el valor de la pérdida de bienestar asociada a una restricción en la oferta de suelo urbanizado. En efecto, podríamos argumentar sobre la medida en la que determinadas regulaciones aplicadas actualmente en los municipios de Brasil, proporcionan de hecho más privilegios de exclusión a determinados grupos o una burocracia flagrante y obstáculos de procedimiento que elevan los precios de la vivienda sin crear efectos indirectos positivos para el conjunto del municipio (Henderson 2007).
Ya a finales de la década de los ochenta, los planificadores urbanos de Brasil reconocieron que las normas y las regulaciones urbanísticas estaban aumentando los costos de urbanización y afectando a las viviendas sociales. A pesar de la falta de pruebas estadísticas, los profesionales se dieron cuenta de que los tamaños mínimos de parcela, los terrenos de estacionamiento obligatorios, los impedimentos a los usos mixtos (comerciales y residenciales), y otras regulaciones sobre el uso del suelo urbano no favorecían el aumento de la oferta de vivienda asequible.
Se adoptó un enfoque pragmático a fin de minimizar esas limitaciones a través de la noción ZEIS (Zona Especial de Interés Social), donde se flexibilizaban las regulaciones que incrementaban los costos con el objetivo de promover la oferta de viviendas asequibles. Las ZEIS se definen mayoritariamente de forma que coincidan con los límites de asentamientos ocupados existentes y los municipios las utilizan como herramienta para regularizar ocupaciones de suelo irregulares previas simplemente enunciando que el asentamiento no necesita cumplir las normas aplicables de forma general a las zonas urbanas del municipio. El inconveniente de esta medida paliativa es que el municipio ya no se ve obligado a intervenir en la zona puesto que, por definición, la zona ZEIS ya es conforme a la norma. En otras palabras, el doble estándar abre la vía para que el municipio ignore el problema más allá de la emisión de una ordenanza sobre zonificación.
En resumen, la reforma de la política de vivienda en Brasil exige actualmente un enfoque más amplio que estructure de forma conjunta los elementos de financiación, tecnología y gestión urbanística, y se aleje de la visión paternalista de ofrecer un cobijo o del enfoque limitado sobre los asentamientos informales. Hemos argumentado que el papel de la regulación del suelo urbano y de la construcción es un factor indispensable a tener en cuenta en cualquier intento de afrontar con seriedad el desafío que plantea la informalidad en Brasil y en otras ciudades del tercer mundo.
Referencias
Biderman, C. 2008. Informality in Brazil: Does urban land use and building regulation matter? Documento de trabajo. Cambridge, MA: Lincoln Institute of Land Policy.
Damasio, Claudia, Claudio Gutierrez, Gevaci Perfroni y Jacqueline Menegassi. Próxima publicación. Estudo de caso de urbanizaçao social no municipio de São Leopoldo. Documento de trabajo. Cambridge, MA: Lincoln Institute of Land Policy.
Ellickson, R. 1977. Suburban growth controls: An economic and legal analysis. Yale Law Journal 86 (3).
Henderson, J.V. 2007. The effect of residential land market regulations on urban welfare. Urban Research Symposium 2007. Banco Mundial, 14–16 de mayo.
IBGE (Instituto Brasileiro de Geografia e Estatistica/Brazilian Institute of Geography and Statistics). 1991 y 2000. http://www.ibge.gov.br/home/
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Turner, J.F.C. y R. Fichter. 1972. Freedom to build: Dweller control of the housing process. New York: The Macmillan Company.
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Sobre los autores
Ciro Biderman es Visiting Fellow del Lincoln Institute of Land Policy e investigador adjunto al Departamento de Planificación y Estudios Urbanísticos del Instituto de Tecnología de Massachusetts. Asimismo es profesor asociado en la Fudación Getulio Vargas e investigador asociado al Centro de Estudio de las Políticas y Economía del Sector Público (CEPESP/FGV) de São Paulo, Brasil (en licencia).
Martim Smolka es Senior Fellow y Director del Programa sobre América Latina y el Caribe del Lincoln Institute.
Anna Sant’Anna es investigadora asociada principal del Programa sobre América Latina y el Caribe del Lincoln Institute.
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