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LAND-BASED FINANCE AS A LOCAL REVENUE �SOURCE: APPROACH, TOOLS, PROJECTS �

Jean du Plessis�UN-Habitat Land, Housing and Shelter Section

Nairobi, Kenya

jean.duplessis@un.org

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WHAT IS GLTN?

The Global Land Tool Network (GLTN) was formed in 2006 – a proactive response to pressing land challenges in both rural and urban areas, globally
It is a growing alliance of 83 international partners working together “To contribute to poverty reduction and sustainable development through promoting secure land and property rights for all”
We do this by developing, testing and promoting pro-poor, gender-responsive land tools that can be implemented at scale, at country level
…and through interdisciplinary, multilevel, cross sector partnerships

�

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WHO ARE THE GLTN PARTNERS?

From five sectors:

International Professional Bodies
International Research & Training Institutions
Bi-lateral Organisations
Multi-lateral Organisations
Urban & Rural International Civil Society Organisations

83 Partners including:

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WHAT IS A GLTN LAND TOOL?

A land tool is a practical way to solve a problem in land governance, to put principles, policies, legislation into effect
A GLTN land tool can be:

a specific, ready-to-use product
an approach and process with a set of associated implementation products

May be a checklist; a set of evaluative criteria on a matrix; a software package and accompanying protocol; guidelines, approaches, procedures; etc.
Can be used in combination, with an emphasis on practicality and capacity – users should be able to take a land tool and apply it (or adapt it) in their own situation
Five tool-development areas, eight cross-cutting themes

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GLTN LAND TOOLS
ACCESS TO LAND AND TENURE SECURITY
Continuum of Land Rights
Participatory Enumeration for Tenure Security
Land Record System for the Poor
Customary Tenure
LAND ADMINISTRATION AND INFORMATION
The Social Tenure Domain Model (STDM)
Costing and Financing of Land Administration � Services (COFLAS)
Fit for Purpose Land Administration
Transparency in land administration
LAND-BASED FINANCING
Innovative Land and Property Taxation
Land-based Financing (LBF)
Valuation of Unregistered Lands and Properties
LAND MANAGEMENT AND PLANNING
Participatory and inclusive land readjustment (PILaR)
Citywide Slum Upgrading
Land Use Planning
City wide planning
LAND POLICY AND LEGISLATION
Regulatory Framework for Non-State Actors
Pro-poor land policy development
Land sector coordination

Fit-for-purpose land administration

Land-based financing

Continuum of land rights

Transparency in land administration

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WHY DO WE NEED TO ‘LEVERAGE LAND’?

PREMISE #1: By 2050, two out of every three people will live in urban areas

Q: What is the estimated percentage in your country?

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LEVERAGING LAND

PREMISE #2: Cities urgently need additional resources to meet the increased demand for infrastructure and services

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WHERE WILL THESE RESOURCES COME FROM?

Many urban authorities are seriously under-resourced and hence unable to meet the ever-growing demand for affordable land, essential services and new infrastructure, as well as for the maintenance of existing infrastructure and services…

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LAND-BASED FINANCE

Land-based financing (LBF): A collective name given to a range of tools by which local governments could leverage land to expand their revenue base and generate funds that will help them realize their service delivery, infrastructure development and maintenance goals

Advantages of land-based finance

Land-based taxes and fees are difficult to avoid
Land-based taxes and fees tend to promote transparency and accountability in local government
Land-based taxes promote effective, compact and productive land use
Land-based taxes and fees are fair
Land-based taxes and fees can be pro-poor through improved tenure security and expanded civic engagement

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THE GLTN APPROACH TO LBF

Land-based finance can unlock unique opportunities for inclusion of all residents within a framework of responsible municipal governance
Huge segments of populations are often missed due to lack of recognized land rights.
The more people are provided with security of tenure, the more they can become part of an inclusive urban development process.
GLTN’s land-based finance approach is therefore based on an inclusive concept of land tenure security, backed up by innovative land tools designed to facilitate this.
It is also based on the assumption that revenues collected should translate into infrastructure and essential services for the inhabitants

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THE GLTN “LEVERAGING LAND” TOOLS

“Leveraging Land: Land-based �finance for local governments”

A Reader

Instruments and cases

A Trainer’s Guide

Training strategy and tools

Download the Reader and Guide from www.gltn.net

Access the Videos via www.elearning.gltn.net

“Where to Start: A Guide to Land-�based Finance in Local Governance”

“Land-based Finance Instructional Videos”

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TRAINING OBJECTIVE AND INTENDED OUTCOMES

Objective:

To develop the capacity of local leaders and officials by enhancing their ability to implement land-based financing instruments

Intended outcomes for each participant:

Improved understanding and skills in the application of land-based financing instruments
An action plan for improving land-based financing in their home environment
A personal commitment to the successful implementation of that action plan
Colleagues and peers with the same understanding and commitment

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Process: Intensive, carefully planned learning events

Target audience:

Land officials, administrators and professionals from developing countries working at the local and national level of government

THE TRAINING

Tested in various formats in:

Nairobi
Manila
Cairo
Montreal
Kuala Lumpur
Mashhad

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ELEVEN LBF INSTRUMENTS COVERED

Recurring land value tax

Recurring building value tax

Betterment levies

Special Assessments

Developer Charges

Land value increment tax

Sale of development rights

Sale of public land

Lease premium

Recurring lease payments

Transfer taxes & stamp duties

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LAND-BASED FINANCE INSTRUMENT #1

Recurring land value tax

Timing:

* Assessed annually

* Can be collected in installments

Description:

Recurring tax based on an estimate of the value of land or on land attributes

Appropriate for Policy Goals:

* Recover the cost of public investments

* Claim a portion of increased private land value created by public action

* Collect payments for public services proportional to the benefits provided to landholders

* Collect a “use charge” for private use of public land

Minimum requirements:

*Appropriate enabling legal framework

*Fiscal cadaster (land registry) that includes all taxable land plots

*Appropriate estimate of taxable value

*Administrative ability to calculate tax due, deliver bills, and collect tax

NOTE: First of 11 examples. For distribution purposes via link also providing �#2 to #11 (hidden during presentation for sake of time)

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LAND-BASED FINANCE INSTRUMENT #2

Recurring building value tax

Timing:

* Assessed annually

* Can be collected in installments

Description:

Recurring tax based on an estimate of the value of immovable improvements or on attributes of the improvements

Appropriate for Policy Goals:

* Recover the cost of public investments

* Claim a portion of increased private land value created by public action

* Collect payments for public services proportional to the benefits provided to landholders

* Collect a “use charge” for private use of public land

Minimum requirements:

*Appropriate enabling legal framework

*Fiscal cadaster (land registry) that includes all taxable land plots

*Appropriate estimate of taxable value

*Administrative ability to calculate tax due, deliver bills, and collect tax

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LAND-BASED FINANCE INSTRUMENT #3

Betterment levies

Timing: �* Assessed and collected as a one-time charge

Description:

* Charges assessed in connection with specific infrastructure improvements

* Limited to recovery of actual costs incurred

Appropriate for Policy Goals:

* Recover the cost of public investments

* Collect payments for public services proportional to the benefits provided to landholders

Minimum requirements:

• Appropriate enabling legal framework

• Identification of all land plots whose value is affected by the improvements

• Estimated impact of the improvements on the land value of each affected plot

• Accurate estimate of the cost of the improvements

• Method for allocating the improvement costs to individual plots based on the share of benefit received

• Adequate one-time billing and collection system

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LAND-BASED FINANCE INSTRUMENT #4

Special Assessments

Timing:

• Assessed once

• Collected over a period of time, often as a temporary addition to the recurring property tax

Description:

• Charges assessed in connection with specific infrastructure improvements

• Limited to recovery of actual costs incurred

Appropriate for Policy Goals:

* Recover the cost of public investments

* Collect payments for public services proportional to the benefits provided to landholders

Minimum requirements:

• All points included for betterment levies

• Adequate installment billing and collection system

• Agreement of a majority of land owners

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LAND-BASED FINANCE INSTRUMENT #5

Developer Charges

Timing:

• Assessed once

• Collected as project is approved and completed

Description:

• Charges assessed in connection with development approval

• Can be paid in cash, in land or in kind

Appropriate for Policy Goals:

* Claim a portion of increased private land value created by public action

* Avoid direct expenditures for new infrastructure

Minimum requirements:

• Appropriate enabling legal framework

• Estimate of the impact of the proposed development on existing infrastructure

• Administrative coordination with city planning functions

• Method for calculating the amount of exaction due

• Adequate billing, collection, and project monitoring system

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LAND-BASED FINANCE INSTRUMENT #6

Land value increment tax

Timing:

• Can be assessed when land title transfers or when specific public actions result in increased land values

• Collected when land title transfers or by special billing

Description:

Tax assessed as a percentage of the increase in land value due to public actions or general market trends

Appropriate for Policy Goals:

* Claim a portion of increased private land value created by public action

Minimum requirements:

• Appropriate enabling legal framework

• Estimate of the “before” and “after” land values

• Administrative capacity to identify when the tax is due

• Adequate billing and collection system

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LAND-BASED FINANCE INSTRUMENT #7

Sale of development rights

Timing:

* Collected once

Description:

• Payments received in exchange for permission to develop or redevelop land at higher density or changed land use

• Rights can either be sold at auction or at fixed price

• Rights may be transferable to other locations or resold

Appropriate for Policy Goals:

* Recover the cost of public investments

* Claim a portion of increased private land value created by public action

* Avoid direct expenditures for new infrastructure

Minimum requirements:

• Appropriate enabling legal framework

• Effective control of existing development rights

• Demand for additional development rights

• Administrative and planning capacity to determine acceptable amount of additional development

• Capacity to manage the process of selling additional development rights

• Capacity to monitor use and any resale of rights sold

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LAND-BASED FINANCE INSTRUMENT #8

Sale of public land

Timing:

* Collected once

Description:

Payment received in exchange for freehold title to public land

Appropriate for Policy Goals:

* Recover the cost of public investments

* Claim a portion of increased private land value created by public action

* Avoid direct expenditures for new infrastructure

Minimum requirements:

• Appropriate enabling legal framework

• Administrative and planning capacity to determine which lands should be privately developed

• Capacity to manage a transparent and fair sales process

• Capacity to allocate and manage sales proceeds

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LAND-BASED FINANCE INSTRUMENT #9

Lease premium

Timing:

* Assessed and collected once

Description:

• Payment received in exchange for right to occupy and benefit from public land

• Permitted land use is specified

• Terms vary from 2 to 99 years

Appropriate for Policy Goals:

* Recover the cost of public investments

* Claim a portion of increased private land value created by public action

Minimum requirements:

• Appropriate enabling legal framework

• Administrative and planning capacity to determine which lands are available for lease

• Appropriate estimate of market value of land to be leased

• Administrative ability to solicit and negotiate leases

• Administrative ability to monitor leases for the duration of the lease

• Administrative capacity to allocate and manage lease proceeds

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LAND-BASED FINANCE INSTRUMENT #10

Recurring lease payments

Timing:

• Recurring payments

• Payment amount reviewed and updated periodically

Description:

• Payment received in exchange for right to occupy and benefit from public land

• Permitted land use is specified

• Terms vary from 2 to 99 years

Appropriate for Policy Goals:

* Collect payments for public services proportional to the benefits provided to landholders

* Collect a “use charge” for private use of public land

Minimum requirements:

• Appropriate enabling legal framework

• Administrative and planning capacity to determine which lands are available for lease

• Appropriate estimate of market value of land to be leased

• Administrative ability to solicit and negotiate leases

• Administrative ability to monitor leases for the duration of the lease

• Administrative capacity to allocate and manage lease proceeds

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LAND-BASED FINANCE INSTRUMENT #11

Transfer taxes & stamp duties

Timing:

* Assessed and collected once

Description:

• Charge assessed for recording the transfer of a land title from one party to another

• Can be either a fixed fee or a percentage of the value of the property being transferred

Appropriate for Policy Goals:

* Claim a portion of increased private land value created by public action

* Collect payments for public services proportional to the benefits provided to landholders

Minimum requirements:

• Appropriate enabling legal framework

• Effective land registration system

• Administrative capacity to identify when the tax is due

• Capacity to estimate taxable value

• Adequate billing and collection system

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THE READER - LEARNING THROUGH CASE STUDIES

21 ILLUSTRATIVE CASES FROM 18 COUNTRIES

Region	Country
Latin America	Bogotá, Colombia
	Cuenca, Ecuador
	Medellín, Colombia
	São Paulo, Brazil
North America	Vancouver, British Columbia, Canada
East Asia	Hong Kong, PRC
	Singapore
	Taiwan (ROC)
South Asia	Ahmadabad, Gujarat, India
	Kandahar, Afghanistan
	Mumbai, India
	Punjab, Pakistan
Europe	Albania
Europe	Helsinki, Finland
Middle East and North Africa	Egypt
Middle East and North Africa	Turkey
Africa	Tanzania
Africa	Sierra Leone

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CONSOLIDATION, ACTION PLANNING

Training participants are encouraged and assisted to:

Critically compare the instruments discussed in terms of their practical potential for the participant’s home setting
Recognize the most critical tasks and functions in adapting and implementing the most relevant instrument(s)

Recognize the administrative requirements for successful implementation, including the human and other resources necessary
Recognize the political, legal and other environmental factors that will affect implementation
Devise a prioritized list of actions required in order to implement or improve the most relevant instrument(s)
Develop an action plan for accomplishment of the desired changes

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CURRENT PROJECT: LBF IN FRAGILE STATES

UN-Habitat Land and Property Tax Revenues Project 2020-22

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KEY LESSONS FROM THE PROJECT (thus far)

LBF process improvements can greatly increase overall revenue
Revenue increases can but don’t automatically lead to improved service delivery
Not yet clear whether improved tenure security can be an immediate outcome of practical LBF reform
Two implementation modalities tested in Afghanistan (embedded + technical support) and Somalia (Agreement of Cooperation), each with own pros and cons (an assessment is being planned)
Significant knowledge products approaching completion
Two additional countries being onboarded to test existing lessons, and prepare the ground for possible future interventions
Land and property taxation remains a very male-dominated space, both locally and internationally – a more concerted plan and effort needed to change this
Further work (and time) needed to understand how to incentivize revenue reform and strengthen the connection between increased revenues, improved service delivery and citizenship building

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THANK YOU!

www.gltn.net

www.unhabitat.org

Presented in partnership with

www.fmdv.net

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