OGLM 3140 - Land Value Capture

Local governments should be able to capture the land value uplift generated by their own public interventions such as infrastructure investments, or land use change (Smolka 2013). “The value of urban lands comes from the collective efforts of city’s residents, public investment and market conditions” (Echavarria, Monkkonen 2025). Thus, when a local government invests in a specific infrastructure, or change some land use, the land value increase should be captured for the public interest, and not only by the property-owning class. Developing countries have low property tax levels, do not tax vacant land, and ever worst, are selling their former land reserves in the interest of influent groups. In addition, they confront political and technical challenges in properly applying LVC, which vary in equity and efficiency.

However, there are basic Land Value Capture mechanisms that could be implemented to bring in some spatial justice and finance housing projects, parks and public facilities. This class will present the main types of LVC developed and used in large metropolis, in particular in the US and in Asia (for transportation), and will then study in detail MENA region countries to understand the institutional barriers, and political challenges they face when trying to finance infrastructure in the interest of their citizens. It will also assess their feasibility, their efficiency and equity.

Most developing countries have only implemented land taxation (property tax and betterment charge), density bonus and sales of development rights, or public-private partnerships (PPPs). However, the variety of instruments is wide and cover 16 basic ones (Kaganova, Peteri, Kaw 2023):

Control over government property / Strategic land management: 1. Land/facility leases or concessions, 2. Land sales; 3. Joint development agreements (JDAs) or 4. public-private partnerships (PPPs), 5. Air rights contracts, 6. Naming rights, 7. Intensification of land uses on public-use land,

Power to regulate land-use: 8. Sales of development rights/density bonuses. 9. Land conversion fee, 10. Land readjustment

Fiscal instruments: 11. Property tax, 12. Tax Increment Financing, 13. Betterment charge, 14. Special Assessment Districts, 15. Real estate capital gain tax, 16. real estate transfer tax, 17. Developer charges /exactions

However, these taxes often face property owner resistance, developer pushback as they want to keep a margin of profit, political resistance against property tax reform and administrative barriers (as LVC need detailed land valuation systems and strong governance, and equity concerns (fear of gentrification or displacement of informal dwellers).

This class will focus on Egypt (NUCA), Saudi Arabia (white land tax), Jordan (Amman), Morocco (Casablanca), with other examples. It builds upon a personal experience with Greater Amman Municipality for the World Bank (team of Jon Kher Kaw in 2021-2024, and with Olga Kaganova in 2016 and 2022) (Kaganova, Kaw, Ababsa 2023).

Group oral presentation by three students on a specific MENA country main Land Value Capture instruments, compared with similar city outside the MENA/

Individual short paper with introduction on a section of the presentation.