The Capture of Land Value Capture:
Accounts of the Perversion of Henry George’s Ideal
Scholars have frequently observed municipal governments’ ample incentive to use public sector capabilities and resources to shore up concentrated private affluence. Arenas in which this occurs include infrastructure investment, tax policy, and – above all – policy governing the use and exchange of real property. Recently, critics have argued that many projects involving so-called “land value capture” or “development value capture” (such as tax-increment financing, transfer of development rights, and purchasable density bonuses) serve to inflate property prices, fuel displacement, and/or deliver public subsidy to the wealthy.
Ironically, land value capture is the brainchild of Henry George, the socialist author of the wildly popular book Progress and Poverty (1889) and founder of the movement for land value taxation. George, working in the tradition of classical political economy, imagined a public sector that steeply taxed unearned land rent and used the proceeds for beneficial investments in infrastructure, social services, and a universal basic income, thus ending poverty. George understood land and location as possessions of the social collectivity and viewed private property in land as a fundamental injustice. This paper explores historical and social scientific accounts of the evolution of Georgist thought, looking for clues as to how a radical anti-capitalist idea became transfigured over the course of the 20th century into a tool of the so-called “real estate state” (Stein, 2019). Culprits range from the conflation of land with capital in mainstream economics to Progressive-era compromises among Georgist reformers, local politicians, and rentier interest groups which, rather than leading to consensus around land’s fundamentally public nature, bolstered the commodification of real estate and the perpetuation of an individualistic ideology of property ownership.
Public Land, Value Making, and Austerity:
State-led Housing Production in Post-Crisis London
The creation and extraction of value from public land is a key site through which the contradictions of neoliberal governance are mediated and through which different futures are imagined. In London, public land has come to the fore of political struggles in the era of post-crisis austerity, as local authorities have channelled low-cost public credit into the built environment in an attempt to gain greater control over housing production and as a way to pull in revenue for welfare provision. Taking as its focus the emergence of municipally owned housing companies in London, this paper explores the processes of valuation and value-making that are at work in the state’s debt-leveraged experiments in housing production and traces some of the emerging contradictions of this latest shift in governance in the wake of the COVID-19 pandemic. In thinking about value as a relational process, I examine the narratives and practices through which public land and housing are commodified, elucidating the ways in which value is continuously shaped by struggles unfolding both within and outside the boundaries of the local state. If commodification works to deepen crises of political legitimacy, recent efforts to move beyond rigid conceptions of monetary value and to expand democratic participation in the refurbishment and redevelopment of public housing have inevitably knocked up against the path-dependent landscapes of urban neoliberalism. Under circumstances of prolonged austerity, the calculative logics of ‘financial viability’ continue to prevail in the process of cross-subsidizing affordable homes through for-profit, market-rate housing. Concurrently, the local state’s revived role as producer of housing and its enhanced ability to act in and through urban land markets is belied by a weakened organizational capacity, which itself is driven by the longstanding privatization of state functions and continued rounds of public sector downsizing.
Leveraging Urban Air Rights: Public Transport Finance and Vertical Densification in Urban Taipei
The sale of urban air rights is one of the market-based land value capture tools that have emerged in cities under the challenge of austerity. With large urban infrastructure projects – such as urban rail systems – in demand with the global circulation and funding of transit-oriented development (TOD) schemes, many cities with scarce financial resources are seeking to turn upzoning practices into a resource frontier to finance infrastructure projects. However, how the sale of air rights has been developed and employed against other value capture tools is still understudied. In this paper, I examine the processes of policy design and operationalisation of Incremental Floor Area (IFA), a value capture tool developed by the Taiwanese government that activates the sale of urban air rights to finance transit-oriented development (TOD) schemes. Drawing on an urban rail transit project called ‘Three Rings Six Lines’ in New Taipei City, Taiwan, I highlight the emerging mode of ‘leverage’ which signifies the fiscal moments wherein money and space shift from one-way financing to two-way creating a mutually-reinforced relationship. Such a money-space relationship in fiscal planning is built upon the anticipatory revenue of upzoning and the sales of air rights along the transit corridors. In this case, I explore how the process of value capture of urban airspace is imagined, planned, and practiced. And, I investigate how COVID-19 has impacted the implementation of this anticipatory mode of public transport finance. This paper offers a policy analysis based on a review of grey literature, including government and consultancy reports, media reports, meeting records, website materials, and the social media accounts of key policymakers (i.e. Facebook posts). I highlight how the various policy tools of urban air rights are leveraged to (1) restructure existing urban forms; (2) recruit potential developers and landowners; and (3) recoup future development gains to finance present infrastructural costs before and during the coronavirus outbreak.
Value is an ambiguous abstraction on which rest vast structures and practices engaged in extracting, capturing, and accumulating value in and from the urban landscape. But what is value and how does it attain its coercive power over urban life and form? The unreflective deployment of axiomatic assumptions regarding value’s ontology constitutes a form of magical thinking conjuring something out of nothing and transforming an immaterial abstraction into a material force that is real in its consequences. Unpacking the concept of value reveals a long and contentious debate regarding the ontological status of value as a driver of the urban process. Alternative formulations posit value as intrinsic or extrinsic, objective or subjective, an essence or an illusion, residing in the world or constructed in the mind, and subject to universal law or spatially and temporally contingent. Transcending all such dualisms, Deweyan pragmatism understands value as a transactional relation of interdependent forces comprising the valuing subject, the object of valuation, and the enveloping context in which valuation occurs. More than a merely theoretical debate, the delineation of value’s ontology is fraught with political consequences for reproducing or altering the status quo. The move towards more benign or less harmful outcomes begins with exposing and exploring the foundational assumptions propelling practices of value formation, extraction, capture, and distribution in specific situations. Problematizing value assumptions shifts the definition of the value problem from a concern with distributive justice, as in the distribution of surplus value between capitalists and workers, to the question of epistemic justice concerning whose value(s) prevail in a given problematic situation. This redefinition of the problem shifts the focus of political contention from ameliorating current practices to contesting the underlying value commitments at work in the world.
Land Value Capture and COVID-19 Mortality in a Segregated City: Santiago, Chile
Ernesto López-Morales, Universidad de Chile, Chile (email@example.com)
Claudia Sanhueza, Universidad Mayor, Chile (firstname.lastname@example.org)
Nicolás Herrera, Universidad de Chile, Chile (email@example.com)
In this paper, we provide a spatial characterization of the Land Tax capture in Santiago, the capital of Chile, a highly segregated city. We assume that the Land Tax is a wealth tax; thus, it is a novel measure of urban segregation: wealth segregation. We show the uneven distribution of Land Tax collected in the city, drawing on secondary quantitative official administrative data on Land Tax from the Tax Revenue Service. The wealthiest ten percent of the municipalities in the Santiago Region contribute 55 percent of the Land Tax in the city. On the flip side, the rest of the municipalities in the city have considerable urban and housing deficits, with higher indices of poverty and segregation. These areas are “net receivers” of Land Tax, but still, this redistribution does not ameliorate their poor condition. These areas also show higher mortality rates from COVID-19 infections, explained by comorbidities and lack of access to medical care, while in the wealthy areas, the COVID-19 mortality rate is much lower. We conclude that changing land value collection and redistribution could afford better access to healthcare infrastructure and services in Santiago’s deprived areas.
Reparative Budgeting: Towards a Radical Reconceptualization of Value and Care
The COVID-19 pandemic and the Black Live Matter movement have drawn stark attention to who is valued in American society. Though these crises are deeply rooted in the historical trajectory of racial capitalism, the ongoing response to them are igniting urgent debates over the politics of care and public investment. As protestors hit the streets in the wake of the killing of George Floyd, demands to defund the police and invest in a people’s infrastructure rung out from Portland to Atlanta. They were accompanied by an insistence that city budgets be confronted as moral documents. Budgeting and accounting are typically thought of as mundane and tedious practices as they dwell on record keeping and tracking of credit and debt. Yet as the protestors made clear, budgets are critically important sites for theorization, debate, and intervention. They entail deeply political and ethical decision-making about who and what is valued in society, and thus, cared for. This paper analyzes municipal budgeting as a key site to understand how and to what ends care and value are being rethought in a crucial moment of societal upheaval. Specifically, the paper uses the case of Nashville, TN, where residents have launched the Nashville People’s Budget Coalition (NPBC), to investigate how a rethinking of public safety offers a radical reconceptualization of value and care. While the monetization and commodification of value are often embraced within urban planning and governance, and such approaches to value and its capture may yield money for public investment, social movements like NPBC suggest the need to fundamentally reconfigure how value and care are structured and maintained within liberal regimes of property and policing and the politics of land development that follow.
Intensification, Development Regulation, and Land Value Capture: Conflict Over the Rules of the Game in Toronto
Andre Sorensen, University of Toronto, Canada (firstname.lastname@example.org)
Abstract This paper examines the emergence and operation of the Toronto intensification planning regime, focusing on approaches to development regulation, land value capture, and infrastructure finance. Toronto has for 70 years been one of the fastest growing city-regions in North America, and over the last two decades has seen a boom of high-rise intensification. A distinctive value-capture system has emerged, and conflict over both the rules of the game and
their application has been intense and continuous. The sets of institutions regulating capital investment in urban property are increasingly important today, as urban property development has become one of the world’s largest industries, most cities struggle to finance infrastructure demands related to intensification, and cities are key actors in attempts to achieve more sustainable development and better living environments. In theory, as every property in a city requires a wide range of public infrastructure and services to be able to function, each should contribute its share of these costs. But policies to capture land value increases for public benefits have been vigorously contested. Conflict occurs in two main arenas: in the provincial legislature, where planning laws and policies have been repeatedly
revised to modify value-capture mechanisms; and at the micro scale of each development where zoning, permitted height and density, infrastructure assessments, and permission fees are negotiated. This paper traces the evolution of value-capture policies, quantifies the scale of land value capture in Toronto, and details the nature of public benefits that have been realized. While Toronto has seen some success in achieving planning goals and value-capture, it is clear
that the city has become increasingly reliant on exactions for density bonuses, development charges, and park land dedications as sources of infrastructure finance, and big questions remain about the legitimacy and effectiveness of current approaches, particularly as housing has become increasingly unaffordable.
Plan by Density Techniques: Acquisitive Urbanism and Heightened Land Commodification
This paper considers how density techniques have enabled and nurtured an acquisitive appetite for real estate property development that has heightened land commodification in postwar Taiwan. Three density techniques—exemption, TDR (transfer of development rights), and bonusing—allow planners to formulaically grant extra density to property developers without engaging local communities in deliberating and negotiating density use. Using the residual method to mimic property developers’ development finance calculations as well as in-depth interviews, we estimate the possible uplift in land purchase price that extra density has produced. Focusing on 18 residential real estate development projects in Central North, New Taipei City, Taiwan, our estimates suggest that all but one of the projects are able to raise the land price and the uplift ranges from 671 USD/m2 to 4,598 USD/m2 even after accounting for a net profit rate at 20% of total sale revenue. Our calculative exercise is a provocation for a deeper investigation into the relationship between technical devices, acquisitive urbanism, and the intertemporal effect of land commodification.
Contested Values of ‘Development’ in Urban Resettlement
In large-scale development projects that displace a large number of people, proponents increasingly argue that ‘resettlement with development’, which often envisions urbanization, addresses the injustice of forced displacement by creating and distributing capitalized values of ‘development’ through provision of cash, replacement land and physical infrastructure. Critical scholars argue that the provision of such benefits is often insufficient for restoring displaced people’s diversified livelihoods and, subsequently, technocratic discussions about improving quality and quantity of compensations have become dominant. However, little is known about process by which the newly capitalized values through resettlement becomes contradictory to the resettled people’s social and cultural values, as they experience ‘development’ in the new resettlement landscape. Drawing on field visits and interviews with people involved in a resettlement project created by a large-scale ecotourism development project in Mozambique, this paper explores answers to the questions: how does ‘urban resettlement’ produce both capitalized and socio-cultural values and how do these different values lead to contestations? The paper shows that the capitalized values are produced in the expert-led resettlement process while they begin to incrementally overwrite and simultaneously reveal other types of values emerging from the displaced people’s everyday experiences. The paper discusses the relevance of John Dewey’s theory of social values in order to grasp value contestations intensifying in the urban resettlement context.
Land Value Creation, Capture, and Destruction:
Hudson Yards and its Discontents
Bridget Fisher, The New School, USA (FisherB@newschool.edu)
Flávia Leite, The New School & UC Berkeley, USA (email@example.com)
Rachel Weber, University of Illinois at Chicago, USA (firstname.lastname@example.org)
Evaluations of land value capture (LVC) techniques often assume a causal link between public investment and subsequent appreciation and that captured tax revenues will be sufficient to subsidize present-day capital expenses. For the new land value to be captured, however, it must first exist. We demonstrate how property values are determined by calculative and political practices that can not only create and capture them but also destroy them. Public land value capture schemes compete with the private sector impulse to extract rents from land, the latter often leading to attempts to lower values to avoid taxation through appeals and abatements. We find the true cost of capital investments, the pace of capitalization, struggles to claim the new value in targeted areas, and the magnitude of spillover effects will all affect the degree to which the promise of LVC is realized. We provide examples from an analysis of the Hudson Yards mega-development in Manhattan to show how competing interest among actors and the flexibility of property values allows the taxes on them to be used at cross-purposes, jeopardizing the payback streams, inflating risks shouldered by the public sector, and challenging the project ́s self-financing premise.