16. How can value capture promote implementation?

There are many instruments that help municipalities to set the priorities for urban development and densification. Some of the most effective from around the world have been:

  • Development and zoning levies, according to Emer O’Siochrú a value capture expert, are like the telecommunications industry. In the telecommunications industry, users are required to pay three different charges: for connection, rental and use. A development levy is similar to a connection charge, as it is based on the cost of being connected to roads, water, waste and other infrastructure. A zoning levy, then, is like a rental charge and is a payment for the use of land. Development and zoning levies should be charged at a progressive rate; poorly serviced rural areas should have lower levies than well-serviced cities. Income from development and zoning levies should be pooled in a government fund and redistributed to redress imbalances in revenue between wealthy and poorer authorities.
  • Zoning provisions stipulate a property owner’s rights in terms of the use and development of a particular parcel of land. Although zoning was historically used to reproduce exclusion under the guise of protecting property rights, more flexible zoning can be used to direct development. Incentive zoning is a land use regulation that encourages the creation of certain amenities and land use designs; incentive zoning, for example, can be used to produce higher densities or discourage wasteful layouts.
  • Exactions are obligations imposed on developers to aid the government in providing public services and can take several forms, such as impact fees, infrastructure contributions and land donations. Exactions are payments that a developer must make to the local authority in exchange for obtaining a permit.
  • ZEIS, or special zones of social interest, are primarily used in Latin America to expand access to urban land for low-income groups. There are four types of areas to which ZEIS can be applied, including: occupied land in favelas, vacant public land, vacant private land, and environmentally protected areas. ZEIS are an attempt to ensure class integration, by preventing market speculation and dampening the price of land. ZEIS can also be used to reserve well-located land for social interest housing, thereby linking land regulation with housing policy.
  • Cross-subsidisation refers to the financing of mixed-income housing developments, using the cost of the more expensive units to subsidies a portion of the less expensive units (either the housing structure itself, or the infrastructure).
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