Prospects for Land Readjustment

2. Prospects for Land Readjustment In Relation to UN-HABITAT’s New Urban Agenda Yu-Hung Hong and Rachel Alonso

3. Outline • What is land readjustment (LR)? • Why LR? • How does LR work, and where? • Is this approach transferable to other developing countries? • Summary

4. Format Presentation (approximately 45 minutes) Open dialogue (one hour) Reflection (15 minutes) 4

5. 1a. What is LR? Property owners work with a local government or developers to reconfigure parcels for more optimal development and redevelopment in such a way that increases total land value. During a land readjustment process, a number of private parcels is notionally consolidated andthen reallocated to a new highest and best use with upgraded infrastructure before redistributing back to the original landowners.

6. 1b. What is LR used for? The legislative origins of land readjustment was established in 1902 by Franz Adickes, mayor of Frankfurt-am-Main, Germany with the goal of improving the efficiency of farmland. (Frankfurt-am-Main, Wikimedia Commons)

7. 1b. What is LR used for? War Recovery in Nagoya, Japan

8. 1b. What is LR used for? Before After Increase development density to make room for urban expansion and revitalization Capture land value increments to cover redevelopment Costs Provide urban population with basic services and local infrastructure Redevelop urban areas according to an updated master plan Engage urban poor in land redevelopment and prevent forced eviction (Jabatan Perancangan Bandar Dan Desa - Senanjung, Malaysia)

9. 2a. Why is LR important to UN-HABITAT’s agenda? LR creates land space for urban expansion and redevelopment. It is a form of governance: High level of participation from landowners and occupants, thus avoid forced eviction Cooperation from landowners, renters, private developers, urban designer and planners, NGOs, city officials, and central government authorities It shapes urban legislation. It facilitates urban planning. It utilizes land as a revenue source to finance basic services and infrastructure. 9

10. 2b. Compulsory Purchase vs. Land Readjustment

11. 2b. LR and other Land Management Tools LR complements and does not substitute for other land management tools (i.e. land register and/or cadaster, land use planning, and land and property valuation and taxation).

12. 3a. How does LR work? • There is no blue-print due to varying local conditions. • Flexible design and sequencing are needed. • Common steps

13. 3a. How does LR work? Before After Initiator discusses with major landowners the possibility of LR. 2. Interested parties organize a community meeting to discuss the proposal. 3. Landowners volunteer to pool. If a super-majority agree, minority must participate. 4. Participating landowners form a LR agency. 5. City planners help draft redevelopment plan with inputs from the LR agency. 6. With the completion of a set of feasibility studies, landowners agree on LR plan. 7. Land is assembled, and existing landowners are relocated temporarily to a different area. 8. Every fourth lot designated as a “cost-equivalent” lot. 9. As lots are sold, money from “cost-equivalent lots” will pay off infrastructure costs. 10. If calculations are correct, land will be urbanized or redeveloped at minimal public cost. 11. Remaining lots are returned to original landowners close to original locations. 12. LR agency is dissolved. The city takes over the maintenance of infrastructure. (Source: City Planning Bureau of Nagoya, Japan, 1982)

14. 3b. Where does LR work? Japan: LR was used to rebuild Nagoya, Osaka, Hiroshima, and Yokohama after World War II. It was also used for land acquisition for “Bullet Train” lines and stations. • South Korea: • 60% of the urban expansion of Seoul was accomplished through LR (1984 data). • 30% of the urban expansion of Daegu was accomplished through LR. • Today, 35% of the urban expansion in Korea (1990 data) is accomplished through LR.

15. 3b. Where does LR work? LR and LR-like methods have also been used in: Bhutan, France, Finland, Germany, India, Indonesia, Israel/Palestine, Nepal, the Netherlands, Philippines, Sweden, Turkey, Taiwan, and Thailand.

16. 3c. Under what conditions does LR work best? Property Characteristics: Public land ownership exits. Agreement from major landowners High differential increments in land values before and after the LR project Land ownership is not scattered.

17. 3c. Under what conditions does LR work best? Landowner Characteristics: • Affected landowners have motivation to stay in the neighborhood. • Planning for neighborhood redevelopment is participatory. • Landowners must believe that final profits will be huge and justify the negotiating costs. • Landowners also value improvements in neighborhood amenities and public infrastructure. 17

18. 3c. Under what conditions does LR work best? Technical, Legal, and Political Characteristics: • Technical skill is available for property value assessments before and after LR. • Project initiators have good negotiation skill. • Reliable ownership records (cadastres) is available. • There is a precedent that treats parts of the area as a unified unit for redevelopment. 18

19. 3c. Under what conditions does LR work best? Technical, Legal, and Political Characteristics: • The city is eager to conduct a comprehensive redevelopment of the entire area. • Public subsidies are available. • Potential disputes can be resolved through agreement or addressed by enabling legislation. 19

20. 3d. Under what conditions does LR not work? • Technical supports are absent. • Organizers lack negotiation skill. • There are conflicting claims over land rights. • There are no legal and political institutions to resolve disputes. • Redevelopment needs to be accomplished in a very short time. • Affected parties want to share profits but not risks. 20

21. 3d. Under what conditions does LR not work? • Negotiation involves vast economic interests—large and small landowners, renters, investors, developers, etc. • Compact development may not match the preference of existing property owners. • Government supports in terms of leadership, subsidies, and experiments are unavailable. 21

22. 4a. The Transferability of LR How to convince policymakers and other stakeholders? • Create a sense of urgency to bring all interested parties to the bargaining table • Explain the political and economic costs of inaction • Compare all viable options systematically • Provide technical assistance such as land dispute resolution, cadaster, and valuation • Share the risks of initial experiments • Document and evaluate the process for learning 22

23. 4b. The Transferability of LR How to use LR for slum upgrading? • First used in Bangkok in 1982 • Slum dwellers met with the landowner and agreed on a land sharing scheme (a LR-like mechanism). • It was a way to resolve slum eviction conflicts. • A plot of disputed land was divided up so that a developer was given the right to build on one portion of the site, and land occupants were re-housed on another portion of the same site. 23

24. 4b. The Transferability of LR 10,000 low-income families were rehoused on the same sites they were occupying. Seven settlements, all but one of which was located on public land. 24

25. 4b. The Transferability of LR 25

26. 4b. The Transferability of LR 26

27. 4b. The Transferability of LR 27

28. 4b. The Transferability of LR • Six preconditions for bargaining • A booming property market • Well-established communities • Community organization and consensus • Third party intermediation • Physical/technical feasibility • Financial feasibility 28

29. 4b. The Transferability of LR Situations make land sharing more viable: • The lower the development pressure • The better the cooperation of the landlord • The more legitimate the land occupation by slum dwellers • The earlier the stage in the eviction process • The stronger the community leadership • The stronger the support from outside agencies • The lower the existing residential density 29

30. 4b. The Transferability of LR • Situations make land sharing more viable: • • The smaller the existing size of houses • The lower the value of existing houses • • The higher the ability to pay for housing • • The better the access to sources of housing finance 30

31. 4c. The Transferability of LR • How to apply LR when there is speculation • • In Brazil, land prices will be frozen as soon as the government announces its redevelopment program using a LR-like scheme. • In Germany, landowners’ participation in LR is mandatory. • In Japan, compensation for taking land from dissenting landowners is set according to the land exchange ratio determined by the LR agency. • Education for landowners or occupants 31

32. 5. Summary • LR is potentially a useful tool for urban expansion and redevelopment if we applies it carefully and with due consideration of local contexts. • LR is not just a land tool; it is about managing human interactions and influencing decisions. • Never underestimate the risks involved in the initial experiment perceived by affected parties • LR needs to be implemented alongside of other reforms in decentralization, legislation, urban planning, public finance, and civic society. 32