Oriented Development With
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/VUNHUK;HTH`VZL :\a\RP4\YHRHTP hat the literature has long been missing is a thorough, thoughtful book that translates how to Public Disclosure Authorized Wmove land value capture from the ivory towers of theory to real-world implementation. This book FINANCING comes as close to any in achieving this. It shows that land value capture holds tremendous untapped potential as a viable and sustainable funding source for public transit improvements and leveraging TRANSIT-ORIENTED transit-supportive growth, particularly in developing cities. DEVELOPMENT — Robert Cervero, Friesen Chair of Urban Studies and Professor of City and Regional Planning, University of California, Berkeley FINANCING TRANSIT-ORIENTED DEVELOPMENT WITH his book will help cities in emerging economies, and those of us working with them, to tap into the Tincreases in land value resulting from the economic development stirred by public investments in LAND VALUES PUMYHZ[Y\J[\YLWYV]PKPUNVWWVY[\UP[PLZ[VÄUHUJLM\Y[OLYW\ISPJPU]LZ[TLU[PUPUMYHZ[Y\J[\YLPUH]PY[\V\Z J`JSL;OPZWYV]PKLZÄUHUJLI\[HSZVOLSWZZ[Y\J[\YLTVYLZ\Z[HPUHISLJP[PLZ[OYV\NOJVTWSLTLU[HY` Adapting Land Value Capture SHUK\ZLYLN\SH[PVUZM\Y[OLYPUN[OL]PY[\V\ZJ`JSLVMÄUHUJPHSLU]PYVUTLU[HSHUKZVJPHSZ\Z[HPUHIPSP[` Public Disclosure Authorized in Developing Countries — Holger Dalkmann, Acting Global Director, Transport and Cities, and Director, EMBARQ, World Resources Institute WITH Hiroaki Suzuki, Jin Murakami, Yu-Hung Hong, and Beth Tamayose hat a timely and important book! It makes an impressive contribution to urban planning literature, WIYPKNPUN[OLVY`HUKWYHJ[PJLPU[YHUZP[VYPLU[LKKL]LSVWTLU[HUKVɈLYPUNT\JOULLKLKWYHJ[PJHS LAND VALUES HK]PJLVUOV^[VZ[Y\J[\YLHUKL_LJ\[LSHUK]HS\LJHW[\YLTLJOHUPZTZ[VÄUHUJLPUMYHZ[Y\J[\YL investment. It is invaluable for all city planners and public investors, providing pragmatic guidance IHZLKVU[OVYV\NOHUHS`ZPZVMZ\JJLZZM\SLɈVY[ZPU/VUN2VUNB:(9*OPUHDHUK;VR`VHUKLTLYNPUN LɈVY[ZPUWSHJLZSPRL:qV7H\SV5HUJOHUNHUK/`KLYHIHK)YH]V — George W. McCarthy, President and CEO, Lincoln Institute of Land Policy OPZIVVRPKLU[PÄLZLUHISPUNMHJ[VYZMYVT[OLL_WLYPLUJLZVM;VR`VHUKV[OLYJP[PLZPUWYVTV[PUN Public Disclosure Authorized Tprivate sector railway construction and operation with revenues from development rights sales or SLHZLZHYV\UK[YHUZP[Z[H[PVUZZVJHSSLK¸SHUK]HS\LJHW[\YL¹3=*(SZVHKKYLZZLKHYL[OLYPZRZHUK JOHSSLUNLZPUHWWS`PUN[OL3=*HWWHYH[\Z[VV[OLYJP[PLZ;OPZIVVRWYV]PKLZYPJOL_WLYPLUJLZVMTHU` cities and deserves to be an essential reference for development agencies, including the Japan 0U[LYUH[PVUHS*VVWLYH[PVU(NLUJ`10*([VHKKYLZZ[YHUZWVY[H[PVUPUTLNHJP[PLZPUKL]LSVWPUN countries where public transit is needed as the backbone of urban development. — Junichi Yamada, PhD, Senior Special Advisor, Japan International Cooperation Agency (JICA) ISBN 978-1-4648-0149-5 90000 Public Disclosure Authorized 9 781464 801495 SKU 210149 Financing Transit-Oriented Development with Land Values The Urban Development Series discusses the challenge of urbanization and what it will mean for developing countries in the decades ahead. The Series aims to delve substantively into the core issues framed by the World Bank’s 2009 Urban Strategy, Systems of Cities: Harnessing Urbaniza- tion for Growth and Poverty Alleviation. Across the five domains of the Urban Strategy, the Series provides a focal point for publications that seek to foster a better understanding of the core elements of the city system, pro-poor policies, city economies, urban land and housing markets, sustainable urban environment, and other issues germane to the urban development agenda. Cities and Climate Change: Responding to an Urgent Agenda Climate Change, Disaster Risk, and the Urban Poor: Cities Building Resil- ience for a Changing World The Economics of Uniqueness: Investing in Historic City Cores and Cul- tural Heritage Assets for Sustainable Development Financing Transit-Oriented Development with Land Values: Adapting Land Value Capture in Developing Countries Transforming Cities with Transit: Transit and Land-Use Integration for Sustainable Urban Development Urban Risk Assessments: An Approach for Understanding Disaster and Climate Risk in Cities All books in the Urban Development Series are available for free at https://openknowledge.worldbank.org/handle/10986/2174 Financing Transit-Oriented Development with Land Values Adapting Land Value Capture in Developing Countries Hiroaki Suzuki Jin Murakami Yu-Hung Hong Beth Tamayose © 2015 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 17 16 15 This work is a product of the staff of The World Bank with external contributions. 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All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: [email protected]. ISBN (paper): 978-1-4648-0149-5 ISBN (electronic): 978-0-4648-0150-1 DOI: 10.1596/978-1-4648-0149-5 Cover photo: © Japan Railway Construction, Transport and Technology Agency (2013). Used with permission; further permission required for reuse. Library of Congress Cataloging-in-Publication Data has been requested. Contents Acknowledgments xiii About the Authors xvii Abbreviations xix Glossary xxi Message to City Leaders xxiv Overview 1 Car-Dependent Urban Development in the Developing World 2 Development-Based Land Value Capture as a Strategic Apparatus for Transit Financing and Urban Planning 2 Global Good Practices for Development-Based LVC 5 Critical Factors for Success in Developing Countries 12 Challenges and Risks 25 Roadmap for Development-Based LVC Implementation through a Gradual Approach 26 What International Development Financial Institutions Can Do 27 Conclusion 28 References 29 Part I Introduction 31 1 Development-Based Land Value Capture for Financing Transit-Oriented Development 33 Car-Dependent Urban Development in the Developing World 33 Development-Based LVC as a Strategic Financing and Planning Apparatus for Transit and TOD-Related Investments 35 v vi Contents Objectives, Methods, and Readership 37 Development Finance Context 39 Structure of the Book 40 Notes 40 References 41 2 Theory of Land Value Capture and Its Instruments 43 Rationale for Land Value Capture (LVC) 43 Transit-Induced Land Capitalization 44 Situating LVC in Urban Transport Finance 52 Types of LVC Instruments 54 Conclusion 61 Notes 62 References 63 Part II Lessons Learned from Global Development-Based Land Value Capture Practices 69 3 Rail Plus Property Program, Hong Kong SAR, China 71 Urban Development Context 71 Regulatory and Institutional Framework 74 Land Value Capture (LVC) 79 Development Cases 84 Debate over Land Value Capture and Housing Affordability 91 Conclusion 93 Note 94 References 94 4 Inclusive Land Value