Responding to decades of poverty, poor housing, inadequate health care, rampant crime, deficient schools, poorly planned infrastructure, and inequitable access to services, citizens in about half of Brazil’s 60 major cities voted in October 2000 for mayors from left-wing parties noted for advocacy, honesty and transparency. These reform administrations are introducing new hopes and expectations, but they inherit long-standing mistrust of municipal bureaucrats and politicians, who traditionally have been lax and often corrupt. These new governments also confront the dismal fiscal prospects of low tax receipts, weak federal transfers, and urban land markets that produce segregated neighborhoods and profound inequalities.

The strongest left-wing party, the Workers’ Party (in Portuguese, the Partido dos Trabalhadores or PT), held on to the five large cities it had won in the 1996 election and added 12 more. These PT governments hope to universalize services, thus bypassing traditional top-down methods and giving residents an active role in their local governments. In the process these governments are reinventing local democracy, invigorating politics, and significantly altering the distribution of political and symbolic resources. The most remarkable case may be Porto Alegre, the capital of Brazil’s southernmost state, Rio Grande do Sul, where the PT won its fourth consecutive four-year term with 66 percent of the vote, an example that may have encouraged Brazilians in other cities to vote for democratic reforms as well.

Porto Alegre, like cities everywhere, reflects its national culture in its land use patterns, economic structure and distribution of political power. Brazil’s larger social system employs sophisticated mechanisms to assure that its cities continue to follow the same rules, norms and logic that organize the dominant society. Because Brazilian society is in many respects unjust and unequal, the city must constantly administer to the effects of these broader economic and political constraints.

At the same time, no city is a pure reflection, localized and reduced, of its national social structure. Any city can bring about and reproduce inequality and injustice itself, just as it can stimulate dynamic social structures and economic relations. To the extent that the city, and especially its government, determines events, then the effects can be positive as well as negative. It is not written in any segment of the Brazilian social code, for example, that only the streets of upper- and middle-class neighborhoods will be paved, or that water supply will reach only the more privileged corners of the city.

Participatory Budgeting

In Porto Alegre, a popular front headed by the PT has introduced “participatory budgeting,” a process by which thousands of residents can participate each year in public meetings to allocate about half the municipal budget, thus taking major responsibility for governing their own community. This reform symbolizes a broad range of municipal changes and poses an alternative to both authoritarian centralism and neoliberal pragmatism. Neighbors decide on practical local matters, such as the location of street improvements or a park, as well as difficult citywide issues. Through the process, the PT claims, people become conscious of other opportunities to challenge the poverty and inequality that make their lives so difficult.

Participatory budgeting in Porto Alegre begins with the government’s formal accounting for the previous year and its investment and expenditure plan for the current year. Elected delegates in each of 16 district assemblies meet throughout the year to determine the fiscal responsibilities of city departments. They produce two sets of rankings: one for twelve major in-district or neighborhood “themes,” such as street paving, school construction, parks, or water and sewer lines, and the other for “cross-cutting” efforts that affect the entire city, such as transit-line location, spending for beach clean-up, or programs for assisting the homeless. To encourage participation, rules set the number of delegates roughly proportional to the number of neighbors attending the election meeting.

Allocation of the investment budget among districts follows “weights” determined by popular debate: in 1999, weights were assigned to population, poverty, shortages (e.g., lack of pavement), and citywide priorities. Tension between city hall and citizens has led to expanded popular involvement, with participatory budgeting each year taking a larger share of the city’s total budget. Priorities have shifted in ways unanticipated by the mayors or their staffs.

Participants include members of the governing party, some professionals, technocrats and middle-class citizens, and disproportionate numbers of the working poor (but fewer of the very poor). This process brings into political action many who do not support the governing party, in contrast to the traditional patronage approach that uses city budgets as a way to pay off supporters. As one index of success, the number of participants in Porto Alegre grew rapidly, from about 1,000 in 1990 to 16,000 in 1998 and 40,000 in 1999.

The participatory process has been self-reinforcing. For example, when annoyed neighbors discovered that others got their streets paved or a new bus stop, they wondered why. The simple answer was that only the beneficiary had gone to the budget meetings. In subsequent years, attendance increased, votes included more interests, and more residents were happy with the results. City officials were relieved, too, as residents themselves confronted the zero-sum choices on some issues: a fixed budget, with tough choices among such important things as asphalt over dusty streets, more classrooms, or care for the homeless.

Participatory budgeting in Porto Alegre is succeeding in the midst of considerable hostility from a conservative city council and constant assault from right-wing local newspapers and television programs, all of them challenging participation and extolling unregulated markets. The municipal government depends for its support on the participants and their neighbors, on radio broadcasting, and on many who resisted two decades of military dictatorship, from 1964 to 1985. In electing four consecutive reform administrations, a majority of the population has managed to pressure a hostile city council to vote in favor of the mayor’s budget proposals, keeping the progressive agenda intact.

Changes in Material Conditions

In 1989, despite comparatively high life expectancy and literacy rates, conditions in Porto Alegre mirrored the inequality and income segregation of other Brazilian cities. A third of the population lived in poorly serviced slums on the urban periphery, isolated and distant from the wealthy city center. Against this background, PT innovations have improved conditions, though only moderately, for some of the poorest citizens. For example, between 1988 and 1997, water connections in Porto Alegre went from 75 percent to 98 percent of all residences. The number of schools has quadrupled since 1986. New public housing units, which sheltered only 1,700 new residents in 1986, housed an additional 27,000 in 1989. Municipal intervention also facilitated a compromise with private bus companies to provide better service to poor peripheral neighborhoods. The use of bus-only lanes has improved commuting times and newly painted buses are highly visible symbols of local power and the public interest.

Porto Alegre has used its participatory solidarity to allow the residents to make some unusual economic development decisions that formerly would have been dominated by centralized business and political interests. The city turned down a five-star hotel investment on the site of an abandoned power plant, preferring to use the well-situated promontory as a public park and convention hall that now serves as the new symbol of the city. And, faced with a proposal to clear slums to make room for a large supermarket, the city imposed stiff and costly household relocation requirements, which the supermarket is meeting. In another example, in spite of promises of new employment and the usual kinds of ideological pressures from the Ford Motor Company, the nearby municipality of Guíaba turned down a proposed new auto plant, arguing along political lines established in Porto Alegre that the required subsidies would be better applied against other city needs. (A state investigation in August 2000 found the former mayor, not “at fault” for losing the Ford investment.)

Nevertheless, daunting constraints in the broader Brazilian economic and political environment continue to limit gains in economic growth, demands for labor and quality jobs. Comparing Porto Alegre and Rio Grande do Sul with nearby capital cities and their states during the years 1985-1986 and 1995-2000, one finds few sharp contrasts. Generally, GDP stagnated, and per capita GDP declined. Unemployment rose and labor-force participation and formal employment both fell.

Given this limited extent of economic improvement, how can we account for the sense of optimism and achievement that pervades Porto Alegre? The city is clearly developing a successful experience with local government that reinforces participatory democracy. We believe the PT’s success lies in the way the participants are redefining local power, with increasing numbers of citizens becoming simultaneously subject and object, initiator and recipient, so they can both govern and benefit directly from their decisions. This reconfiguration is immediately discernible in the procedures, methods and behavior of local government.

After 12 years, Porto Alegre has changed not just the way of doing things, but the things themselves; not just the way of governing the city, but the city itself. Such a claim is clearly significant. Porto Alegre offers an authentic, alternative approach to city management-one that rejects not only the centralist, technocratic, authoritarian planning model of the military dictatorship, but also the competitive, pragmatic, neoliberal model of the Washington Consensus, to which the national government still adheres. This model imposes International Monetary Fund (IMF) orthodoxy and requires such “structural adjustment” imperatives as free trade, privatization, strict limits to public expenditures, and high rates of interest, thus worsening the conditions of the poor.

While most Brazilian cities continue to distribute facilities and allocate services with obvious bias and neglect of poor neighborhoods, the reconfiguration of power in Porto Alegre is beginning to reduce spatial inequalities through changes in service provision and land use patterns. We can hope that the effect will be felt in the formal structures of the city and eventually in other cities and in Brazilian society in general.

New Forms of Local Power

Political and symbolic resources normally are monopolized by those who control economic power, but radically democratic municipal administrations, as in Porto Alegre, can reverse power to block the favoring and reinforcing of privilege. They can interfere with the strict solidarity of economic and political power, reduce private appropriation of resources, and promote the city as a collective and socially dynamic body. In other words, a city’s administration could cease to honor the actions of dominant urban groups-real estate interests and others who use various forms of private appropriation of public resources for their private benefit. These actions may include allocation of infrastructure to favor elite neighborhoods, privatization of scenic and environmental resources, and the capture of land value increments resulting from public investments and regulatory interventions. Thus, a reconfigured, publicly oriented city administration permits access to local power for traditionally excluded groups. Such a change constitutes a quasi-revolution, with consequences that cannot yet be measured or evaluated adequately by activists or hopeful governments.

Are Porto Alegre’s experiences with municipal reform, participatory budgeting and democratic land use planning idiosyncratic, or do these innovations promise broader improvements in Brazilian politics as other citizens build expectations and improve the structure of their governments? The Interamerican Development Bank (IDB) is urging localities throughout Latin America to engage in participatory budgeting, following Porto Alegre’s example. Can reform-minded city administrations override the constraints of international markets and national policy? In recommending the formal and procedural aspects of the participatory budgeting technique, does the IDB overestimate the practical economic achievements and underestimate the symbolic and political dimensions of radical democracy?

The lesson of urban reform in Porto Alegre emerges not so directly in the economic market as in new experiences with power, new political actors, and new values and meanings for the conditions of its citizens. Even as citizens weigh their expectations against stagnating macroeconomic conditions, they can find hope in new visions of overcoming spatial and social inequalities in the access to services. These new forms of exercising political power and speaking out about land use and governance issues give the city’s residents a new capacity to make a difference in their own lives.

References

Rebecca N. Abers. 2000. Inventing Local Democracy. Grassroots Politics in Brazil. Boulder: Lynne Rienner.

Gianpaolo Baiocchi. 1999. “Transforming the City,” unpublished manuscript. University of Wisconsin (September).

Boaventura de Sousa Santos. 1998. “Participatory Budgeting in Porto Alegre.” Politics and Society 26, 4 (December): 461-510.

William W. Goldsmith is a professor in the Department of City and Regional Planning at Cornell University. Carlos Vainer is a professor in the Institute for Urban and Regional Planning and Research at the Federal University of Rio de Janeiro. They participated in a December 1999 seminar hosted by the City of Porto Alegre and cosponsored by the Lincoln Institute and the Planners Network, a North American association of urban planners, activists and scholars working for equality and social change.

As a next step in the economic reforms begun in the post-Soviet period, momentum is growing in Poland for the introduction of a property tax based on market value. The recently established Department of Local Government Taxes and Cadastre within the Ministry of Finance is responsible for carrying out the reforms, and has invited the Lincoln Institute and other international organizations to advise them on developing an ad valorem property tax system.

Last October several Polish officials visited the Institute to learn about property taxation in the United States, and subsequently the Polish government requested support from the U.S. Agency for International Development (USAID) to bring international advisors to Poland for a series of seminars and meetings.

In January we traveled to Warsaw to participate in a week-long program on the legal and administrative framework needed to implement an ad valorem system. We made presentations at two seminars: one at the Sejm, the Polish Parliament, for its members and local government officials; and another at the Ministry of Finance for central government officials, professional experts and other interested parties. Our meetings with department officials focused on the draft laws being prepared by the ministry for introduction to the parliament later this spring.

The proposed ad valorem tax on real property in Poland will replace three existing taxes on urban, agricultural and forest property that are based on non-value-based rates per square meter of land and buildings. These taxes were introduced originally with purely fiscal objectives to expand the tax base beyond income and to capture wealth being diverted into real property assets. After the Soviet period, property taxes were recognized as an appropriate source of revenue for local governments. Since 1991 the revenues from the three existing taxes have been assigned solely to local governments (gminas).

The economic reforms introduced in the past decade by Deputy Prime Minister for Finance Leszak Balcerowicz have now reached such a stage of maturity that a market value-based tax on property is both feasible and desirable. There is an active and growing real estate market, including privatization of land holdings by local governments and secondary sales of residential and commercial properties. Ad valorem taxation will offer a stable source of revenue with a potentially broad and expanding tax base for local governments. It will provide the benefits of a more equitable distribution on taxes, as well as greater fiscal transparency and accountability.

An earlier USAID-funded feasibility study project in Krakow, in which the Institute also participated, resulted in legislative proposals for an ad valorem property tax in 1995. However, those efforts stalled in the face of complexities of land surveying, land registration and assessment administration.

Benefits and Obstacles

In this renewed effort, Polish officials are also focusing on the non-fiscal benefits of a value-based property tax, including its potential as a stimulus of real estate markets and mortgage credit institutions and as a tool for urban revitalization and more efficient land use. W. Jan Brzeski, president of the Krakow Real Estate Institute and adviser to the Deputy Prime Minister, has contributed to an understanding of these non-fiscal benefits through previous Lincoln Institute-sponsored research and education programs in Poland and other transition economies.

Considerable progress has been made in addressing some of the institutional obstacles to an ad valorem property tax that stalled the 1995 proposal. There is acknowledgment that a property tax information system and fiscal cadastre can be developed independently of title registries and land surveys that are as yet incomplete. Mass appraisal concepts and methods are more readily understood now and are viewed as opening new opportunities to the appraisal profession. Local governments have developed greater experience and influence to lobby for an autonomous source of revenue and greater independence in fiscal decision-making. Although local administrative capacity and expertise remain a concern for the over 2400 gminas, a possible solution may be found in placing fiscal cadastre and mass appraisal functions in the newly created regional governments (Powiats).

Discussions with Ministry officials concerning policy issues and implementation strategy focused on how to define market valuation in the law and how to educate local officials and taxpayers on its meaning and application. Current Polish law requires that detailed descriptions of taxation methods be written into legislation and that the local elected council approve the calculations. There is concern about an appropriate appeals system that will recognize both taxpayers’ rights and the government’s ability to achieve defensible mass appraisal models from less mature real estate markets. There is also a growing awareness of the importance of educating the public on the benefits and responsibilities associated with an ad valorem property tax.

The need to estimate implementation costs, develop effective administrative arrangements and assess the potential impacts of an ad valorem system has led some officials to propose one or more pilot projects before full implementation. However, this approach must be weighed against the possibility of losing the political momentum to enact ad valorem taxation in this parliament if legislative action is delayed until after pilot projects are completed.

Jane Malme is an attorney and fellow of the Lincoln Institute. She has researched and advised on property tax policy and administration for transitional economies and is preparing a series of case studies on the development of market value-based taxation in several countries. She is also a legal adviser on property taxation to USAID tax reform assistance programs in the Russian Federation.

Dennis Robinson, vice president for programs and operations, has worked on fiscal cadastre systems in Central and Eastern Europe and throughout Latin America.

To what extent are problems of distressed urban areas attributable to the property tax, and how can changes in property taxation help remedy urban decline? Political leaders, policy analysts and public finance experts gathered to discuss this complex and controversial issue during a Lincoln Institute seminar in New Haven on March 15.

John DeStefano, Jr., now in his second term as Mayor of New Haven, opened the session with a strong indictment of the property tax as a cause of urban ills. Described by the New York Times as “a leading spokesman for a growing number of people who believe Connecticut’s reliance on the property tax is harming not just the state’s cities, but its entire economy,” Mayor DeStefano argued that high relative property taxes in Connecticut were a direct cause of the state’s decline in population and jobs. From 1990 to 1995 Connecticut lost over 12,000 residents, while New Haven and Hartford suffered the two steepest population declines of any U.S. cities during that period.

His concern was shared by representatives from the Capital Region Council of Governments, the Regional Growth Partnership of South Central Connecticut, and the Connecticut Conference of Municipalities, which distributed a report stating that overdependence on the property tax was “reducing quality of life in all of Connecticut’s cities and towns.”

How can this widespread assumption linking property taxes to urban ills be tested, and what changes in the sources of local revenue could encourage urban revitalization? It may be that shifting demographic and economic patterns, such as the large defense industry cutbacks that have reduced Connecticut’s supply of high-wage jobs, have more to do with employment and population loss than does the property tax. If so, changing the property tax will not address the underlying causes of urban decline. Property taxes in Connecticut are not as far from the national average as a percentage of personal income as they might appear in absolute dollars (see chart).

Will lowering property taxes enhance economic growth if it is accompanied by an increase in other forms of taxation? Meeting growing needs in urban areas with a declining economic base is a problem of dependence on locally based taxation, not a problem of property taxation alone. Shifting from one local tax to another will not necessarily assist the neediest cities that have the least amount of revenue to draw upon.

Alternative Revenue Sources

What revenue sources can offer alternatives to the property tax as it is currently structured? The property tax base in the U.S. initially included real property and personal property, tangibles and intangibles alike; the restriction to land and buildings was the result of nineteenth-century reform efforts. Seminar speaker C. Lowell Harriss urged that these two portions of the property tax base be considered separately. The first, a tax on land values, deserves even more intensive use than it is getting, he argued, whereas the second, a tax on man-made capital such as buildings, machinery and inventories, warrants even more condemnation than it receives.

Donald Reeb of the State University of New York at Albany examined the actual process of obtaining state and local support for such a shift. He described successful efforts to permit Amsterdam, New York, to change from a single-rate property tax to a graded tax with a higher rate on land than on building value.

Robert Schwab of the University of Maryland discussed his own study of Pittsburgh’s two-rate tax, with buildings taxed five times as heavily as land. This case has particular interest for the issue of causality–whether or not the tax itself deserves credit for improving the local economy. Schwab drew a subtle distinction between finding that the tax had caused an increase in building and investment and that the tax had not impeded development. Although he felt that his study could not support the first proposition, he endorsed the second and emphasized its importance. This led to discussion of the special nature of a tax on land, which avoids the excess burden caused by most other forms of taxation in terms of lost efficiency.

Ronald Fisher of Michigan State University challenged the perception that heavy property taxation alone was the main problem for Connecticut’s economy. He pointed out that the state presents a complex mix of high personal income, relatively modest governmental expenditures, low income taxes, and consequent reliance on sales and property taxes. Connecticut only introduced a state personal income tax in 1991, and that tax has been the object of intense political protest and repeal efforts. In discussing various revenue sources, including local income taxes, local sales taxes and user charges, Fisher also questioned whether the absence of effective regional government in Connecticut could be partially responsible for the disparities between distressed central cities and prosperous suburban areas.

Tax-base and Revenue Sharing

Further discussion probed options for tax-base and revenue sharing as ways to reduce the tax burden on urban residents while meeting city revenue needs. The Connecticut Property Tax Reform Commission has recommended simply increasing state aid. Another option would reduce unfunded mandates in areas such as welfare and education.

A third alternative uses state funds to allow property taxes to serve as a credit against income taxes for low-income homeowners–and a refund to those with no income tax liability. Termed a “circuit breaker,” it is designed to prevent property taxes from exceeding a fixed proportion of income. The credit sometimes extends to renters as well. Over half the states provide some form of circuit breaker, but most are limited to senior citizens.

Lee Samowitz, a Bridgeport state representative, presented a proposal for regional service districts financed by a portion of the commercial and industrial tax base. Direct tax-base sharing of this type has its longest history in the Minneapolis-St. Paul region, which for 25 years has pooled 40 percent of the growth in the industrial and commercial property tax.

Yet such programs face formidable political hurdles, in part because most areas have fragmented or weak regional governments. According to economists Howard Chernick and Andrew Reschovsky, “Despite its success in Minnesota, the prospects for the establishment of tax-base sharing plans in other metropolitan areas are poor. The political representatives of those communities that would be net ‘losers’ under a tax-base sharing plan, or who believe they will be net losers at some point in the near future, will oppose tax-base sharing.”

Political obstacles have impeded plans for tax-base sharing in recent years in a number of states. However, the discussion in New Haven made it clear that property tax reform will become increasingly important as an element in the search for regional solutions to urban problems.

Joan Youngman, senior fellow at the Lincoln Institute, is an attorney and expert on legal problems of valuation for property taxation. She develops and teaches courses on land taxation and regulation issues.

References

Chernick and Reschovsky. “Urban Fiscal Problems: Coordinating Actions Among Governments,” Government Finance Review, vol 11, no. 4 (August 1995) p. 17ff.

Connecticut Conference of Municipalities. Property Tax Relief and Reform, Public Policy Report #96-03. March 1996. 900 Chapel St., 9th floor, New Haven, CT 06510-2807. 203/498-3000.

Fisher, Ronald C. State and Local Public Finance. Chicago: Irwin, 1996.

Over the past decade, the Lincoln Institute has developed and presented many courses on the interaction of land and tax policies and on the development of value-based land and real property taxation for policy makers and senior government officials from countries transitioning to market economies in Central and Eastern Europe and the Baltics. These courses address the economic and legal basis for value-based taxes as well as practical problems in their implementation.

As private property markets evolve, property changes hands and new wealth is invested in real estate. The introduction of ad valorem taxation is a natural step in the development of market-based economies. With economic growth and development, the revenue capacity of a value-based tax increases, and the tax can contribute to other important transition objectives such as privatization, government decentralization, infrastructure improvement and efficient land use. Nevertheless, the introduction of value-based taxation confronts both political and practical difficulties in developing an appropriate legal and administrative framework, as well as effective valuation, appeals and information systems.

The Baltic countries of Estonia, Latvia and Lithuania have been in the forefront of implementing value-based taxes on land (Malme and Youngman 2001). Estonia was the first of these new independent states to recognize the benefits of land taxation and to introduce a value-based land tax in 1993, followed by Latvia in 1998. Lithuania has been a leader in integrating and unifying real property cadastral, registration and valuation systems to strengthen nascent real estate markets and support real property taxation. Progress toward value-based taxation in Lithuania began with the integration of real property administrative units and the development of an automated central database of real property information in a self-funded state enterprise known as the State Land Cadastre and Register (SLCR). In 2001 the Ministry of Finance funded the SLCR to plan and develop a mass valuation system in preparation for the anticipated passage of laws that will introduce value-based taxation of real property throughout Lithuania. The first phase of this program was the development of land value maps that were completed and made public in 2003.

The Lincoln Institute and SLCR (renamed the Lithuanian State Enterprise Centre of Registers [SECR] in 2002) have worked collaboratively since 1997 to offer educational programs and document Lithuania’s progress (Malme 2001; Sabaliauskas and Aleksienė 2002). In 2003 the Institute and SECR developed a new executive course, Introducing a Market Value-Based Mass Appraisal System for Taxation of Real Property, for lawmakers and senior government representatives preparing to implement value-based taxes in other countries experiencing rapid political and economic change.

The course uses Lithuania’s experiences in market valuation as a case study, and SECR executives and specialists join core international faculty in the Institute’s Department of Valuation and Taxation to address the principles, strategies and practical problems raised by mass valuation of real property. The Lithuanian case study demonstrates how those responsible for developing that mass valuation system dealt with the problems they faced.

The first offering of the week-long course was presented in Vilnius, Lithuania, in October 2003 to a delegation from the Russian Federation, led by Alexey Overchuk, deputy chief of the Federal Land Cadastre Service of Russia (see related article). Participants included senior administrators of land valuation boards from various regions of Russia, officials from the federal ministries of Economic Development, Finance and Property Relations, and representatives from private companies involved in valuation system development. Two delegates from the National Cadastral Agency of the Republic of Belarus also participated. This course will be offered again in Vilnius in fall 2004 for a delegation from another country that is undertaking mass valuation for land or real property taxation.

Jane H. Malme is a fellow at the Lincoln Institute. She developed the new course on mass valuation with Lincoln Institute faculty Richard Almy, John Charman and Robert Gloudemans, together with SECR representatives Albina Aleksienė, Arvydas Bagdonavičius, Bronislovas Mikūta, Rimantas Ramanauskas, Antanas Tumelionis and Lidija Zavtrakova.

References

Malme, Jane H. 2001. Market value-based taxation of real property. Land Lines 13(1):8–9.

Malme, Jane H. and Joan M. Youngman. 2001. The Development of Property Taxation in Economies in Transition: Case Studies from Central and Eastern Europe. Washington, DC: The World Bank. Available at http://www1.worldbank.org/wbiep/decentralization/library9/malme_propertytax.pdf

Sabaliauskas, Kestutis, and Albina Aleksienė. 2002. Progress toward value-based taxation of real property in Lithuania. Land Lines 14(4):11–13.

The Institute’s June 2007 Land Policy Conference focused on decentralization—the degree to which local and provincial governments exercise power, make decisions about their revenues and expenditures, and are held accountable for outcomes. Because the services,regulatory constraints, and institutional environments provided by local governments are major factors in the location decisions of households and firms in urban areas, decentralization is a key determinant of policies that affect land and property taxation.

As the world’s most populous country and its third largest economy, China and its rapid urbanization and development will represent one of the defining trends of the twenty-first century. Over the past 30 years, China has made remarkable economic and social progress, lifting hundreds of millions out of poverty and catapulting China onto the international stage.

This economic transformation has also involved an institutional transformation as China’s centrally planned economy has moved pragmatically to a broad reliance on market mechanisms. This movement has been especially challenging in the case of land, which for decades was owned by the state or peasant collectives. Progress has been made in urban areas, where the leasehold term of land ownership is now normally 70 years, but in rural areas collective land ownership continues.

Despite its noteworthy accomplishments, China is facing critical land policy issues that will determine the direction of its future economic development and urbanization.

• Property rights. The rapid growth of cities has led to government transfers of rural land to urban and industrial uses. Inadequate compensation to farmers whose property rights have been poorly defined has fueled growing civil unrest, while urban leaseholders seek to strengthen their new property rights.
• Property tax implementation. Recent tax reform has reduced local government revenues and prompted local officials to rely on land sales receipts, fees, and off-budget revenues to finance government expenditures. China’s government is seeking to implement a property tax as a local revenue source to take advantage of the rapid growth of the real estate market.
• Farmland preservation. The large amount of land removed from agricultural production by the complex forces of urbanization has exacerbated concerns about farmland preservation, especially related to food security.
• Urban planning and development. Rapid urbanization has also resulted in increased urban poverty, housing affordability problems, inequality between urban and rural population groups, regional disparities, and other social and economic challenges. China’s urban planning practices are in need of reform to better reflect market forces and economic behavior.
• Environmental sustainability. China’s economic and demographic changes over the past 30 years have been associated with severe environmental degradation. With rapid urbanization forecast over the next decade, there is growing consensus that China must find a more sustainable development model. More sustainable cities are integral to any low-carbon development trajectory.

With these diverse issues in mind, the Lincoln Institute of Land Policy’s China Program was inaugurated in 2003 and continues to focus on improving the quality of public debate and decisions concerning land policy and urban development in China through sound research and the leveraging of international experience and expertise.

The China Program has grown considerably in capacity, scope, and geographic footprint, highlighted by the establishment of the joint Peking University–Lincoln Institute Center for Urban Development and Land Policy in October 2007. The Center’s mission is to study land, urban, and fiscal policies and to facilitate education, training, policy analysis, and research. Having this joint facility in Beijing provides the China Program with an ongoing domestic presence that expands the Institute’s networks and resources and brings together government officials, practitioners, and foreign and domestic scholars to engage in dialogue and to share experiences to promote a better understanding of land policy, urbanization, and property taxation in China and around the world.

The China Program has identified six key research areas that are highly relevant to China’s future development and also offer the best opportunities to utilize the Lincoln Institute’s expertise and resources.

Adoption of a Property Tax

China’s 11th Five-Year Plan (2006–2010) elevated the issue of a property tax onto the official agenda, and pilot property tax projects are currently under way in more than 10 provinces. However, the issue’s sensitive political nature, lingering technical difficulties concerning data and valuation, and continued debate about the exact form of any proposed property tax have slowed implementation and made it unlikely that a broader property tax and related tax policy reforms will be implemented before the 12th Five-Year Plan begins in 2011.

Through close working relationships with the State Administration of Taxation (SAT), the Ministry of Finance (MOF), and the Development Research Center for the State Council (DRC), the China Program has offered a number of educational programs and provided significant intellectual and capacity building support for China’s adoption of a property tax.

For example, in October 2009 representatives of the British Columbia Assessment Office, the Altus Group, and ESRI Canada led a China Program training workshop on property tax implementation and design of computer-assisted mass appraisal (CAMA) systems. More than 50 SAT officials participated, including representatives from each of the property tax pilot cities.

Delegates from the SAT and the Lincoln Institute attended a three-day conference on valuation and mass appraisal at the University of Pretoria, South Africa, in March 2009, before traveling to Johannesburg’s valuation office to discuss the challenges of implementing a property tax in that country.

In November 2008, training on technical aspects of property valuation was provided in Beijing by property tax experts from Canada, the United States, South Africa, and Hong Kong for more than 40 administrators and assessors from China’s property tax pilot cities.

Local Public Finance

Fiscal policy reform is a key component in addressing many of the social and economic problems China faces. Restructuring the current tax system and promoting balanced tax and expenditure responsibilities at the local government level is one of the main policy objectives of the Chinese government. The underlying efforts are closely related to the future development of any property tax, a necessary and critical solution to local public finance challenges.

The China Program is focused on issues of fiscal decentralization, public service financing, land-related taxes and fees, regional inequity, intergovernmental finance, and the role of property taxation in a modern public sector finance system. Representative activities have included a January 2009 workshop in Beijing on fiscal policy and economic growth in China with leading fiscal policy scholars and experts, including officials from the MOF, DRC, and SAT.

An international conference held at the Lincoln Institute’s headquarters in Cambridge, Massachusetts in May 2008 focused on local public finance and property taxation. Those proceedings will be edited and published in a Lincoln Institute book in 2010, and the volume will be translated and published in China as well.

Land Policy and Land Management

The revision of China’s Land Management Law has been a sensitive issue over the past several years, as the country struggles to define rural land rights, land expropriation, and the public good. With a new land law revision on the horizon, land-related issues remain at the forefront of China’s policy agenda, particularly issues concerning urban and rural property rights, land expropriation, land use efficiency, land use planning, land conservation, and urban expansion and sprawl.

In June 2009 the China Program co-organized a roundtable discussion on the most recent draft revision of China’s Land Management Law with the Land Law Committee of the China Land Science Society in association with the Ministry of Land and Resources (MLR). Experts and prominent scholars from across the political spectrum engaged in direct dialogue and discussion with government officials at MLR who are working on the revision.

The China Program is now compiling and translating several land management laws from a dozen developing and developed countries for use by Chinese officials and scholars. The Program also cosponsored a comprehensive survey of land use and farmland conservation issues in a dozen provinces in China, and is building a database for future research on land management issues.

Urban Planning and Development

Rapid urbanization has led to the explosive growth of Chinese cities and their populations, presenting an enormous challenge in terms of city planning, infrastructure, and transportation. New approaches to urban planning are fundamental to the development and management of cities, as well as a prerequisite to ensuring the efficient use of land and integrated development in China. Efforts also must be made to use land sensibly and to coordinate the spatial layout of urban areas, thereby avoiding rampant and uncontrolled urbanization.

The China Program cooperated with the Chinese Society for Urban Studies and the Urban Planning Society of China, affiliated with the Ministry of Housing and Urban-Rural Development, in organizing the July 2009 International Forum on Urban Development and Planning, which featured the theme “Harmony and Ecology: Sustainable Cities.”

In cooperation with the Lincoln Institute’s Department of Planning and Urban Form, more than 20 international speakers attended a symposium on megaregions and spatial planning practice worldwide, held in Beijing in October 2008.

Affordable Housing

Housing policy, and in particular affordable housing, is becoming an important focus for China’s policy makers during this period of rapid urbanization. With upwards of 15 million new urban residents expected annually over the next decade, the growth in the supply of affordable housing is an immediate concern. In addition to a one-year joint policy research project with the DRC, the China Program is conducting original research in the field of housing policy and introducing international experience to China’s policy makers and the academic community.

For example, in July 2009 the China Program organized a symposium on low-income housing policy in China to provide a platform for international and domestic scholars and government officials from DRC, the Ministry of Housing and Urban-Rural Development, and the People’s Bank of China to engage in dialogue and discussion. Papers from the symposium will be published in an edited volume for distribution in China. The China Program also hosted an international conference entitled Housing Policy and Housing Markets in China in Cambridge, Massachusetts, in May 2009, and is preparing an edited conference volume for publication in both English and Chinese.

Environmental Challenges

With international attention focusing on recent climate negotiations in Copenhagen, there is a pressing need for timely research on low-carbon development and the complex linkages between land, transportation, and urban and environmental policies in China and globally. The China Program is leading research on environmental taxation in China from a global perspective and developing a database of environmental tax statistics.

The Program organized a roundtable on green cities at Peking University in September 2009, which drew strong interest from domestic and international academics and signaled the need for further study of environmental policy issues in the future. And in May 2008, the Program, joined by Loeb Fellows from the Harvard University Graduate School of Design and Chinese policy makers and academics, held a roundtable discussion at Peking University that addressed urban transformation and sustainability.

Building Capacity to Address the Issues

Since its inception the China Program has been committed to enhancing the capacity of both current policy makers and academics and researchers whose analysis and opinions will influence China’s future policies and reforms. This educational emphasis continues with the establishment of the Peking University–Lincoln Institute Center, which has become an important platform for reaching and engaging students and scholars at Peking University and other academic institutions through training programs, fellowships, lecture series, online education, and research publications.

Training the Trainers

This annual program aims to enhance the capacity and awareness of scholars throughout China regarding urban economics, planning, public finance, and related land policy issues. The courses target university faculty and professional researchers, as well as select government officials, with the goal to increase competence through intensive professional seminars on issues related to land policy in China. More than 70 participants on average attend each two-week training program. Leading experts in their fields from around the world offer the participants an invaluable international perspective. The China Program’s recently launched online education platform seeks to build on previous training programs and to move progressively toward more specialized trainings.

Fellowships

The China Program awards several types of fellowships to international and Chinese scholars and graduate students working on Chinese land and urban policy. Two or three international fellowships are awarded annually to leading scholars and professional researchers based at universities around the globe. In addition to producing important research on issues ranging from the spatial structure of megacities to household carbon emissions in Chinese cities, the international fellowship is an invaluable tool to increase scholarly dialogue between China and the world. These fellows are an integral component of the China Program’s other activities, such as teaching at Training the Trainers programs, reviewing other fellowship proposals, and speaking at seminars.

Fellowships for Chinese graduate students and junior researchers are administered through the Peking University–Lincoln Institute Center to bring young scholars into Chinese land and urban policy studies. Approximately 15 dissertation fellowships are awarded to aspiring scholars annually, while an additional 6 or 8 research fellowships help strengthen the capacity of scholars based in China’s leading institutions.

The China Program’s in-country presence at the Peking University–Lincoln Institute Center also facilitates interactions among the fellows, including the provision of constructive feedback on their ongoing research. All fellows are invited to Beijing for a mid-term progress report, where they share their initial research findings with peers and a panel of international experts. This event has proven to be an effective way to help domestic junior scholars and graduate students build research skills and promote studies of urban and land issues in China.

Speaker Series

The China Program also regularly invites distinguished individuals drawn from the Lincoln Institute’s network of leading scholars and policy makers to speak to the Beijing scholarly community on vital topics ranging from planning support systems to fiscal federalism and decentralization in the United States. This speaker series helps meet the demand for knowledge about international development and urbanization experiences and how these cases can be adapted to fit China’s needs.

Online Education

The Lincoln Institute has long history of employing online education as a tool to reach a broader audience and maximize its resources. Given the vast geographic distances in China and its emphasis on training and capacity building, the China Program has similarly been interested in online education for some time. The establishment of the Peking University–Lincoln Institute Center has accelerated the process of making information, analysis, and data available online, and widened the network of collaborators interested in tapping into the Institute’s expertise.

Through the Center, the China Program engaged a local online education company to develop a China-centric platform, which was inaugurated in the summer of 2009 during the China Program’s Training the Trainers session on urban economics and planning. The two-week program was recorded and translated into Chinese, and is accompanied online by Chinese transcripts of lectures and associated PowerPoint presentations and other materials.

The value of the online platform has become apparent almost immediately. During the fall 2009 program and demonstration on property taxation and CAMA, which was also recorded for later conversion to the online platform, attending SAT officials expressed their eagerness to use the platform to demonstrate the concepts to their colleagues and superiors.

Publications and Web-based Resources

As the China Program has increased its research capacity and professional support with the establishment of the Peking University–Lincoln Institute Center, it is producing a steadily increasing series of working papers, books, and training materials that are extending the Lincoln Institute’s and the China Program’s expertise on and influence in China. During 2008 and 2009, nine books were published or made ready for print, and eight other books are at various stages of development. The China Program and the Center’s fellows and visiting fellows have also produced about 40 working papers and a number of focused reports and policy briefs, which will soon be available online.

Complementing all of these activities is the Peking University–Lincoln Institute Center’s revamped Web site. It provides a window into the China Program’s mission and vision, and is an important link between the Lincoln Institute’s and the China Program’s dual educational and research objectives. Drawing together Chinese and English working papers, training and education materials, and conference proceedings from both the Lincoln Institute and the Peking University–Lincoln Institute Center, the Web site is a rich repository of impartial knowledge and an expanding platform for scholarly dialogue concerning the ascendant land, urban, and environmental policy issues in China.

In 2010, the China Program will continue to strengthen its online resources to synthesize and disseminate its recent research to a broader audience of Chinese scholars and policy makers through new publications and focused policy reports, while also striving to advance academic debate through research, demonstration projects, conferences and other activities.

About the Author

Joyce Yanyun Man is senior fellow and director of the Lincoln Institute’s China Program, as well as director of the Peking University–Lincoln Institute Center for Urban Development and Land Policy. She is also professor of economics in the Peking University College of Urban and Environmental Science.

Las ciudades norteamericanas tienen un potencial prometedor a largo plazo como centros de innovación y crecimiento, y la expansión tecnológica y de las ciencias de la salud están comenzando a compensar la erosión de varias décadas en el sector de manufactura. Las ciudades siguen siendo también lugares llenos de vitalidad, que ofrecen opciones de diseño urbano, densidad y transporte que atraen a residentes de todas las edades y procedencias. De hecho, nueve de las diez ciudades más pobladas de los Estados Unidos han crecido en población en la última década, según el censo de 2010.

Sin embargo, las perspectivas de corto plazo de las ciudades están cargadas de desafíos. Con el reciente brusco descenso en los ingresos tributarios, causado por el colapso del mercado inmobiliario en 2008 y la consiguiente crisis financiera y recesión económica, se ha hecho extraordinariamente difícil para los gobiernos locales y estatales mantener los servicios básicos, por no mencionar los planes de inversion para el futuro. Los fondos federales de la Ley de Recuperación y Reinversión de los Estados Unidos (American Recovery and Reinvestment Act, o ARRA) ayudaron a los gobiernos locales a compensar la disminución de la renta de los últimos tres años, pero los fondos de ARRA ya no están disponibles para el año fiscal entrante (una transición que se ha dado por llamar “el precipicio”), obligando a los funcionarios locales a hacer frente en su totalidad al efecto causado por el déficit de ingresos.

El Foro Periodístico sobre Suelos y el Entorno Edificado: La Próxima Ciudad (Journalists Forum on Land and the Built Environment: The Next City) de 2011 reunió a académicos, profesionales y líderes politicos con periodistas de los medios impresos y audiovisuals para explorar el tema de la infraestructura de las ciudades en el contexto de la recuperación económica presente. Este programa es producto de una asociación anual entre el Instituto Lincoln, la Fundación Nieman de Periodismo de la Universidad de Harvard, y la Facultad de Estudios de Posgrado en Diseño de Harvard.

Los debates del Foro se centraron en dos enfoques para las inversiones en infraestructura y sus servicios asociados. El primero fue un enfoque a corto plazo de las inversiones en infraestructura como estímulo fiscal, con objeto de recuperar el nivel de actividad económica y aumentar el empleo. El segundo fue un enfoque a más largo plazo en cuanto a la función que cumple la infraestructura para sustentar la transformación de las economías municipales y el aumento de competitividad y habitabilidad en un mundo globalizado.

La infraestructura y la crisis fiscal de los gobiernos locales

La necesidad del país de contar con un estímulo fiscal para impulsar la economía en 2009 llevó a plantear inversiones colosales en infraestructura para satisfacer esta necesidad. No obstante, los tipos de proyectos que se podían iniciar rápidamente a nivel local tendían a ser esfuerzos de pequeña escala, como reparación de caminos y mantenimiento de instalaciones. Las iniciativas más ambiciosas, como los trenes de alta velocidad interurbanos, no llegaron a materializarse debido a problemas presupuestarios y de endeudamiento, y porque todas ellas requerían una mayor planificación antes de poder proceder a la etapa de implementación.

Lawrence H. Summers, quien recientemente retomó su cargo de profesor en Harvard después de haber sido director del Consejo Económico Nacional en la Casa Blanca, defendió el plan de estímulo de la administración Obama, que consideró necesario para restaurar la confianza en el sistema financiero y evitar que la recesión “pasara a formar parte de los libros de historia”. No obstante, admitió que “si bien los gobiernos locales pudieron usar los fondos de estímulo para cubrir déficits de ingresos, había muy pocos proyectos grandes listos para empezar”.

Más aún, la cruda realidad de la presión fiscal es que las ciudades no pueden concentrarse en proyectos de infraestructura en gran escala y a largo plazo porque están ocupadas en recortar gastos y realizar cambios en la dotación de los serviciospúblicos locales, señaló Michael Cooper, periodista de The New York Times. Algunos ejemplos de estos recortes en los servicios incluyen el programa de licencia sin goce de sueldo todos los viernes para los maestros públicos de Hawái durante el año escolar en curso; el niño de San Diego que murió atragantado con un chicle porque la estación de bomberos más cercana estaba cerrada debido a las clausuras rotativas; las decisiones de Colorado Springs de apagar un tercio de los faroles de alumbrado todas las noches, y de subastar el helicóptero de la policía; y el pueblo de California que destituyó a su alcalde porque acondicionó las tuberías de Madera deterioradas del sistema de aguas, pero aumentó las tarifas para pagar esta reparación.

Muchas jurisdicciones también tienen problemas fiscales con la falta de financiación de los fondos de pensión y de beneficios sociales. Algunas están agravando el problema simplemente dejando de realizar los pagos anuales requeridos, una medida de emergencia adoptada, por ejemplo, por el gobernador Chris Christie en Nueva Jersey. El Mercado de bonos municipales se está tambaleando y algunas ciudades, como Harrisburg, Pensilvania, se encuentran al borde de la quiebra. Los deficits fiscales están creciendo porque los gobiernos locales han gastado lo último que les quedaba de los fondos de ARRA.

Adrian Fenty, exalcalde de Washington, DC, afirmó que las ciudades se tienen que gestionar de forma similar a un negocio, adoptando una política de rendimiento y alejándose de la política de patrocinio. Es necesario mejorar tanto la eficiencia del suministro básico de servicios como la gestión de las finanzas municipales. Dado que la educación es tan importante para el crecimiento económico de las ciudades, su administración dio prioridad a una reforma educativa, concerniente tanto a la infraestructura humana como a la física, de manera que, durante su mandato en la alcaldía, su administración clausuró el 20 por ciento de las escuelas y redujo el personal administrativo un 50 por ciento. También renegoció los contratos de los maestros, ofreciendo un sistema de remuneración basado en el mérito y sin cargo fijo, que fue aceptado por el 60 por ciento de los maestros.

Desafíos de infraestructura: El caso del tren de alta velocidad

La iniciativa de 53 mil millones de dólares del presidente Barack Obama para construir trenes de alta velocidad ha puesto en evidencia los desafíos de la crisis fiscal en los gobiernos locales. Los gobernadores de Florida, Ohio y Wisconsin devolvieron los fondos federales asignados para ferrocarriles interurbanos con el argumento de que sus gobiernos locales y estatales no estaban en condiciones de asumir los gastos de explotación y mantenimiento, al tiempo que cuestionaban las proyecciones de tráfico de pasajeros. El proyecto de tren de alta velocidad de California, si bien estaba financiado por una emisión de bonos aprobada por los votantes, se encuentra con una oposición similar debido a las cargas financieras y a las disputas sobre el uso de suelos locales.

Bruce Babbitt, exgobernador de Arizona y Secretario del Departamento del Interior de los Estados Unidos, y miembro de la junta directiva del Lincoln Institute, dijo que la campaña de la administración Obama para construir ferrocarriles interurbanos de alta velocidad fue un “desastre político”, y que la visión subyacente se tenía que reevaluar. Sugirió que se usara como modelo el Corredor del Noreste, y que un plan revisado debería incluir un sistema bien definido de refinanciación confiable, similar a la estrategia adoptada para construir el sistema de autopistas interestatales.

El pago de la infraestructura de los ferrocarriles de alta velocidad exigirá una fuente de financiamiento específica, quizás mediante un aumento en el impuesto sobre la gasoline en los estados por donde se localizarán las nuevas líneas de ferrocarril, y un sistema de recuperación de plusvalías que comprometa a los propietarios privados que se beneficiarían del aumento en el valor de sus propiedades como consecuencia de estos proyectos de obras públicas. “No tenemos el coraje político para definir nuestra prioridades”, dijo Babbitt. Hará falta un “martillo nacional” para abordar el déficit de infraestructura del país sin abdicar del control a los gobernadores y los estados.

Los ferrocarriles de alta velocidad podrán vivir o morir de acuerdo a consideraciones económicas. Petra Todorovich, directora ejecutiva de America 2050, que ha efectuado numerosos análisis del potencial del ferrocarril de alta velocidad, propuso un marco de 12 megaregiones en los Estados Unidos que representan conjuntos de áreas metropolitanas donde la mejora en el servicio de ferrocarril brindaría el mayor potencial para reemplazar al automóvil y al viaje en avión de corta duración. Los trenes de alta velocidad pueden intensificar los mercados laborales, aumentar las economías de aglomeración y aumentar la productividad, al vincular grandes centros urbanos. Japón, Francia y China se encuentran entre los países que han demostrado cómo las líneas ferroviarias interurbanas pueden promover las sinergias económicas por medio de la ubicación estratégica de las estaciones para trenes de alta velocidad y sus conexiones con otros trenes y demás sistemas de transporte.

Este argumento de aprovechamiento económico fue respaldado por Edward Rendell, exgobernador de Pensilvania y alcalde de Filadelfia, y miembro de Building America’s Future, una campaña de revitalización de infraestructura deteriorada en todo el país. Rendell argumenta que los Estados Unidos han estado descansando sobre los laureles de las inversiones pasadas, y que la revitalización de los degradados cimientos físicos de la nación es ahora una prioridad urgente. Sin una infraestructura de nivel mundial, el país no será competitivo para atraer inversiones privadas, innovación tecnológica rápida y sustentable, y un crecimiento de la productividad, y no podrá mantener el crecimiento de buenos puestos de empleo a nivel nacional.

La infraestructura y el futuro de las ciudades

A medida que la recuperación se afiance y vuelva el crecimiento económico, serán necesarias inversions en nuevas tecnologías de comunicación, energía verde, sistemas urbanos inteligentes, transporte -como los trenes de alta velocidad y los sistemas de transporte colectivo- y otras obras de infraestructura, para ayudar a las ciudades a cumplir su papel de centros de innovación, cultura y productividad.

La visión de infraestructura combinada con el planeamiento a largo plazo también es fundamental para que las ciudades se puedan adaptar al impacto inevitable de los cambios climáticos, tales como un aumento posible en el nivel del mar de un metro con las consiguientes marejadas de tempestad, inundaciones y aumento en la cantidad de eventos climáticos extremos. La infraestructura de la mayoría de las ciudades costeras es tan vieja que incluso un huracán moderado puede causar importantes daños, dijo Ed Blakely, profesor de Política Pública de la Universidad de Sídney y “exzar” de la recuperación de Nueva Orleans tras el huracán.

Las ciudades han elaborado sus planes actuales sobre la base del registro meteorológico relativamente calmo de los últimos 200 años, pero esta calma probablemente se irá reduciendo a causa del cambio climático, de modo que la infraestructura existente resultará inadecuada u obsoleta. No se debe prestart atención a los esfuerzos de reconstrucción después de catástrofes como los del huracán Katrina, dijo Blakely, sino a la reubicación, reposicionamiento y “garantías de futuro” para ciudades más resistentes.

La infraestructura como servicio de utilidad pública que mejora la habitabilidad de la ciudad se puede observar en el proyecto High Line de la ciudad de Nueva York, consistente en el cambio de uso de una línea de trenes de carga elevada que pasa por el Meatpacking District y Greenwich Village. Uno de los arquitectos de ese proyecto, Liz Diller, socia de Diller, Scofidio y Renfro, sugirió que este tipo de mejoras puede transformar las áreas urbanas, funcionar como centros para eventos sociales y culturales, y promover la actividad económica, si bien advirtió que “la arquitectura no puede resolver en realidad grandes problemas”.

A pesar de la crisis fiscal actual, se espera que las ciudades experimenten otros cambios que puedan ayudar a su recuperación económica. Entre ellos, podemos mencionar las consecuencias de la crisis inmobiliaria actual, que probablemente genere demanda de propiedades en alquiler, y el desplazamiento demográfico a medida que la generación de baby boomers se vaya jubilando y mudando a casas más pequeñas.

Arthur C. (Chris) Nelson, profesor de la Universidad de Utah, notó que ambos cambios pueden generar más demanda de estilos de vida urbanos. Por ejemplo, se puede observar ya una reducción en la demanda de casas unifamiliares ocupadas por sus propietarios en la periferia metropolitana de las Rocosas, el Sudoeste y el Sur, donde hay subdivisions completas que están virtualmente vacías. El porcentaje de familias que son dueñas de sus casas ha disminuido desde un máximo de 69,2 por ciento en 2004 a 66,4 por ciento en 2011, generando una mayor demanda de unidades de alquiler, que normalmente están ubicadas en áreas más urbanizadas.

Los desplazamientos demográficos también están relacionados con cambios en la composición de los hogares. Para 2030, los hogares unipersonales constituirán un tercio de la población, y sólo alrededor de un 25 por ciento de los hogares incluirá niños, comparado con el 45 por ciento en 1970 y el 33 por ciento en 2000. Estos cambios promoverán probablemente un ajuste significativo en los mercados y valores inmobiliarios, a medida que los baby Boomers envejezcan y pongan a la venta sus casas suburbanas y se muden a ubicaciones más urbanizadas con acceso a transporte público y a barrios peatonales. Al mismo tiempo, los próximos cambios en los mercados hipotecarios y la reforma de Fannie Mae y Freddie Mac puedan llegar a aumentar el costo del financiamiento hipotecario (y de ser propietario de una casa) e inducir a las familias más jóvenes a alquilar en vez de comprar.

Las ciudades como motor de crecimiento

La inversión en infraestructura para respaldar las regiones metropolitanas puede justificarse también por la sorprendente fortaleza de las propias ciudades. El resurgimiento urbano se puede observar en el crecimiento de los ingresos de profesionales altamente especializados, la disminución relativamente modesta de los precios de las viviendas y hasta en los recientes incrementos en varias ciudades prósperas, y en una concentración de innovación en las áreas urbanas, dijo el profesor de economía de Harvard Edward Glaeser. “Podríamos mudarnos a cualquier lugar que se adecúe a nuestra biofilia”, dijo. “Pero seguimos atraídos por las ciudades”.

El crecimiento de la población urbana está altamente correlacionado con los ingresos urbanos promedio, los niveles de educación y la participación en la tasa de empleo en pequeñas empresas, a medida que las ciudades siguen atrayendo a emprendedores y promoviendo la productividad. Si los ingresos en otros lugares fueran como los de la ciudad de Nueva York, el PIB nacional aumentaría un 43 por ciento, dijo Glaeser. Las ciudades también resultarán atractivas por su valor medioambiental, por ser lugares de densidad y transporte público, con un uso relativamente menor de energía per cápita y menor emisión de carbono que las áreas suburbanas y rurales. G laeser rechazó las normas de edificación y las regulaciones restrictivas que desalientan el aumento de densidad y hacen que los barrios urbanos antiguos de baja altura estén “fosilizados en ámbar”. También recalcó que la educación pública sigue siendo la inversión más importante que las ciudades pueden y deben hacer para mejorar el crecimiento económico y la calidad de vida.

A medida que se recuperen la economía nacional y los ingresos de los gobiernos locales, una de las prioridades claves será equilibrar los gastos actuales en servicios y las inversiones de más largo plazo. El crecimiento económico facilitará el financiamiento de inversiones en infraestructura, pero éstas serán necesarias a su vez para aumentar el crecimiento económico. El desafío será encontrar una manera políticamente viable de romper este círculo vicioso.

Sobre los autores

Gregory K. Ingram es presidente y gerente ejecutivo del Instituto Lincoln de Políticas de Suelo.

Anthony Flint es fellow y director de asuntos públicosen el Instituto Lincoln de Políticas de Suelo.

Alan Mallach es senior fellow no residente en el Programa de Políticas Metropolitanas del Instituto Brookings y senior fellow en el Centro para el Progreso Comunitario, ambos de Washington, DC; y académico visitante en el Banco de la Reserva Federal de Filadelfia. Ha sido profesional, promotor y académico en temas de vivienda, planificación y desarrollo comunitario por casi 40 años, durante los cuales ha realizado aportaciones en muchas áreas, como el desarrollo de viviendas sociales y de ingresos mixtos, la revitalización de barrios y la regeneración urbana. En 2003, fue nombrado miembro del Colegio de Socios del Instituto Norteamericano de Planificadores Certificados, en reconocimiento a sus permanentes logros como líder de la profesión de planificación urbana.

Mallach es también profesor visitante en el programa para graduados en Planificación Urbana del Instituto Pratt de Nueva York, y ha enseñado en la Universidad Rutgers y en la Escuela de Arquitectura de Nueva Jersey. Ha publicado numerosos libros y artículos sobre vivienda, desarrollo comunitario y uso del suelo; su libro Bringing Buildings Back: From Abandoned Properties to Community Assets (Reconstruyendo edificios: de propiedades abandonadas a activos de la comunidad) es reconocido como el estándar en la materia. Su libro más reciente: Rebuilding America’s Legacy Cities: New Directions for the Industrial Heartland (Reconstruyendo las ciudades industriales históricas de los EE. UU.: nuevas direcciones para el corazón industrial), fue publicado en 2012 por la American Assembly de la Universidad Columbia. Reside en Roosevelt, Nueva Jersey, y tiene una licenciatura por la Universidad de Yale.

Land Lines: ¿Cómo se involucró en el Instituto Lincoln?

Alan Mallach: Ya había sabido del Instituto Lincoln desde hacía muchos años, e inicialmente me involucré en la década de 1990 con mi trabajo sobre la revitalización de áreas industriales abandonadas. Desde entonces, trabajé como profesor en una serie de sesiones de capacitación patrocinadas por el Instituto y participé en reuniones y conferencias en Lincoln House. Hace alrededor de siete años, Nico Calavita, profesor emérito del Programa de Graduados en Planificación Urbana de la Universidad Estatal de San Diego, y yo comenzamos a investigar el tema de vivienda inclusiva. Este proyecto llevó a que el Instituto publicara en 2010 el libro que coeditamos: Inclusionary Housing in International Perspective: Affordable Housing, Social Inclusion, and Land Value Recapture (Vivienda inclusiva en perspectiva internacional: vivienda económica, inclusión social y recuperación de plusvalías). Más recientemente he estado trabajando con Lavea Brachman, directora ejecutiva del Centro de Políticas del Gran Ohio, en un informe de enfoque sobre políticas de suelo que investiga temas relacionados con la regeneración de las ciudades industriales históricas de los Estados Unidos (ver página 28).

Land Lines: ¿A qué se refiere como «ciudades industriales históricas»?

Alan Mallach: «Ciudades industriales históricas» es un término que se ha comenzado a usar en vez de «ciudades en retroceso», como una manera de describir las ciudades del país que han perdido una cantidad significativa de población y puestos de trabajo en los últimos 50 años o más. Ciertas ciudades icónicas, como Pittsburgh, Detroit y Cleveland se mencionan generalmente en este contexto, pero la categoría también incluye a muchas ciudades más pequeñas, como Flint, Michigan; Utica, Nueva York y Scranton, Pensilvania.

Land Lines: ¿Cómo se conectan los temas de las ciudades industriales históricas con las preocupaciones principales sobre la política de suelo del Instituto Lincoln?

Alan Mallach: Hay muchos puntos de conexión, pero creo que el más importante es cómo debería usarse el suelo en estas ciudades. Todas estas ciudades tienen una sobresaturación significativa de oferta tanto de edificios residenciales como no residenciales en relación con la demanda, por lo menos desde la década de 1960. Como consecuencia de una demolición extensiva a lo largo de décadas, se ha acumulado un gran inventario de suelo vacante o subutilizado. Sólo Detroit tiene más de 100.000 parcelas de suelo vacante separadas y otros 40.000 a 50.000 edificios vacíos. Si bien este inventario es una carga, también podría convertirse en un enorme activo para el futuro de la ciudad. Uno de los temas centrales que enfrentan estas ciudades industriales es cómo desarrollar estrategias efectivas para usar este suelo no solo de forma que beneficie al público sino que también estimule el crecimiento económico y la demanda del mercado.

Land Lines: ¿Cómo compararía este desafío con su trabajo en vivienda inclusiva?

Alan Mallach: Desde el punto de vista económico, es la otra cara de la moneda. La vivienda inclusiva es una manera de usar el proceso de aprobación de planificación para canalizar una fuerte demanda del mercado y crear un beneficio público en forma de vivienda social, ya sea de manera directa, incorporando una cierta cantidad de unidades de vivienda social en un emprendimiento inmobiliario que quiere ser aprobado, o en forma indirecta por medio de desarrollo de predios o contribuciones en efectivo por parte del emprendedor. Como tal, involucra, ya sea explícita o implícitamente, la recuperación de la plusvalía del suelo que se crea en el proceso de aprobación de planes. La vivienda inclusiva parte de una gran demanda en el mercado, y no puede suceder sin ella.

Las estrategias de reúso del suelo en ciudades industriales tratan de generar demanda donde hoy en día no existe, o alternativamente encontrar maneras de usar el suelo para beneficiar al público y que se puedan implementar aun en condiciones donde no se puede inducir demanda en el mercado, por lo menos en un futuro previsible. Estas estrategias se llaman frecuentemente de usos «verdes» del suelo, como es el caso de la agricultura urbana, los espacios abiertos, la restauración de humedales o la gestión del aguas lluvias. Puede ser difícil conseguir que los funcionarios locales y los ciudadanos reconozcan que las formas tradicionales de revitalización, como la construcción de casas nuevas, centros comerciales, etc., requieren de la existencia de un mercado para dichos productos. No obstante, en muchas de estas zonas devastadas la demanda simplemente no existe. Más aún, la demanda no se puede inducir artificialmente por medio de subsidios públicos masivos, si bien los fondos públicos pueden, bajo ciertas condiciones, actuar como un estímulo para crear demanda.

Land Lines: ¿La falta de demanda es evidente en todos lados en las ciudades industriales históricas?

Alan Mallach: No, y esta es una de las cosas más interesantes sobre estas ciudades. En algunas ciudades la demanda crece mucho más que en otras, pero en la mayoría de los casos la revitalización se limita a ciertas partes de la ciudad.

Una tendencia perceptible es que las zonas del centro, o cercanas al centro, particularmente aquellas que tienen un carácter urbano peatonal fuerte, como el corredor de Washington Avenue en St. Louis, o el Distrito de Almacenes de Cleveland, están mostrando un gran dinamismo, si bien en muchas otras partes de estas dos ciudades sigue habiendo pérdida de población y abandono de viviendas.

Parte de este dinamismo se debe al carácter peatonal y la fuerte forma urbana (ver el nuevo libro del Instituto Lincoln por Julie Campoli, Made for Walking: Density and Neighborhood Form (Hecho para caminar: densidad y forma del barrio) (2012), que examina 12 barrios peatonales y las fuerzas que han generado su reciente popularidad). Un segundo factor importante es que estas áreas atraen a un segmento demográfico en particular: individuos y parejas jóvenes. Este grupo no sólo está orientado cada vez más a la vida urbana, sino que su porcentaje en el total de la población norteamericana está creciendo.

Land Lines: ¿Qué otros temas está explorando en su trabajo sobre las ciudades industriales históricas?

Alan Mallach: Me estoy centrando en dos áreas de investigación: una más cualitativa y otra más cuantitativa. En el primer caso, estoy examinando cómo muchas de estas ciudades están pasando por una pronunciada reconfiguración espacial y demográfica, un proceso que está exacerbando las disparidades económicas entre distintas áreas geográficas y poblaciones en estas ciudades. Si bien los centros de las ciudades más viejas, como los de St. Louis, Cleveland, Baltimore y hasta Detroit, son cada vez más atractivos, particularmente para los adultos jóvenes, y están ganando población y actividad económica, muchos otros barrios en estas ciudades están perdiendo población a una velocidad cada vez mayor. En muchos lugares estas tendencias están acentuando divisiones raciales que ya eran problemáticas.

Mi segunda área de investigación gira alrededor de lo que hace falta para promover una regeneración exitosa y sostenida. Lavea Brachman y yo hablamos de esto en nuestro informe de enfoque sobre políticas de suelo, pero espero poder investigar este tema más profundamente, examinando incluso algunas ciudades europeas que se han visto en situaciones similares a las de las ciudades industriales norteamericanas. Creo que las experiencias de las ciudades del norte de Inglaterra, por ejemplo, o el valle del Ruhr en Alemania, son similares a nuestras ciudades industriales históricas.

Land Lines: ¿Qué quiere decir con «regeneración exitosa»?

Alan Mallach: Esta es una cuestión muy importante. Yo creo que frecuentemente hay una tendencia a ver un evento en particular (las Olimpiadas de Barcelona o un edificio importante como el Museo Guggenheim en Bilbao, España, por ejemplo) como evidencia de regeneración, cuando en el mejor de los casos es un impulso discreto para obtener un cambio más sustancial. Creo que la regeneración tiene que ser consecuencia de cambios en tres áreas fundamentales: primero, el bienestar de la población, que se refleja en parámetros tales como el desempeño en educación superior, nivel de ingresos y menor desempleo; segundo, un mercado inmobiliario más fuerte y mayor fortaleza de los barrios; y tercero, la creación de nuevos sectores económicos orientados a la exportación para reemplazar el sector industrial perdido. El crecimiento de población por sí solo (es decir, la reversión de la disminución histórica de población) puede ser o no una prueba de regeneración. Es más probable que sea una consecuencia de estos tres cambios en vez de una causa.

Land Lines: ¿Cómo ve el futuro de las ciudades industriales norteamericanas?

Alan Mallach: Veo un futuro mixto. Como hemos mostrado en el informe sobre enfoque en políticas de suelo, a algunas ciudades les está yendo mucho mejor que a otras. Pittsburgh y Filadelfia están mostrando signos fuertes de resurgimiento, mientras que Cleveland, Detroit y Buffalo están perdiendo terreno. Creo que las ciudades industriales tienen dos desafíos importantes a medida que miran hacia el futuro.

El primer tema es cuál será el motor económico de estas ciudades. Las ciudades que han tenido mayor éxito hasta ahora han podido concentrar los grupos más significativos de universidades de investigación nacional y centros médicos. Estas instituciones tienden a dominar las economías de sus ciudades. Si bien han ayudado a ciudades como Pittsburgh y Baltimore a reconstruirse en la era postindustrial, creo que quedan muchas preguntas por contestar en lo que se refiere a su sostenibilidad como motores económicos de largo plazo.

La segunda cuestión es demográfica. Los centros pueden estar atrayendo a personas solteras y parejas jóvenes, pero muchos de los barrios residenciales de estas ciudades fueron construidos hace alrededor de 100 años, como comunidades principalmente para parejas casadas que estaban criando a sus hijos. Ahora se están descomponiendo incluso muchos barrios que habían permanecido estables hasta hace relativamente poco. Esta demografía de parejas casadas con niños está disminuyendo en todo el país, y más aún en las ciudades más viejas. Hoy, por ejemplo, sólo el 8 por ciento de los hogares de Baltimore está en esta categoría. Creo que el futuro de estos barrios es muy importante para el destino de estas ciudades, y estoy muy preocupado por sus perspectivas.

Land Lines: A pesar de estos desafíos, ¿cree que su trabajo marca la diferencia?

Alan Mallach: El hecho es que muchas ciudades están avanzando. Pittsburgh ha realizado una excelente tarea al valorizar sus activos para desarrollar nuevos motores económicos, mientras que Baltimore y Filadelfia están haciendo grandes avances al reorganizar muchas de sus funciones gubernamentales para resolver los desafíos de propiedades vacantes y problemáticas. Baltimore, por ejemplo, ha iniciado un programa llamado De vacantes a valor (Vacants to Value) que integra el cumplimiento de códigos de edificación y las propiedades problemáticas con estrategias más abarcadoras de construcción de mercados. He tenido la fortuna de haber participado directamente en algunas ciudades, como Filadelfia y Detroit; por otro lado, siempre me gratifica cuando funcionarios locales o líderes comunitarios me cuentan que usan mi trabajo, o que mis pensamientos han influido en ellos. Esto hace que el esfuerzo valga mucho más la pena.

More than any other single variable, the change in land values across time and over space provides important insights into the shifting spatial structure of a city. Whereas a typical property sale reflects the combined value of the land and buildings, the land value alone represents the actual current worth of a location and suggests expectations about the future. Even if a parcel bears the burden of an outmoded construction, the price of the land reflects the present discounted value of the stream of returns that could be earned from the highest and best use of the parcel. Rapidly rising land prices in an area of a city are a clear indication that people expect the neighborhood to be in high demand for some time to come, signaling investment opportunities to developers. Changes in land values may also serve to alert city officials that an area may require zoning changes and investments in infrastructure.

Land value is also an important component in the cost approach to property assessment, which is one of the three commonly used assessment methods (including the sales comparison and income approaches). The cost approach has three major components: (1) the cost of building the existing structure if it were new at the time of assessment; (2) the depreciation of the building to its current condition; and (3) the price of the land parcel. Adding (1) to (3) and subtracting (2) generally produces a good estimate of overall property value. In standard property transactions, however, land values are not easily separated from the value of structures. Sales of vacant land, which more clearly indicate a site’s value, are relatively rare in large, built-up urban areas; as a result, relatively few studies of vacant land sales exist (see Ahlfeldt and Wendland 2011; Atack and Margo 1998; Colwell and Munneke 1997; Cunningham 2006). Teardowns can sometimes be used to measure land values, because land represents the entire value of a property when the existing building is demolished immediately following a sale (McMillen 2006; Dye and McMillen 2007). However, teardowns tend to be concentrated in certain high-value neighborhoods, and the data on demolitions can be hard to obtain.

Among U.S. cities, Chicago is uniquely fortunate to have a data source, Olcott’s Land Values Blue Book of Chicago, which reported estimates of land values for every city block and for blocks in many Cook County suburbs for most of the 20th century. Olcott’s provided a critical input to the cost assessment procedure: After determining the building cost and depreciation, the overall value of a property can be assessed by multiplying the parcel size by the land value provided in the Blue Book series. This article is based on a sampling of data from the Olcott volumes (box 1). It includes a series of maps that provide a clear picture of the spatial evolution of Chicago during the 20th century, similar in spirit to the classic book, One Hundred Years of Land Values in Chicago (Hoyt 1933).

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Box 1: Data Sources for Chicago Land Values

Olcott’s Land Values Blue Book of Chicago covers the City and much of suburban Cook County with a series of 300 maps, each printed on one page of a book. The city itself comprises 160 individual maps with an impressive level of detail. Most block faces have a value representing the price per square foot for a standard 125-foot-deep lot. Land use is also indicated. Large lots and most industrial land have prices quoted by the acre or occasionally by the square foot for an unspecified lot depth. The data represent land values for 1/8- x 1/8-mile square grids, which closely follow Chicago’s street layout and thus resemble city blocks. Each year’s data set includes 43,324 observations for the entire city.

The Lincoln Institute of Land Policy has provided funding to digitize the data contained in Olcott’s Blue Book for a series of years spanning much of the twentieth century: 1913, 1926, 1932, 1939, 1949, 1961, 1965, 1971, 1981, and 1990. A more thorough description of the procedure used is presented in Ahlfeldt et al. (2011). Digitizing the maps involves bringing them into a GIS environment. Average land values are calculated for 1/8- x 1/8-mile squares overlaid on the maps. The full data set has more than 600,000 data points across the 10 individual years.

Olcott’s stopped publication in the early 1990s, and the last year of digitized data is 1990. To supplement Olcott’s records for recent years, the authors obtained data on all vacant land sales in the city from 1980 to 2011. More than 16,000 sales were successfully geocoded, and they display the dramatic increase in land prices during the period prior to the collapse of the housing market at the end of 2006. These combined data sets provide a unique opportunity to analyze the changing spatial structure of an entire city over an extended time.

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Spatial Variation in Land Values

Despite its flat terrain, Chicago has never been a truly monocentric city. Lake Michigan has long been an attractive amenity for its scenic value, its moderating effect on the climate, and the series of parks lining its shore. The Chicago River also has had a significant influence on the location of both businesses and households. Development to the north of the Central Business District (CBD) was delayed because the bridges over the main branch of the river had to open so often for river traffic that commuting to the Loop business area was unpredictable and time consuming. The north and south branches of the river attracted both industrial firms and low-priced residential developments for laborers while repelling high-priced homes designed for CBD workers. The locations of major streets, highways, and train lines also had significant effects on development patterns. Thus, there is ample reason to expect that the rate of change in land values varies across the city.

The maps in figure 1 show this spatial variation in land values in Chicago over time. In 1913, land values were highest in a large area around the CBD, and they were also quite high along the lakefront and along some of the major avenues and boulevards leading out of the downtown area. In 1939, this pattern was generally similar, along with the rise of the north side relative to the south side of the city: Land values were very high all along the northern lakefront and extending well inland on the north side. The area at the edge of the city due west of the CBD (the Austin neighborhood) also had relatively high land values in 1939.

By 1965, the pattern of land values had changed markedly. Very high land values were confined to a relatively small area in the CBD. The high-value area of the west-side Austin neighborhood was much smaller in 1965 than in 1939, and nearly all the formerly high-value areas had shrunk in size.

By 1990, however, the situation changed dramatically. The area with very high values extended much farther north and inland than previously. Areas on the south side had relatively high land values in 1990, particularly around the South Loop (near the CBD) and Hyde Park (along Lake Michigan south of the CBD).

After 1990, the pattern of continued redevelopment of the city is based on an analysis of actual sales of vacant land. The expansion of the high-value area to the north and west of the CBD is remarkable, and the near south side also enjoyed a resurgence during this time.

Figure 2 addresses how the recent recession affected the growth of land values in Chicago by expressing land values as a function of distance from the CBD. The plots show the change in average (log) land values over time for tracts with centroids falling within 2-, 5-, and 10-mile rings around the CBD. In 1913, average land values were far lower 10 miles from the CBD than in the closer rings. By the 1960s, there was little difference between land values across these distances. Since then, average values grew much more in the 2-mile ring than in more distant locations. During the Great Recession, land values declined rapidly in the 2-mile ring, less rapidly in the 5-mile ring, and not at all in the 10-mile ring. Thus, the areas that had the highest rates of appreciation during the period of extended growth also had the highest rates of decline during the recession.

Figure 3 provides a different perspective on the spatial variation in land values over time. The three panels show smoothed land value surfaces for 1913, 1990, and 2005. The 1913 and 1990 surfaces are estimated using Olcott’s data, while the 2005 estimates are based on sales of vacant land. In all three years, land values are far higher in the CBD than elsewhere. In 1913, there are a large number of local peaks in land values at the intersections of major streets. These areas were relatively small commercial districts that served local residents in a time before car ownership was commonplace. In 1990, the land value peak in the CBD is accompanied by a much lower plateau just to the north along the lakefront. In 2005, the plateau has grown to a large area that extends well into the north side and inland along the lakefront. The region of high land values has also extended south along the lakefront, with a local rise much farther south in Hyde Park.

Persistence of Spatial Patterns

Historical land values are interesting not only because they reveal how an urban area has changed over time, but also because the past continues to exert substantial influence on the present. Cities are not rebuilt from scratch in every period. Buildings last a long time before they are demolished, and sites that were attractive in the past tend to remain desirable for a long time. One of the unique features of the Olcott’s data set is that it allows us to compare land values from 100 years ago to current land values and land uses.

Figure 4 shows the average date of construction for the 1/8- x 1/8-mile squares. The recent recentralization of Chicago is evident in the donut shape of building ages around the CBD. The newest buildings are close to the CBD, while the oldest buildings are in the next ring. Buildings in the most distant region were most likely built between 1940 and 1970.

Figure 5 summarizes this relationship by comparing the mean construction date to distance from the CBD. The oldest buildings are in a ring just over 5 miles from the CBD.

A good measure of structural density is the ratio of building area to lot size. Economic theory predicts that structural densities will be high where land values are high. Structures last for a long time. How well do past values predict current structural density? Figure 6 compares the structural density of buildings in the 2003 Cook County assessment rolls to land values in 1913 and 1990. This data set includes the building area of every small (six units or fewer) residential structure in Chicago.

The height of the bars indicates the structural densities: Tall bars have relatively high ratios of building areas to lot sizes. The color of the bars indicates land values: Red bars have relatively high and values. Thus, we should expect to see a large number of tall red bars and low green bars. In general, the two panels do indicate a positive correlation between structural density and land values. The correlation is particularly evident on the north side and along the lakefront. The correlation with 1990 is less clear on the south and west sides. Several elevations in the density surface are not matched by correspondingly high land values. One explanation for these results, which are in line with the reorientation of high-priced areas toward the north side, is that the relatively high densities in these areas are artifacts of a past when those blocks were relatively more valuable and when there were incentives to use the land intensively. The 1913 panel of figure 6 suggests that land values are actually more closely correlated with building densities for 2003 than are the 1990 values. The root of this apparently anomalous result is that building density reflects the economic conditions at the time of construction, and most of the buildings in that part of the city date from long ago. The past continues to exert a major influence on the present.

Conclusion

Olcott’s data provide a clear picture of the changes in Chicago’s spatial structure during most of the 20th century. Never a truly monocentric city, Chicago began the century with very high land values in the CBD, along the lakefront, and along major avenues and boulevards leading out of the downtown area. Values were also high in neighborhood retail areas at the intersections of major streets. By 1939, the north side of Chicago had already begun to display its economic dominance. The city then suffered an extended period of decline, with the CBD holding the only major cluster of high land values in the 1960s. Since then, the city has undergone a remarkable resurgence. High land values now extend over nearly the entire north side, and land values have also rebounded in parts of the south side. Our analysis also shows the strong role that history continues to play in the current spatial structure of the city. A result of this persistence is that land values from a century ago are better than current land values at predicting the density of the current housing stock.

Acknowledgments

The authors thank the Lincoln Institute of Land Policy for generous funding and support, and are grateful to the Centre for Metropolitan Studies at the TU-Berlin for hosting a team of researchers during the project work. Kristoffer Moeller and Sevrin Weights are acknowledged for their great contribution to designing and coordinating the compilation of the data set. Philip Boos, Aline Delatte, Nuria-Maria Hoyer Sepulvedra, Devika Kakkar, Rene Kreichauf, Maike Rackwitz, Lea Siebert, Stefan Tornack, and Tzvetelina Tzvetkova provided excellent research assistance.

About the Authors

Gabriel M. Ahlfeldt is associate professor at the London School of Economics and Political Sciences (LSE) in the Department of Geography and Environment and Spatial Economics Research Centre (SERC).

Daniel P. McMillen is professor in the department of economics at the University of Illinois at Urbana-Champaign.

Resources

Ahlfeldt, Gabriel M., Kristoffer Moeller, Sevrin Waights, and Nicolai Wendland. 2011. “One Hundred Years of Land Value: Data Documentation.” Centre for Metropolitan Studies, TU Berlin.

Ahlfeldt, Gabriel M., and Nicolai Wendland. 2011. “Fifty Years of Urban Accessibility: The Impact of the Urban Railway Network on the Land Gradient in Berlin 1890–1936.” Regional Science and Urban Economics 41: 77–88.

Atack, J., and R. A. Margo. 1998. “Location, Location, Location! The Price Gradient for Vacant Urban Land: New York, 1835 to 1900.” Journal of Real Estate Finance & Economics 16(2) 151–172.

Colwell, Peter F., and Henry J. Munneke. 1997. “The Structure of Urban Land Prices.” Journal of Urban Economics 41: 321–336.

Cunningham, Christopher R. 2006. “House Price Uncertainty, Timing of Development, and Vacant Land Prices: Evidence for Real Options in Seattle.” Journal of Urban Economics 59: 1–31.

Dye, Richard F., and Daniel P. McMillen. 2007. “Teardowns and Land Values in the Chicago Metropolitan Area.” Journal of Urban Economics 61: 45–64.

Hoyt, Homer. 1933. One Hundred Years of Land Values in Chicago. Chicago: University of Chicago Press.

McMillen, Daniel P. 2006. “Teardowns: Costs, Benefits, and Public Policy.” Land Lines, Lincoln Institute of Land Policy 18(3): 2–7.

Since its inception just over a year ago, the Northeast State Planning (NESP) Leadership Retreat has been a valuable professional development tool for state planners from Maine to Maryland. This collaboration between Lincoln Institute and Regional Plan Association (RPA) brings together high-level state officials to discuss current state planning issues. After only two annual meetings the participants from 11 northeast states already have implemented ideas discussed with their peers, and a few states have initiated and built smart growth planning and community development schemes inspired by this interstate exchange.

At the second retreat held in March 2000, the participants shared new ideas and success stories, addressed “the do’s and don’ts” of building state planning programs, and took steps toward establishing an economic development program for the northeast corridor. They compared state growth management initiatives in the Northeast to those occurring in the rest of the country, and traded caveats and suggestions on how to sustain political support in the face of a changing economy, bipartisan politics and conflicting interests.

Smart Growth Across the Nation

According to John M. DeGrove, Eminent Scholar of Growth Management and Development at Florida Atlantic University, a new and bipartisan commitment to smart growth is developing across the United States. No longer is the nation enshrouded in a “no-planning” or “planning in isolation” mindset by state and local governments.

As the keynote speaker at the retreat, DeGrove outlined prerequisite factors crucial to a sustainable smart growth program. A primary realization is that the protection of natural systems and the revitalization of urban systems on a local level should happen concurrently with support and coordination from state agencies. Executive leadership can strengthen state legislative initiatives and is usually crucial to program development and implementation. The involvement of diverse coalitions can also be critical in accelerating a smart growth agenda at the state level.

For a progressive smart growth program to survive, there must be an impetus to place growth management in a state or regional framework bolstered by strong incentives and disincentives. State actions linked to federal programs-TEA 21, the Clean Air Act, the Clean Water Act, and the possible renewed funding of the Land and Water Conservation Fund-can enhance the success of strategic, comprehensive planning. Finally, bottom-up coalition building, grassroots efforts, and state agency coordination should be used in place of or in conjunction with top-down approaches. Experiences in Maryland and Pennsylvania have shown that such processes are effective.

Patricia Salkin, associate dean and director of the Government Law Center of Albany Law School in New York, is also at the forefront of growth management research. She has compiled and analyzed information about state planning programs across the country, citing gubernatorial support and legislative reforms as the primary factors driving smart growth programs. She reported that gubernatorial support is generally strong in the Northeast and is growing in such states as Arizona, Colorado, Georgia, Illinois, Minnesota, North Carolina, Utah and Wisconsin.

Salkin mentioned three main categories of legislative reform: 1) recodification and tightening of existing laws, 2) authorization for innovative and flexible controls, and 3) major overhauls. As examples, Oklahoma’s Senate Bill 1151 created a Planning and Land Use Legislative Study Task Force to evaluate the effectiveness of current laws, review model legislation, and identify public information needs; California’s Assembly Bill 1575, encourages innovative land use policies such as unified county plans; and Tennessee is undertaking a study to overhaul its planning and growth management framework and replace it with a smart growth program.

Sustaining Political Support

Sustaining political support for smart growth plans is a challenging task. Bipartisan politics, influential lobbying interests, changes in administration, and home rule are just a few of the most commonly mentioned obstacles to comprehensive, regional programs that address urban, suburban, rural and conservation issues. Arguably, the current strong economy may be facilitating smart growth incentives as many states, especially in the Northeast, offer monetary and capital rewards to municipalities whose policies are consistent with state and regional plans.

A number of common practices on this topic were outlined at the retreat. State agencies such as the office of planning or the department of community affairs may develop coalitions with entities other than fellow state agencies, especially if the “state” is seen as a meddling force in local issues. Some success stories tell of coalition building with elder communities, religious leaders and faith-based communities. Others have tried the silent partner approach in a public/private venture. Most importantly, the political force of local voices can be potent in getting local officials, state congressional representatives and agencies involved.

One key area that requires cautious handling is the presentation and dissemination of information. When plans move from general to specific, care must be taken to allow a broad range of interests to perceive personal and community benefits at the present time and through continued participation in the future. The use of proper terminology is also crucial. For example, in a politically driven world, executives may strive to separate themselves from counterparts with original ideas and phraseology. A state can gain distinction by interchanging the prevalent term “smart growth” with “community preservation,” or “locally designated growth areas” with “urban growth boundaries.”

Political support also can be sustained by creating educational programs to address the planning needs of a community. Training and curricula can be developed for elected public officials and for citizens appointed to planning boards, board of appeals and historic preservation committees. Some efforts have even begun to institutionalize planning studies at the elementary, middle and high school levels. Stamford, Connecticut, for example, is engaged in a program modeled after the recycling movement to encourage school children to bring home planning issues and initiate their family’s involvement in the development and growth of their communities.

Revitalizing the Northeast Corridor

Numerous areas around the globe have adopted the regional corridor concept of economic development. Major capital campaigns are in the process of feasibility analysis or implementation in such diverse locations as California’s San Francisco to San Diego corridor and China’s Beijing to Shanghai corridor. Representatives from several northeast states reported that they are working collaboratively to encourage the economic development of their corridor. Transportation, especially the utilization of rail, is an essential component of the strategy to move goods and people more efficiently throughout the Northeast. Of particular interest is linking the economies of mid-sized cities with the region’s megalopolis anchors-Washington, DC, New York and Boston. The intermediary cities include Providence, RI; Hartford, New Haven, Bridgeport and Stamford, CT; Newark and Trenton, NJ; Philadelphia, PA; Baltimore, MD; and Wilmington, DE.

This planning group, led by the Regional Plan Association, will create a vision and mission statement for the project and then conduct an economic analysis to quantify the benefits. Once a plan is formulated, its cost will be calculated and a timeline will detail the phasing-in of each segment. The participants will then begin an outreach effort to gain backing from various state and local officials, as well as advocacy groups and community representatives. Amtrak, the main source of passenger rail in the corridor, plans to have its high-speed regional train service on-line in late 2000, and a number of partnerships could evolve from the already active advocacy efforts of several groups, such as the National Corridors Initiative/NCI, the I-95 Corridor Coalition, and the Coalition of Northeastern Governors (CONEG). A diverse coalition of business, civic and nonprofit organizations may be instrumental in advancing a regional economic development instrument.

A Southeastern Massachusetts Case Study

The planning retreat culminated with an exercise that looked at the rural southeastern region of Massachusetts where the Commonwealth and the Executive Office of Environmental Affairs (EOEA) are planning to cultivate a bioreserve. Now in its initial stages, this program seeks to preserve vast tracts of valuable land, including forests and wetlands, and curb haphazard and uncoordinated development. The area of concern is the largest high-yield, sole-source aquifer in Massachusetts, with close to 70,000 acres of cranberry bogs, areas of endangered habitat, and a cluster of pine barrens. The Commonwealth is exploring various avenues to preserve these natural resources.

Through a statewide Community Preservation Initiative, the Commonwealth has begun to provide technical assistance to towns in the region by helping them forecast their commercial/industrial buildouts based on current zoning and population estimates. The EOEA hopes this information will help the communities make better decisions regarding future development and put this knowledge to use on a cooperative regional level to create beneficial growth plans for all nearby cities and towns.

The participants emphasized three considerations that specifically addressed the issues raised by the EOEA, and that are transferable to other regional planning initiatives. First, negotiated processes, whether between state government and a municipality, between municipalities, or between a community and a state agency, are effective in consensus building and cutting costs. Investing in consensus building at the beginning of the planning process can preclude litigation costs and the costs of stalled development due to community opposition. Second, technical assistance must be provided in a manner that keeps communities engaged throughout the entire analysis stage. Engagement increases support for the results and demystifies the “technical experience,” thus giving a sense of empowerment and control to those most affected by the final plan. Finally, local government involvement is key to any planning process, since local officials usually have their fingers on the pulse of community vitality and needs, and can use that knowledge to ensure effective programs.

Alternatively, participants mentioned a few pitfalls that need to be avoided in the context of this southeastern Massachusetts case. The original mapping of the bioreserve maximized the layout of open spaces and land in need of protection. However, in the desire to classify maximum acreage for protection, some new boundaries would have cut through municipalities, leaving the potential of an insider/outsider dichotomy. In areas where home rule is a coveted prize, as in Massachusetts towns, government programs are often met with suspicion and resistance. Further, if state government presents an agenda for preservation with lines drawn and boundaries sited without local input, communities will often react adversely to any plans, regardless of the goodwill and intent of the program. The ideal action to preclude these problems is to offer technical assistance to achieve through collaboration the preservation that the state ultimately wants. Preferably, the entire municipality should be represented in any regional framework for southeastern Massachusetts to facilitate inter- and intra-muncipal support for the desired program.

In conclusion, the discussions at the Second Annual NESP Retreat offered a great deal of insight into the experiences of the 11 states represented. Though they share a common geographic location, they have taken many approaches to address future growth and development. The retreat offered instructive lessons on the common theories, practices and principles that are useful in building a diverse array of programs appropriate to each state’s local conditions, and it underscored the value of continuing such meetings.

Robert D. Yaro is executive director and Raymond R. Janairo is senior research associate of the Regional Plan Association, based in New York City.