C. Lowell Harriss is Professor Emeritus at Columbia University, where he taught economics from 1938 until his retirement in 1981. He then served as executive director of the Academy of Political Science until 1987. He has been a consultant to and a member of numerous government commissions and boards of professional organizations. He has written and edited many books and hundreds of articles, and is the recipient of countless honors and awards. Dr. Harriss has been a valued associate of the Lincoln Institute since its founding in 1974, as a faculty member, research scholar, and board member. Joan Youngman, senior fellow and chairman of the Institute’s Department of Valuation and Taxation, spoke with him about his lifelong commitment to education, public service, and property taxation.

Joan Youngman: How does land value differ from improvement value as a property tax base?

Lowell Harriss: The significant factor with land is location, the unimproved condition of nature in the most fundamental economic sense. Whatever results from private or public investment and labor, such as streets, buildings, and so forth, is not part of land in this definition. Land differs from other productive resources because it is immobile and its quantity is fixed.

Land exists not because people produce it, but because it’s there by nature. The price one pays for land, as contrasted with other resources, has no role in creating supply. Land is also unique in that no two pieces are the same, so the kind of analysis appropriate for labor and capital with fungible aspects is not applicable to land.

Another important element is the ability to control land use–for example, to receive rent as payment for access, rather than because the owner created anything. The person who controls land use can serve a constructive function by directing it into better instead of poorer uses, and I think there should be the prospect of rewards for doing so. Market forces will indicate demand, and one interested in public policy hopes that the land will be used in the best possible ways. The owner of desirable land will get higher returns, but not because of anything he or she did to create it.

Almost any urban use illustrates this. Some thirty or forty years ago, I was walking down Park Avenue and I saw a very fine building in a key location, 64th Street, I think, housing some offices of the New York City Board of Education—much too valuable a location to be used for administrative purposes. I raised this point with someone in the school system, and he said that they were moving out. They had come to the same economic realization.

Any use of land prevents another use. Holding land idle or partially idle affects not only the owner but neighbors and society at large. Others will have to travel further to get to work or to the grocery store or to school. Land is so crucial, so important to life, that society will be better off if there are forces, market forces or governmental forces, inducing better rather than poorer uses.

JY: How can the tax system encourage better land use?

LH: A tax system that imposes higher taxes on land creates pressure on owners to make more productive use of their land. I don’t like the term “land value tax,” because it emphasizes the tax aspect. My focus over the years has been on reducing the tax rates on structures to induce more investment in improvements. I have not emphasized increasing the tax rates on land to increase pressure for better land use, but these can go together. If the tax system can create a built-in inducement, year in and year out, for better use of land, that will be a plus. I don’t want to be unduly skeptical about more direct land use regulation, but government is politics and the political pressures that affect government regulation do not always represent mankind at its best.

JY: How would you deal with past improvements to land, before the implementation of a land-based tax?

LH: I would just establish the tax on the current condition of the land. The past is past. We’re not talking about a tax on capital gains but a recurring tax on an immobile resource. Some of its current value does reflect prior capital investment, the same as for structures, but I don’t see how to make any differentiation for an annual tax on land value. As a practical matter we have no market for land the way it was hundreds of years ago.

Going forward, it would be desirable to distinguish the value of unimproved land from the value of capital improvements to the land, such as infrastructure and grading, that aren’t viewed commonly as “buildings” but that represent investment and effort. The tax system should not create obstacles to investment. I would certainly be open to learning more about what might be administratively feasible in that regard.

JY: What about the taxation of farms, forests, and open space?

LH: Well, this raises complicated concerns. On one hand, I think it would be good to have additional pressure on some owners of agricultural land to speed up nonagricultural development, especially in the urban fringe. On the other hand, decisions about land use are often irreversible. Covering more acres in Westchester County, where I live, with asphalt and buildings will affect drainage for years to come. I think if anything there should be bias against decisions that are costly in the long run and difficult to reverse if conditions change. But it’s also pretty clear that interests vary, and what is in the interest of farmers is not always in the interest of the public as a whole.

Land is a large part of farm investment, and anticipated future income is reflected in land prices. The market value of land does not necessarily reflect current cash flow, so if taxes are high they may constitute a substantial portion of farm income. I’m sometimes considered not very sympathetic to farmers, because I think they have undue political influence.

The effect of many state and federal programs to benefit farms will be capitalized into higher land values. The consumer will pay forever, and the benefits will go to the person who owned the land when the policy was established. This is not a new conclusion. It’s been in the literature since farm programs began in the 1930s, but it has not affected the political decision-making process. Congressman Barney Frank of Massachusetts asked why the family farm deserves more consideration than the family shoe store, and I agree with the implication of his question.

JY: What about two people who own identical parcels of land, side by side, but one has a small, older house and the other has a new commercial building or shopping center? Many people think it’s unfair to impose the same tax on both.

LH: There are real problems here, too, partly because of imperfections in the capital markets. The person with unimproved land, let’s say it’s a widow, might ideally get a reverse mortgage to realize cash income from her property. The logical thing at that stage of life is to consume capital, for example, by drawing down retirement accounts. We have a systematic market that enables us to live off of our capital when it’s in the form of financial investments, but it’s not that well developed for the real estate market.

I always want to be sympathetic with the person who is having trouble, but wise public policy cannot be made well by concentrating on the extreme cases. Society needs to deal both with the cases of human need and with other problems such as the pressures on land use. Those whose land has become valuable, not because of what they did, but because of their neighborhood, are lucky, even though they may not recognize it. We need separate instruments to deal with separate problems, such as the person whose tax bill goes up even when his cash income does not.

Another aspect of the question is that the property tax is not a personal tax and cannot be evaluated on the same grounds as, say, an income tax. To attempt to do so can mislead. A rich person may own no land and a person with very little cash may own a good deal of land. There are ways to deal with the cash-flow problem, such as circuit breakers that limit property taxes to a certain percentage of income or deferral of tax payments until the property is sold.

JY: Is speculation a special concern? Is everyone who holds property with the hope that it will rise in value a speculator?

LH: I’ve always been reluctant to use the term “speculation,” and I certainly would not say that public policy should penalize the speculator. But, to the extent that government plays a role, I would say its bias should be toward use rather than idleness, and tax policy also supports this view. There is a whole range of speculation, from an owner deciding not to sell a house this week because of hopes for a better price next week, to holding a plot of ground idle in downtown Manhattan, knowing that someone is going to offer a very high price for it eventually.

The developer is presumably a constructive element in the total process. I don’t think anyone really wants equilibrium, but something better than what would be equilibrium. More people live better by reasonable standards now than was the case 20 or 100 years ago, and the real estate developer has played a part in that process. Sometimes it’s fashionable to be disparaging of developers, but we owe a lot to them. Maybe we’ve overpaid some of them, but plenty of them have lost their shirts. It can be a very risky business.

JY: How should the tax system treat government-financed improvements to land?

LH: In New York City, for example, I don’t know how much of the cost of building and extending subways could be borne by taxing the increments of the land value in the neighborhood, but probably a good deal. It’s not going to slow down progress to use those land value increases to help finance the expansion of the subway system.

We need to distinguish, however, between year-in, year-out financing of government by taxes on land and more or less one-time charges. That is, if the subway system is extended, there will be immediate capital gains as well as a long-term increase in the property tax base. Each of these effects deserves consideration in public policy.

JY: What is the difference between someone who invests in a piece of land and then watches as the price of land rises and someone who invests in a stock and then watches the stock market rise?

LH: Well, as far as income taxation is concerned I would think they are the same, but for financing local government they’re very different. The land stays in place, yet the stockholder can move. The ability of the landowner and stockholder to pay may be the same, but that isn’t the only relevant consideration. In thinking about how to tax gains you need to take into account whether the taxpayer can move from the jurisdiction.

I think that taxing people annually to finance local government, based on their ownership of land, is good public policy. The effort to apply that same principle to intangibles was a complete failure in the late nineteenth and early twentieth centuries, because you can’t tax people locally on the basis of resources that are so mobile.

The distinction here is not between earned and unearned income. For income tax purposes the tax is applied after a sale when the owners have realized their gain. But, to finance schools and other services you don’t want to rely on residents’ decisions about whether or not to sell their land. You want a permanent and steady source of tax revenue.

This is quite different from the question of unearned income, that is, whether or not the owner grew rich in his sleep. If the Astors became rich from owning land in Manhattan, but paid their property taxes year in and year out, well, so be it. I think that the property tax can take only a very limited account of differences in wealth. The administrative difficulties of a net wealth tax could be enormous. And the identification of a property tax with a tax on wealth or net worth is, I think, diverting and dangerous. It shifts attention from the goal of financing government to issues of personal status and relative position.

JY: Could you say more about the problem of jurisdictions competing for business by offering tax reductions?

LH: It seems to me there is no need for property tax exemptions on land. Special concessions may be appropriate for buildings, as an acceptable means of competition, but I’m dubious and favor broad reduction of taxes on structures. In any case, the land is not going to move. If you give concessions for land, they will tend to be capitalized into capital gains for the present owners. Under a two-rate land and buildings tax system, any concessions should be made on the basis of the variable resource, which is the building value. Inducements are not going to create more land, but they might create more structures. In this way, economic development incentives might be more effective under a land tax.

Una versión más actualizada de este artículo está disponible como parte del capítulo 7 del CD-ROM Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.

Paulo Sandroni se graduó de economista en la Universidad de São Paulo en 1964 y fue profesor adjunto de economía en la Universidad Católica de São Paulo (PUC) hasta 1969, cuando dejó Brasil durante la dictadura militar. Enseñó en la Universidad de Chile en Santiago hasta 1973 y después en la Universidad de los Andes en Bogotá, Colombia, hasta 1979. Después de retornar a São Paulo, volvió a enseñar en la PUC hasta 2006 y también se incorporó a la Escuela de Administración de la Fundación Getulio Vargas (FGV).

En 1988, después de la victoria del Partido de los Trabajadores (PT) en Brasil, se incorporó al gobierno municipal de la alcaldesa Luiza Erundina en São Paulo, donde dirigió agencias dedicadas al desarrollo urbano y el transporte público. Durante un breve período, también fue viceministro de administración en el gobierno federal.

En 1994 dejó el área de gobierno municipal para continuar enseñando y realizando investigaciones sobre desarrollo urbano en ciudades de Brasil y otros países de América Latina, y publicando artículos y libros sobre economía, incluyendo un diccionario de economía que se considera como referencia primaria en Brasil. Inició su afiliación con el Instituto Lincoln en 1997. En la actualidad es consultor privado sobre temas de desarrollo urbano y transporte, y sigue enseñando en la Escuela de Administración de FGV y en programas patrocinados por el Instituto Lincoln.

Land Lines: ¿Cómo se interesó en temas de política urbana, vistos sus antecedentes en macroeconomía?

Paulo Sandroni: En 1988 −cuando era asistente de Luiz Inácio Lula da Silva, ahora Presidente de Brasil y en ese entonces un candidato en las elecciones de 1989− ayudé a desarrollar programas para resolver los problemas macroeconómicos de Brasil. Después de la victoria de Luiza Erundina a la alcaldía de São Paulo en 1988, fui invitado a dirigir el programa de Operaciones Interligadas. Este programa consistía en negociar y formar sociedades entre los sectores público y privado para otorgar derechos adicionales de edificación, y usar la recaudación proveniente de la parte recuperada del incremento del valor del suelo (o plusvalía) para construir viviendas sociales para familias pobres.

También participé en el desarrollo de Operaciones Urbanas (OU), una forma de intervención para revitalizar grandes áreas de la ciudad, que también involucró la recuperación de plusvalías. Estaba fascinado por el desafío de formar parte de un grupo cuya misión era gobernar la ciudad más grande de Brasil con un proyecto de gran connotación social, y además continué asistiendo al Presidente Lula da Silva en temas macroeconómicos hasta 1998.

Land Lines: A su juicio, ¿por qué los proyectos de desarrollo urbano son un desafío tan grande?

Paulo Sandroni: La primera razón es que en los grandes proyectos que afectan los aspectos históricos, culturales, sociales y ambientales de la ciudad, la resolución de los problemas económicos y de financiamiento se debe considerar como parte del desafío, pero no son el objetivo principal. Por ejemplo, las OU que tratan de evitar el aburguesamiento y producir un entorno social más equilibrado pueden tener que usar tierras más valiosas para construir viviendas sociales. Estos proyectos requieren atención especial, porque la tierra no se puede vender usando el criterio típico de mayor y mejor uso. En Brasil hay una distinción importante entre los grandes proyectos urbanos (GPU) que pueden o no usar las herramientas de recuperación de plusvalías proporcionadas por las OU. Los GPU que están en condiciones de usar estas herramientas pueden redituar beneficios financieros y sociales, tanto para el sector público como el privado, con mayor facilidad.

Land Lines: ¿Puede describir el instrumento financiero detrás de esta política?

Paulo Sandroni: Desde 2004, los fondos para financiar las viviendas sociales y otras inversiones de infraestructura en las OU se han recaudado por medio de un nuevo instrumento ingenioso de recuperación de plusvalías llamado CEPAC (Certificado de Potencial Adicional de Construcción). Un CEPAC puede representar una cantidad determinada de metros cuadrados de derechos de construcción adicionales, dependiendo de dónde se formó la OU. Por ejemplo, en la OU de Faria Lima los CEPAC oscilaban de un mínimo de 0,8 a un máximo de 2,8 m2 y en la OU de Agua Espraiada, de 1,0 a 3,0 m2, porque los precios del suelo varían entre distintos lotes, incluso dentro de la misma OU.

La administración pública que crea y posee los derechos de desarrollo puede vendérselos a los emprendedores que quieran edificar con una densidad mayor que lo que estaba permitido previamente en esos lotes. Los CEPAC se venden en subasta a través de la bolsa, y si el interés de los emprendedores es alto, los precios pueden llegar a aumentar. No hace falta que el sector público valore la propiedad, porque el mercado se encarga de hacerlo. Los ingresos por la venta de CEPAC se depositan bajo una ley muy estricta en una cuenta separada utilizada para financiar proyectos de infraestructura y de viviendas sociales dentro de la OU, de manera que no aumenta la presión sobre el presupuesto de la ciudad.

Muchos observadores ven con recelo este instrumento porque temen que sea una forma de especulación del suelo en los mercados financieros. Creo que esto es un error, por dos razones. Primero, los especuladores agresivos en general invierten en bonos de alta liquidez que pueden aumentar de valor rápidamente en el corto plazo; los CEPAC no tienen ninguna de estas características. Segundo y más importante, el gobierno controla el mercado a esta altura del proceso. Si los precios aumentan debido a especulación, el sector público puede vender estos derechos a un precio más alto, incrementando sus ingresos proporcionalmente, o puede vender una cantidad más grande de acciones, causando un descenso del precio y neutralizando a los especuladores.

Land Lines: ¿Cómo han funcionado los CEPAC en la práctica?

Paulo Sandroni: Ambas OU que mencioné anteriormente han usado este instrumento para recaudar fondos de los emprendedores. A la fecha se ha vendido el 31 por ciento del inventario de metros cuadrados, o CEPAC, en el caso de Agua Espraiada y el 32 por ciento de Faria Lima. El caso de Agua Espraiada ilustra el proceso de licitación y la influencia de los especuladores. El gobierno de la ciudad realizó una subasta de 186.740 CEPAC en febrero de 2008, a un precio inicial de R$460 (equivalente a US$200). Un oferente trató de comprarlos todos, así que el precio subió a R$1,110 (US$480), un aumento increíble del 141 por ciento.

Meses más tarde, en octubre, otra subasta ofreció 650,000 CEPAC a un precio inicial de R$535 (US$230), pero se vendieron solamente 379.650, sin ningún aumento del precio. Entre diciembre de 2004 y febrero de 2009, la recaudación por venta de CEPAC en la OU de Faria Lima fue de R$567 millones (US$244 millones) y en la OU de Agua Espraiada fue de R$642 millones (US$276 millones). Si comparamos estos ingresos combinados de $520 millones de dólares en el curso de cuatro años con la recaudación total de impuestos sobre la propiedad en 2008, que fue de $1,25 mil millones de dólares, vemos que representa más del 40 por ciento, o alrededor del 10 por ciento anual.

Land Lines: ¿Cómo se pueden usar estos ejemplos para obtener respaldo a los medios alternativos de financiamiento del desarrollo urbano?

Paulo Sandroni: La forma clásica de financiar inversiones de capital en infraestructura es por medio de préstamos de largo plazo y transferencias de fondos federales; en general, el impuesto sobre la propiedad se usa para mantener la infraestructura y los servicios públicos. Pero en Brasil, los préstamos que pueden tomar las municipalidades y los estados están sujetos a límites estrictos. El hecho de que los ingresos por CEPAC no tengan este tipo de restricción presupuestaria agrega un valor financiero significativo a este instrumento.

Además, al igual que en los Estados Unidos y otros lados, aumentar impuestos es muy impopular. En las últimas cinco elecciones en São Paulo, por lo menos tres candidatos perdieron porque los votantes interpretaron que respaldaban un aumento de impuestos. Por lo tanto, para financiar grandes proyectos urbanos tenemos que evaluar cuánta plusvalía se va a crear, determinar cómo capturarlo y crear una situación que beneficie a todos. Los CEPAC ofrecen una alternativa viable.

Land Lines: ¿La mayoría de los proyectos de América Latina tienen tendencia al aburguesamiento? ¿Cómo se pueden hacer más socialmente aceptables?

Paulo Sandroni: En la medida que los GPU se concentren en las inversiones urbanas en infraestructura (construcción de caminos, puentes, centros comerciales, centros de negocios, etc.), el precio de la tierra probablemente aumentará en ciertas áreas afectadas, y ello contribuirá a la expulsión de familias pobres y hasta algunas de la clase media. De todas maneras, estos GPU son iniciativas del sector público, así que se pueden diseñar mecanismos para mitigar estas fuerzas de exclusión.

La legislación brasileña permite el establecimiento de ZEIS (Zonas Especiales de Interés Social) en áreas ocupadas por barrios marginales dentro del perímetro de los GPU. En estas áreas designadas, el emprendedor sólo puede construir nuevas viviendas para los pobres, aun cuando el precio de la tierra sea muy alto. Por supuesto, la oposición económica y social creada por este mecanismo es considerable entre los terratenientes y los emprendedores inmobiliarios, pero es defendida vigorosamente por las organizaciones y los residentes locales. São Paulo cuenta en la actualidad con ZEIS en cuatro GPU: Agua Branca, Faria Lima, Agua Espraiada y Rio Verde-Jacu. El ZEIS del barrio marginal Coliseu en Faria Lima, y el barrio marginal Jardim Edith en Agua Espraiada, son casos interesantes, porque están ubicados en las tierras más caras dentro de estos proyectos (ver Biderman, Sandroni y Smolka 2006).

Land Lines: ¿Cuáles son las desventajas de estas herramientas regulatorias (CEPAC, ZEIS, OU, etc.) que puedan haber dejado vacíos para el oportunismo de partes interesadas bien posicionadas?

Paulo Sandroni: Bueno, se puede encontrar corrupción y conductas antisociales en todos lados, y algunas condiciones pueden favorecerlas. Pero si uno sobrecarga el sistema con reglamentaciones y normas, se puede terminar bloqueando las iniciativas para superar estos problemas y se paraliza un proceso que puede beneficiar el interés público. Es más riesgoso, por supuesto, reducir las reglamentaciones y brindar más oportunidad para negociar, pero este riesgo se puede mitigar si se crean normas de negociación, con castigos muy severos por violarlas. Al mismo tiempo, hay ciertos asuntos que demandan una reglamentación muy precisa, como es el caso de los ZEIS, porque los grupos más pobres de la ciudad necesitan de la intervención del sector público.

Land Lines: ¿Se pueden replicar estos tipos de proyectos de São Paulo en otras ciudades de América Latina?

Paulo Sandroni: Tenemos que tener cuidado a la hora de transplantar o repetir experiencias que fueron exitosas en un país a otro. Antes de hacerlo, es importante conocer dos cosas: las condiciones imperantes en la ciudad cuando se crearon estas OU; y los tipos de problemas que los planificadores querían resolver con estos proyectos.

Por ejemplo, una condición importante en São Paulo es la separación de los derechos de edificación de los derechos de propiedad, lo cual abre un camino para cobrar por un cambio en la relación de superficie de edificación a superficie del lote. En grandes partes de la ciudad, la relación de superficie de edificación a superficie del lote, que está relacionada con las normas de zonificación, es muy baja en la actualidad, oscilando entre una y dos veces el área del lote. Cuando sea posible aumentar esta relación tres o cuatro veces sin ejercer una gran presión sobre la infraestructura, se impone un cargo sobre los dueños o emprendedores por los derechos adicionales a construir con mayor densidad.

En otras ciudades, donde la relación de superficie de edificación a superficie del lote ya sea alta, hay menos flexibilidad para cobrar por derechos de desarrollo adicionales, de manera que quizás haga falta crear otras políticas o herramientas. La lección principal es que las OU de São Paulo han demostrado que cobrarles a los propietarios o emprendedores por los derechos adicionales a edificar ha sido tanto razonable como equitativo. Ya no es social, política o aun económicamente admisible conceder estos derechos de desarrollo sin cargo.

Referencia

Biderman, Ciro, Paulo Sandroni, y Martim O. Smolka. 2006. Large-scale urban interventions: The case of Faria Lima in São Paulo (Intervenciones urbanas a gran escala: el caso de Faria Lima en São Paulo). Land Lines 18(2): 8–13.

La recuperación de la plusvalía del suelo es ahora un tema popular entre los profesionales de finanzas públicas a nivel local, en parte debido a que la disminución en los ingresos de los gobiernos locales causada por la recesión ha despertado el interés en nuevas fuentes de ingresos, y en parte debido a la necesidad de encontrar nuevas maneras de financiar la infraestructura local, que se ha deteriorado a causa de la falta de inversión. La sexta Conferencia Anual sobre Políticas de Suelos del Instituto Lincoln, celebrada en mayo de 2011, analizó varios aspectos de la recuperación de plusvalías, utilizando experiencias a nivel nacional e internacional.

Principios básicos de la recuperación de plusvalías

Los cambios en el valor del suelo se deben con frecuencia a factores que no están relacionados con el esfuerzo del propietario: acciones tomadas por la comunidad relativas a las inversiones en infraestructura; crecimiento cercano de actividades industriales, comerciales, residenciales o recreativas; normas de edificación que permiten al dueño desarrollar el suelo; o el crecimiento gradual de la comunidad. La recuperación de plusvalías consiste en aplicar un impuesto o arancel diseñado para devolver a la comunidad algo o todo el valor agregado al suelo por las acciones de la comunidad. Su aplicación es particularmente atractiva cuando las inversiones públicas —en caminos, suministro de agua, saneamiento o servicios locales, como el alumbrado público— aumentan los valores de la propiedad.

Experiencia internacional

Arriendo de suelos. Quizás la aplicación más amplia y comprensiva del principio de recuperación de plusvalías tiene lugar en China, donde las municipalidades compran suelos agrícolas a los granjeros a precios de uso agrícola, les agregan servicios públicos de infraestructura, y se los venden a los emprendedores como suelos urbanos, con permisos para realizar emprendimientos urbanos. La municipalidad se queda con la diferencia de precio entre el valor urbano y agrícola del suelo, generando una proporción importante de sus ingresos locales con los cuales paga, entre otras cosas, la instalación de la infraestructura.

Co-desarrollo. Las compañías de transporte público de Hong Kong y Tokio han usado los ingresos de co-desarrollo de comunidades residenciales y áreas comerciales cercanas a las nuevas estaciones de transporte público para ayudar a financiar sus costosos proyectos. En Tokio, los ingresos de las líneas de transporte que no se deben a la venta de pasajes suman del 30 al 50 por ciento del total. En ambas ciudades, los ingresos operativos por la gestión de propiedades están cobrando más importancia que las ganancias obtenidas de los emprendimientos en sí, y proporcionan una fuente de ingresos sustentable.

Tributación del desarrollo inmobiliario. Los intentos de tributar la valorización de las propiedades en el Reino Unido comenzaron en 1909, pero su implementación se vio obstruida por problemas de valuación y otros desafíos. Las contribuciones directas de valorización fueron reemplazadas por contratos con las autoridades locales, donde los emprendedores contribuyen al suministro de infraestructura y servicios, viviendas de interés social y otras obligaciones de planeamiento. Estos contratos se están convirtiendo poco a poco en contribuciones de infraestructura comunitaria, que es una contribución de valorización obtenida por otros medios. Siguiendo una trayectoria histórica distinta, Francia también ha establecido un impuesto de infraestructura local a los nuevos emprendimientos.

Consorcios de suelos. India ha experimentado con los consorcios de suelos para implementar sus nuevos planes de urbanización que reemplazan a los viejos planes de ordenamiento territorial. Esta práctica alienta a los dueños de suelos sin desarrollar, o desarrollados en forma precaria, a que agrupen sus predios y luego reciban una parcela con servicios de infraestructura o un espacio construido cuando el emprendimiento se haya completado. La estrategia adoptada en Ahmedabad usa el 15 por ciento de los suelos para caminos, el 10 por ciento para parques, el 15 por ciento para subastar a terceras partes y el 60 por ciento para los miembros del consorcio.

La experiencia de los Estados Unidos

Algunas de las políticas específicas de recuperación de plusvalías en los Estados Unidos incluyen áreas de tributación especial con cargos por valorización. Por ejemplo, los Distritos de Establecimientos Comunitarios (Community Facilities Districts, o distritos Mello-Roos) destinan aranceles pagados por los residentes al pago de bonos vendidos para financiar el desarrollo de infraestructura. Los Distritos de Mejoras Comerciales (Business Improvement Districts) y el Financiamiento por Incremento de Impuestos (Tax Increment Finance) usan ingresos tributarios o arancelarios separados para financiar mejoras urbanas en áreas designadas al efecto. Los Acuerdos de Beneficios Comunitarios (Community Benefit Agreements), que se negocian en forma privada, obligan a los emprendedores a proporcionar instalaciones comunitarias o beneficios económicos a los residentes locales. Los aranceles municipales de desarrollo e impacto inmobiliario, que se utilizan para financiar obras de infraestructura y otras inversiones relacionadas con los emprendimientos, se basan en general en los costos de dichas inversiones, pero sólo generan ingresos cuando la plusvalía excede el costo.

Lo más notable de la experiencia norteamericana es que los términos en sí —contribuciones de valorización o recuperación de plusvalías— raramente se mencionan, si bien los principios se aplican con regularidad. Sin embargo, este país puede aprender lecciones de las nuevas estrategias de recuperación de plusvalías adoptadas internacionalmente.

Las actas de la conferencia, con artículos y comentarios de más de 25 contribuyentes, serán publicadas en mayo de 2012.

Desde la primera reforma económica ocurrida en 1978 hasta la liberalización de inversiones extranjeras y el desarrollo del sector privado que se dio entre mediados de la década de 1980 hasta la actualidad, las principales reformas económicas de China han tenido como prioridad lograr una alta tasa de crecimiento económico. Estas políticas funcionaron tan bien que el PIB per cápita en dólares constantes en China aumentó cerca de un 10 por ciento anual de 1980 a 2010. Este rendimiento en el crecimiento no tiene precedentes en un país de grandes dimensiones, pero ha sido acompañado por incontables costos, tales como la transformación estructural de la economía, el ajuste social y las migraciones y la degradación medioambiental. En un nuevo libro del Instituto Lincoln titulado China’s Environmental Policy and Urban Development (La política medioambiental y el desarrollo urbano en China), editado por Joyce Yanyun Man, se trata el último de estos temas. Según este libro, de acuerdo con las estimaciones realizadas por agencias gubernamentales, los costos medioambientales sin documentar asociados a la producción económica fueron del 9,7 por ciento del PIB en 1999 al 3 por ciento en 2004.

El crecimiento económico en países de bajos ingresos por lo general viene acompañado de costos medioambientales. Este trueque se ve plasmado en la “curva medioambiental de Kuznets”, según la cual la calidad medioambiental se deteriora con el crecimiento económico en los niveles de bajos ingresos y luego mejora con el crecimiento económico en los niveles de ingresos más altos. Según lo indicado en este libro, las estimaciones de la curva medioambiental de Kuznets para las ciudades chinas entre 1997 y 2007 muestran que, durante dicho período, los índices de contaminación industrial en China se redujeron a medida que aumentaron los ingresos, lo que indica que las ciudades con ingresos más altos experimentaron mejoras en estos índices de calidad medioambiental conforme aumentaron sus ingresos.

Varios de los autores de los capítulos de este libro afirman que las políticas medioambientales de China y su rendimiento se encuentran en una etapa de transición. Los indicadores medioambientales están mejorando en respuesta a las nuevas políticas y reglamentaciones, mientras que el crecimiento económico continúa. Al mismo tiempo, China también ha sufrido reveses en este sentido. Por ejemplo, ciertos eventos de gravedad extrema, como la combinación de un clima extremadamente frío con inversiones atmosféricas que se dio este invierno en Beijing, produjeron niveles muy altos de concentraciones de partículas en dicha ciudad.

La lógica detrás de la curva medioambiental de Kuznets implica diferentes elementos, tanto de demanda como de oferta. En cuanto a la demanda, las poblaciones con ingresos más altos demuestran apreciar cada vez más los servicios que tienen que ver con el medio ambiente, por lo que defienden las mejoras medioambientales. Con respecto a la oferta, las inversiones en nuevas capacidades hacen uso de equipos modernos con procesos que respetan el medio ambiente y tecnologías de control más accesibles económicamente. Las últimas mejoras medioambientales en China también derivan del fortalecimiento de los entes de regulación ambiental. En 1982, la función que tenía la Agencia de Protección Medioambiental era principalmente de asesoramiento. No obstante, en 1988 se transformó en una agencia nacional; en 1998 se convirtió en un ente más independiente, la Agencia Estatal de Protección Medioambiental; y posteriormente, en 2008, se elevó la jerarquía del ente para convertirse en el Ministerio de Protección Ambiental.

La creciente influencia de las agencias de protección medioambiental centrales se vio acompañada por un cambio en el estilo de las reglamentaciones. El antiguo énfasis que se daba a las normas de orden y control (tales como las normas sobre emisiones) se reemplazó en forma parcial por instrumentos basados en incentivos económicos (tales como los impuestos sobre insumos y el nuevo impuesto sobre emisiones de carbono). Según las investigaciones realizadas, a la fecha la aplicación de las normas de orden y control ha arrojado mejores resultados.

Mientras que las agencias centrales establecieron normas nacionales, la responsabilidad de monitorear y velar por el cumplimiento de dichas normas se descentralizó en gran medida hacia las agencias medioambientales municipales o metropolitanas. El rendimiento de los gerentes municipales se revisa todos los años según criterios que hacen hincapié en el crecimiento económico. Otras mejoras en los resultados medioambientales pueden darse solamente cuando dichos criterios dan un mayor peso a las mejoras medioambientales. Por ejemplo, como consecuencia de haber incluido la reducción de las emisiones de sulfuro como criterio de rendimiento anual, se produjo un rápido aumento en el control de las emisiones de dióxido de sulfuro de las centrales de energía.

Aun cuando a China le resta mucho por hacer para reducir la contaminación del aire urbano, limpiar los ríos y lagos y mejorar la eficiencia en el uso de la energía, estos objetivos están cobrando mucha más importancia para los ciudadanos. La creciente disponibilidad de datos relacionados con los indicadores medioambientales está promoviendo un diálogo nacional respecto de la calidad medioambiental. El nuevo libro de la profesora Man representa un aporte a este diálogo, ya que informa sobre el progreso realizado, identifica los desafíos inmediatos y evalúa las nuevas políticas y enfoques normativos para las mejoras medioambientales.

In the wake of the housing market collapse and the Great Recession—which caused a substantial increase in residential foreclosures and often precipitous declines in home prices that likely led to additional foreclosures—many observers speculated that local governments would consequently suffer significant property tax revenue losses. While anecdotal evidence suggests that foreclosures, especially when spatially concentrated, lowered housing prices and property tax revenue, the existing body of research provides no empirical evidence to support this conclusion (box 1). Drawing on proprietary foreclosure data from RealtyTrac—which provides annual foreclosures by zip code for the period 2006 through 2011 (a period that both precedes and follows the Great Recession)—this report is the first to examine the impacts of foreclosures on local government property tax values and revenues. After presenting information on the correlation between foreclosures and housing prices nationwide, we shift focus to Georgia in order to explore how foreclosures affected property values and property tax revenue across school districts throughout the state. Our empirical analysis indicates that, indeed, foreclosures likely diminished property values and property tax revenues. While still preliminary, these findings suggest that foreclosures had a range of effects on the fiscal systems of local governments.

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Box 1: Existing Research into the Impacts of Economic Factors on Property Tax Revenues

While there is existing research examining the various impacts of economic factors on property tax revenues, these studies use data that reflect only a previous recession (e.g., the 2001 recession) or that cover only the very start of the housing crisis in the Great Recession. Doerner and Ihlanfeldt (2010), for example, focus directly on the effects of house prices on local government revenues, using detailed panel data on Florida home prices during the 2000s. They conclude that changes in the real price of Florida single-family housing had an asymmetric effect on government revenues. Price increases do not raise real per capita revenues, but price decreases tend to dampen them. Doerner and Ihlanfeldt also find that asymmetric responses are due largely to caps on assessment increases, positive or negative lags between changes in market prices and assessed values, and decreased millage rates in response to increased home prices. Alm, Buschman, and Sjoquist (2011) document the overall trends in property tax revenues in the United States from 1998 through 2009—when local governments, on average, were largely able to avoid the significant and negative budgetary impacts sustained by state and federal governments, at least through 2009, although there was substantial regional variation in these effects. Alm, Buschman, and Sjoquist (2009) also examine the relation between education expenditures and property tax revenues for the 1990 to 2006 period. In related work, Alm and Sjoquist (2009) examine the impact of other economic factors on Georgia school district finances such as state responses to local school district conditions. Finally, Jaconetty (2011) examined the legal issues surrounding foreclosures, and the MacArthur Foundation has funded a project on foreclosures in Cook County, Illinois.

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Potential Links between Housing Prices, Foreclosures, and Property Values

Local governments in the United States rely on various own-source revenues, including local income, property, and general sales taxes and specific excise taxes, fees, and user charges. Of these, the dominant source is by far the property tax. In 2011, local property taxes accounted for roughly three-fourths of total local government tax revenues and for nearly one-half of total local own-source revenues (including fees and charges).

Some local taxes, such as income and sales taxes, have bases that vary closely with the levels of economic activity, and the Great Recession seriously depressed revenues from such taxes. The basis of the property tax is assessed value, which does not automatically change in response to economic conditions; in the absence of a formal and deliberate change in assessment, a decrease in the market value does not necessarily translate into a decrease in assessed value. Assessment caps, lags in reassessments, and the ability to make deliberate changes in millage or property tax rates combine so that economic fluctuations that influence housing values may not affect the property tax base or property tax revenues in any immediate or obvious way. Over time, however, assessed values tend to reflect market values, and property tax revenues also come under pressure.

A weakened housing market—with lower housing values and more foreclosures—may reduce local government tax revenues from several sources (Anderson, 2010; Boyd, 2010; Lutz, Molloy, and Shan, 2010), including real estate transfer taxes, sales taxes on home construction materials, and income taxes from workers in the housing construction and home furnishings industries. Because property tax revenues are such a large share of local tax revenue, however, changes in property tax revenues are often larger than the changes from these other housing-related taxes.

Foreclosure Activities Nationwide During and After the Great Recession

Figure 1 (p. 24) presents the total nationwide numbers of foreclosures at the 5-digit zip code level as a share of the number of owner-occupied homes in 2010. This figure demonstrates the clear geographic concentration of foreclosures. Arizona, California, and Florida were especially hard hit by the collapse of the housing bubble. However, other areas also experienced significant foreclosure activity.

The Federal Housing Finance Agency (FHFA) produces a housing price index for each metropolitan statistical area (MSA). We matched the RealtyTrac foreclosure data to the FHFA housing price index for 352 metropolitan statistical areas. Figure 2 (p. 24) presents a simple scatterplot that relates total foreclosures over the years 2006 to 2011 as a share of the number of owner-occupied housing units in 2010, to the change in the housing price index over the period 2007 to 2012 for all 352 metropolitan areas. The simple correlation coefficient between foreclosures per owner-occupied housing units and the change in housing price index is -0.556; if we consider only those MSAs with non-zero foreclosures over the period, the correlation coefficient is -0.739. This simple analysis suggests that foreclosures have a significant negative relation with housing values. The next step is to explore the effect of foreclosures on the property tax base and on property tax revenues. In the next section, we examine this issue for the state of Georgia.

More Detailed Analysis: Foreclosures, Property Values, and Property Tax Revenues in Georgia

By examining the effect of foreclosures on property values and property tax revenues in a single state, we eliminated the need to control for the many ways in which institutional factors may differ across states. Georgia is a suitable focal point because in many ways it is roughly an “average” state. For example, local governments in Georgia rely on property taxes only slightly less than the national average; in 2008, property tax revenue as a share of total taxes for local governments was 65.1 percent in Georgia compared to 72.3 percent of the U.S. (Bourdeaux and Jun 2011).

We measure foreclosure activity with the Realty-Trac data, aggregating zip code observations into the corresponding counties. The Georgia Department of Revenue supplied the annual property tax base (referred to as “net digest” in Georgia) and property tax rates. Property tax and total local source revenues for school districts came from the Georgia Department of Education. The tax base is as of January 1 of the respective year. The property tax rate is set in the spring with tax bills being paid in the fall, the revenue from which would be reported in the following fiscal year. School districts are on a July 1 to June 30 fiscal year, so the 2009 tax base and millage rates, for example, would be reflected in revenues for fiscal year 2010. We also use various demographic and economic data (income, employment, and population) measured at the county level to help explain changes in the base. Because these variables are at a county level, for the analysis that follows, we added the property tax base and revenue variables for city school districts to those for the county school systems in each city’s county to obtain countywide totals for 159 counties. For counties that include all or part of a city school system, the tax rate is the average of the county and city school tax rates, weighted by the respective property tax base.

Only county governments conduct property tax assessment in Georgia, but the state evaluates all property tax bases annually, comparing actual sales of improved parcels during the year to assessed values, and determining if the assessment level is appropriate relative to fair market value, which is legally set at 40 percent. The resulting “sales ratio studies” report an adjusted 100 percent property tax base figure for each school district in the state, along with the calculated ratio. We use these adjusted property tax bases, covering the periods 2000 through 2011, to measure the market value of residential property.

Georgia has very few institutional property tax limitations. School district boards can generally set their property tax rates without voter approval, which is required only if the property tax rate for a county school district exceeds 20 mills. Currently, the cap is binding on only five school systems. Also, there is no general assessment limitation, although one county has an assessment freeze on homesteaded property. In 2009, the State of Georgia imposed a temporary freeze on assessments across the state, potentially affecting property tax revenue only in school year/fiscal year 2010; however, with net and adjusted property tax bases declining on a per capita basis for most counties in 2009 through 2011, it is unlikely that the freeze has constrained assessments.

Foreclosures

Table 1 provides the statewide mean and median number of foreclosures by zip code for 2006 through 2011. Total foreclosures almost doubled between 2006 and 2010, before declining in 2011. The mean number of foreclosures is much larger than the median, implying that the distribution is highly skewed.

Table 2 shows the distribution of Georgia zip codes by the number of years that the zip code had non-zero foreclosures. Over 65 percent of the zip codes had foreclosures in each of the six years, while only 7 percent had no foreclosures in all six years. This distribution suggests that very little of the state was immune to the foreclosure crisis.

Figure 3 (p. 25) shows the distribution of foreclosures across the state over the period 2006 through 2011. Because zip codes differ in size and housing density, we also map the number of foreclosures per owner-occupied housing units for 2010 in figure 4 (p. 25). Note that zip codes marked in white either have no foreclosures or are missing foreclosure data. As one would expect, urban and suburban counties (particularly in the Atlanta metropolitan area) have the most foreclosures. However, there are large numbers of foreclosures in many of the less urban zip codes as well.

Figure 5 shows the annual distribution of foreclosures per hundred housing units in each of Georgia’s 159 counties. Note that the bar in the box represents the median value, the box captures the observations in the second and third quartile, the “whiskers” equal 1.5 times the difference between the twenty-fifth and seventy-fifth percentiles, and the dots are extreme values. The median number of foreclosures by county increased from 0.17 per 100 housing units in 2006 to 1.18 per 100 units in 2010—more than a sixfold increase in the median. There is a high positive correlation between foreclosure activity in 2006 and 2011 across the counties. This correlation is 0.78 when measured relative to housing units and 0.74 when measured on a per capita basis, indicating that counties with above (below) average foreclosure activity before the housing crisis remained above (below) average at its peak.

Property Values

As for changes in property values, figures 6 and 7 show the distributions of annual changes, respectively, in the per capita net property tax base and in the per capita adjusted 100 percent property tax base across the 159 counties from 2001 through 2011. Studies suggest that foreclosures may have spillover effects on the market values of other properties in the jurisdiction (Frame, 2010). We attempt to estimate the effect of foreclosures on market values as measured by the adjusted 100 percent property tax base.

Our results are preliminary, in that the analysis included only Georgia data. Even so, they suggest significant negative effects of foreclosures on property values, controlling for year-to-year percent changes in income, employment, and population. The coefficient estimates on the foreclosures variable suggest that a marginal increase of one foreclosure per 100 homes (or approximately the increase in median foreclosures from 2006 to 2011) is associated with a roughly 3 percent decline in the adjusted 100 percent property tax base over each of the two following years. Similarly, an increase of one foreclosure per 1,000 population is associated with nearly a 1 percent decline in the adjusted 100 percent property tax base after one year, and a slightly lower percent decline in the following year.

Property Tax Revenues

We also explore the effect of foreclosures on property tax revenues. Figure 8 (p. 27) depicts the distribution of nominal changes by county in total maintenance and operations property tax revenues since 2001, showing considerable variation across the school systems in the annual changes in property tax revenues. Even in the latest three years of declining property values, at least half the counties annually realized positive nominal growth in property tax revenue. To understand the effect of foreclosure activity on local government property revenues, we estimate regressions that relate foreclosures to property tax levies and to actual property tax revenues.

We find that a rise in foreclosures is associated with a reduction in the levy, after controlling for changes in the property tax base as well as fluctuations in income, employment, and population. An increase of one foreclosure per 100 housing units is associated with about a 1.5 percent subsequent decline in the levy, all else held constant. We also find that foreclosures have a negative impact on revenues, all else constant. Like our earlier estimates, these results are for Georgia only, but they indicate a significant negative relationship between foreclosures and local government property tax levies and revenues. It may be that higher foreclosure activity makes local officials hesitant to raise property tax rates to offset the effect of foreclosures on the tax base.

Conclusions

How have foreclosures driven by the Great Recession affected property values and property tax revenues of local governments? Our results suggest that foreclosures have had a significant negative impact on property values, and, through this channel, a similar effect on property tax revenues, at least in the state of Georgia. Our results also suggest additional effects on levies and revenues after controlling for changes in the tax base. Further work is required to see whether these results extend to other states.

About the Authors

James Alm is a professor and chair of the department of economics at Tulane University.

Robert D. Buschman is a senior research associate with the Fiscal Research Center in the Andrew Young School of Policy Studies at Georgia State University.

David L. Sjoquist is a professor and holder of the Dan E. Sweat Chair in Educational and Community Policy in the Andrew Young School of Policy Studies.

Resources

Alm, James and David L. Sjoquist. 2009. The Response of Local School Systems in Georgia to Fiscal and Economic Conditions. Journal of Education Finance 35(1): 60–84.

Alm, James, Robert D. Buschman, and David L. Sjoquist. 2009. Economic Conditions and State and Local Education Revenue. Public Budgeting & Finance 29(3): 28–51.

Alm, James, Robert D. Buschman, and David L. Sjoquist. 2011. Rethinking Local Government Reliance on the Property Tax. Regional Science and Urban Economics 41(4): 320–331.

Anderson, John E. 2010. Shocks to the Property Tax Base and Implications for Local Public Finance. Paper presented at the Urban Institute-Brookings Institution Tax Policy Center and the Lincoln Institute of Land Policy Conference, “Effects of the Housing Crisis on State and Local Governments,” Washington, D.C. (May).

Bourdeaux, Carolyn and Sungman Jun. 2011. Comparing Georgia’s Revenue Portfolio to Regional and National Peers. Report No. 222. Atlanta, GA: Fiscal Research Center, Andrew Young School of Policy Studies, Georgia State University.

Boyd, Donald J. 2010. Recession, Recovery, and State and Local Finances. Paper presented at the Urban Institute-Brookings Institution Tax Policy Center and the Lincoln Institute of Land Policy Conference, “Effects of the Housing Crisis on State and Local Governments,” Washington, D.C. (May).

Doerner, William M. and Keith R. Ihlanfeldt. 2010. House Prices and Local Government Revenues. Paper presented at the Urban Institute-Brookings Institution Tax Policy Center and the Lincoln Institute of Land Policy Conference, “Effects of the Housing Crisis on State and Local Governments,” Washington, D.C. (May).

Frame, W. Scott. 2010. Estimating the Effect of Mortgage Foreclosures on Nearby Property Values: A Critical Review of the Literature. Economic Review 95(3): 1–9.

Jaconetty, Thomas A. 2011. How Do Foreclosures Affect Real Property Tax Valuation? And What Can We Do About It?” Working paper presented at National Conference of State Tax Judges, Lincoln Institute of Land Policy, Cambridge, MA (September).

Lutz, Byron, Raven Molloy, and Hui Shan. 2010. The Housing Crisis and State and Local Government Tax Revenue: Five Channels. Paper presented at the Urban Institute-Brookings Institution Tax Policy Center and the Lincoln Institute of Land Policy Conference, “Effects of the Housing Crisis on State and Local Governments,” Washington, DC (May).

Antes de incorporarme al Instituto lincoln de Políticas de Suelo, tuve la responsabilidad de hacer el seguimiento de la ciudad de detroit para la fundación ford durante casi una década. Allí pude ser testigo de primera mano de los desafíos sin precedentes que implicaba la tarea de revertir la suerte de la que fue la ciudad más poderosa e importante de los Estados Unidos de mediados del siglo XX. La magnitud de estos desafíos requirió la coalición de algunos de los mejores y más brillantes reconstructores de comunidades con los que he tenido el privilegio de trabajar. La calidad y el compromiso de este enérgico grupo de funcionarios públicos, líderes cívicos y comunitarios y visionarios del sector privado ayudaron a Detroit a recuperar un futuro brillante.

Uno de los proyectos distintivos llevados a cabo por esta asociación filantrópica pública y privada fue la planificación, la construcción y el financiamiento de la primera inversión de Detroit en obras de transporte público durante más de cinco décadas: el ferrocarril M1, que se inauguró en julio de 2014 gracias a una inversión de fondos privados combinados de más de US$100 millones. El liderazgo de este proyecto no sólo construyó una línea simbólica de ferrocarril liviano de 5,3 kilómetros a lo largo de la avenida Woodward, el eje de la ciudad, sino que también aprovechó la inversión privada para garantizar el compromiso del gobierno estatal y el gobierno federal de crear la primera autoridad para el transporte de la región.

Algunos filántropos líderes a nivel municipal y nacional también recaudaron más de US$125 millones para lanzar la Nueva Iniciativa Económica, un proyecto de 10 años destinado a revitalizar el ecosistema empresarial en la región a través de la incubación estratégica de cientos de nuevos negocios, miles de empleos nuevos y una duradera colaboración a largo plazo entre empleadores y desarrolladores de la fuerza laboral. Además, en lo que podría considerarse como el proyecto colectivo más controvertido y heroico de esta Iniciativa, estos filántropos trabajaron junto con el estado de Michigan para recaudar más de US$800 millones para The Grand Bargain (El gran pacto), mediante el cual no sólo se salvó la legendaria colección del Instituto de Artes de Detroit de la subasta, sino también las futuras pensiones de los funcionarios públicos de Detroit.

Increíblemente, mientras los empresarios sociales hacían lo imposible por recaudar cientos de millones de dólares para ayudar a Detroit, supuestamente la ciudad devolvía al gobierno federal sumas similares en concepto de subvenciones de fórmula no utilizadas. Una ciudad con más de 100.000 propiedades vacantes y abandonadas e índices de desempleo cercanos al 30 por ciento no lograba encontrar una manera de utilizar las subvenciones de las que disponía libremente: sólo debía solicitarlas y monitorear su uso. Los funcionarios públicos de la atribulada Detroit, que se vieron diezmados debido a la pérdida de población y a la insolvencia fiscal de la ciudad, no tenían la capacidad ni los sistemas para gestionar de manera responsable las normas sobre subvenciones federales ni para cumplirlas. Y, en este sentido, Detroit no es muy diferente a otras ciudades industriales históricas u otros lugares con problemas fiscales.

En un informe de marzo de 2015 elaborado por la Oficina de Rendición de Cuentas Gubernamental, denominado “Municipalities in Fiscal Crisis” (Municipios en crisis fiscal) (GAO-15-222), se analizaban cuatro ciudades que se habían declarado en quiebra (Camden, Nueva Jersey; Detroit, Michigan; Flint, Michigan; y Stockton, California), y se llegaba a la conclusión de que la incapacidad de estas ciudades para utilizar y gestionar las subvenciones federales se debía a una inadecuada capacidad del capital humano, a las reducciones de personal, a una capacidad financiera reducida y a sistemas de tecnología informática desactualizados. Los autores del informe también se lamentaban de que estas ciudades no sólo eran incapaces de utilizar las subvenciones de fórmula (por ejemplo, los subsidios en bloque para el desarrollo comunitario que se distribuyen de acuerdo con criterios objetivos, tales como el tamaño de la población o las necesidades de la comunidad), sino que también se privaban repetidamente de solicitar fondos competitivos. En un análisis independiente del año 2012, llevado a cabo por el senador Tom Coburn (Republicano de Oklahoma) y denominado “Money for Nothing” (Dinero para nada), se detectaba una suma de aproximadamente US$70 mil millones en fondos federales que no se utilizaron “debido a leyes mal redactadas, obstáculos burocráticos y mala administración, así como también a una falta generalizada de interés o de demandas por parte de las comunidades a las cuales se habían asignado los fondos”.

¿Cómo puede ser que las ciudades más necesitadas sean incapaces de utilizar la ayuda que tienen a su disposición? No es de sorprender que una ciudad como Detroit, que perdió casi dos tercios de su población en seis décadas, viera una reducción de personal y una disminución de las capacidades de los empleados en las oficinas municipales. Tampoco no es de sorprender que Detroit no tuviera sistemas de tecnología informática actualizados. Cuando un municipio enfrenta problemas fiscales, la infraestructura siempre queda en el último lugar. La incapacidad de utilizar los fondos asignados probablemente no es un pecado de comisión sino una lamentable omisión mucho más profunda que debe solucionarse. Pero ¿dónde comenzamos? Veamos lo que nos dicen los datos. ¿Qué programas de subvenciones de fórmula tienen el menor rendimiento? ¿Cuáles son las ciudades con el peor aprovechamiento? Sin lugar a dudas, no lo sabemos. Y si las agencias federales saben cuáles son los programas y las ciudades que se encuentran en las listas de los mejores y peores, evidentemente no están informando de ello. Además, la mayoría de los ciudadanos en Detroit, que soportan una de las tasas más altas del impuesto sobre la propiedad del país, no saben que su ciudad está desaprovechando millones de dólares en subvenciones federales cada año.

El verano pasado, sin bombo ni platillo pero con gran ambición, el Instituto Lincoln lanzó una campaña mundial para promover la salud fiscal municipal. Esta campaña centra su atención en varios factores que impulsan la salud fiscal municipal, entre los que se incluye el papel que desempeñan los impuestos sobre el suelo y la propiedad con el fin de brindar una base de recaudación estable y segura. En este número de Land Lines, analizamos algunas maneras en que las ciudades y regiones están desarrollando nuevas capacidades (tales como un monitoreo fiscal confiable y una administración transparente de los recursos públicos; comunicación y coordinación efectivas entre el gobierno federal y los gobiernos municipales, de los condados y de los estados; etc.) para superar las barreras económicas y medioambientales más importantes. Analizamos la forma en que las ciudades están mirando dentro y fuera de sus límites para obtener ayuda de otras fuentes. Esperemos que estas historias nos inspiren a trabajar para encontrar formas más amplias, más profundas y más creativas de progresar juntos, en lugar de luchar en soledad.

Dos herramientas tecnológicas que presentamos en este número están modificando la forma en que se organiza y se comparte la información financiera municipal. Estas herramientas permiten a los ciudadanos y al electorado pedir la rendición de cuentas a sus líderes comunitarios y asegurarse de que, una vez que se accione el interruptor de la ayuda económica, se complete el circuito. PolicyMap (pág. 18) se fundó con el objetivo de fundamentar la toma de decisiones públicas basada en datos. Los investigadores de PolicyMap han organizado docenas de bases de datos públicas y han desarrollado una sólida interfaz en la que los usuarios pueden visualizar los datos en mapas. Esta herramienta contiene miles de indicadores que rastrean el uso de los fondos públicos y el impacto que tienen. La ciudad de Arlington, Massachusetts, ha desmitificado sus finanzas municipales mediante el Presupuesto Visual (pág. 5), un programa de código abierto que ayuda a los ciudadanos a entender en qué se gastan los impuestos que pagan. Tanto PolicyMap como el Presupuesto Visual tienen el potencial de rastrear todas las fuentes de ingresos y gastos de una ciudad y hacer que la administración sea transparente para los contribuyentes. Para aquellas ciudades o agencias federales que desean divulgar este tipo de información, estos emprendimientos sociales están listos para rastrear e informar del uso (o la falta de uso) de los fondos públicos.

La alineación vertical de varios niveles gubernamentales para lograr la meta de salud fiscal municipal no sólo es una solución en este país. Nuestra entrevista con Zhi Liu (pág. 30) contiene información sobre las medidas tomadas por el gobierno central de la República Popular China para desarrollar una base de recaudación estable en cada gobierno municipal a través de la promulgación de una ley del impuesto sobre la propiedad; esta medida ayudará a los gobiernos municipales a sobrevivir a las arenas movedizas de la reforma del suelo.

En nuestro informe sobre Working Cities Challenge (Desafíos para Ciudades en Funcionamiento) (pág. 25), los investigadores del Banco de la Reserva Federal de Boston identifican lo que posiblemente es la capacidad más importante para promover no sólo la salud fiscal municipal sino también ciudades prósperas, sustentables y resilientes: el liderazgo. El liderazgo —que puede provenir de funcionarios públicos visionarios, emprendedores cívicos audaces o implacables académicos peripatéticos— está en la esencia de otros casos inspiradores que analizamos en este número. Los líderes en Chattanooga (pág. 8) hicieron una apuesta fuerte por la infraestructura (servicio de Internet de altísima velocidad a bajo costo, proporcionado a través de una red municipal de fibra óptica) con el fin de ayudar a la ciudad a pasar de ser una ciudad industrial retrógrada y contaminada a un centro tecnológico moderno y limpio. Y funciona.

Super Ditch (pág. 10) es otro ejemplo de cómo varios gobiernos pueden trabajar junto con el sector privado con el fin de encontrar soluciones creativas para los desafíos conjuntos. Super Ditch está innovando la gestión del agua urbana y agropecuaria a través de nuevos acuerdos entre el sector público y el sector privado que detienen las antiguas estrategias de “buy-and-dry” (comprar y secar) practicadas por las ciudades con escasez de agua y continúan supliendo la demanda municipal de agua sin despojar a las principales tierras de cultivo de este recurso.

Antes de que nos hallemos inmersos en una interminable polémica partidista acerca de si los gobiernos nacionales deberían rescatar a las ciudades en quiebra, tal vez deberíamos encontrar una forma de garantizar que, en primer lugar, estas ciudades no lleguen a la quiebra, mediante el uso de la ayuda que ya hemos prometido. Sólo un sádico o un cínico pondría intencionalmente estos recursos a la vista pero fuera del alcance de las personas o ciudades necesitadas. Si invertimos sólo una fracción de los fondos no utilizados con el fin de desarrollar las capacidades municipales adecuadas, las comunidades podrán solucionar sus propios problemas. Ya sea mediante una asociación filantrópica pública y privada, una herramienta tecnológica innovadora o una nueva forma de cooperación entre los gobiernos y el sector privado, los emprendedores sociales están ampliando la inventiva humana para ayudarnos a superar el mayor desafío que enfrentamos: encontrar nuevas formas de trabajar juntos para no perecer en soledad.

Thomas J. Nechyba is professor of economics at Duke University in Durham, North Carolina, where he also serves as director of undergraduate studies for the Department of Economics. In addition, he is a research associate at the National Bureau of Economic Research, and he serves as associate editor for the American Economic Review and the Journal of Public Economic Theory. His research and teaching focus on the field of public economics, in particular primary and secondary education, federalism and the function of local governments, and public policy issues relating to disadvantaged families.

Professor Nechyba has lectured and taught in courses at the Lincoln Institute for several years, and he recently completed a working paper based on Institute-supported research, “Prospects for Land Rent Taxes in State and Local Tax Reform.” This conversation with Joan Youngman, senior fellow and chairman of the Institute’s Department of Valuation and Taxation, explores his interest in land taxation and his research findings.

Joan Youngman: How is a land tax different from a conventional property tax?

Thomas Nechyba: It’s really a question of tax efficiency. Any tax has two effects, which economists call the income and substitution effects. The income effect of a tax is the change in the choices made by the taxpayer because payment of the tax has reduced the taxpayer’s real income. The substitution effect arises because the very existence of the tax changes the relative prices of the taxed goods, and therefore gives an incentive to taxpayers to substitute non-taxed goods for taxed goods. The income effect does not give rise to any efficiency problems; it simply implies that some resources are transferred from taxpayers to the government, and we hope the government will do something useful with the money. But, the change in behavior from the substitution effect causes an economic distortion that does not benefit anyone. That is, when the higher price of a taxed good causes me to substitute to a different non-taxed good purely because of the distorted prices, then I am worse off and the government gets no revenue. This is the source of the loss of economic efficiency from taxation, because people are worse off than they were previously, and by a larger amount than the tax collections themselves. This phenomenon is sometimes called a deadweight loss.

Once I asked my students to react to the following statement on an exam: “People hate taxes because of income effects, but economists hate taxes because of substitution effects.” One student wrote that it was undeniably true because it showed that economists aren’t people! Well, I think at least some economists are also people. However, it is true that people dislike taxes primarily because they don’t like paying money to the government. Economists especially dislike those taxes that cause greater deadweight losses, i.e., taxes that have greater substitution effects.

A land tax is a very unusual tax. It does not carry this deadweight loss because it does not give rise to a substitution effect. No one can make a decision to produce more land or less land, and the fact that land is taxed will not distort economic decisions. If we think of the price of land as the discounted present value of future land rents, a tax that reduces expected future rents will cause the price of land to drop. But the total cost of the land, which is the purchase price plus the tax, remains unchanged. Those who are considering the purchase of land therefore face the same cost before and after the tax: before the tax, they simply pay a single price up front; after the tax, they pay a lower price up front but they know they will also have to pay all the future taxes. There is no substitution effect, only an income effect for those who currently own land, because now they can sell it for less than before. Property taxes that tax both land and buildings, on the other hand, do give rise to substitution effects because they distort the cost of making improvements to the property.

A revenue-neutral shift to land value taxation would reduce other, distortionary taxes. A shift to a more efficient tax can improve economic welfare without a loss in tax collections. This much is well known. What is not well known is the magnitude of this benefit and of the cost to landowners in terms of lower land prices. Conventional wisdom predicts that a shift to an efficient land tax would increase income and output but reduce land prices. This kind of general statement isn’t much help to policy makers. If one is suggesting major changes in a tax system, policy makers need to know whether the benefits and the costs are going to be large or small. My recent Lincoln Institute working paper, “Prospects for Land Rent Taxes in State and Local Tax Reform,” constructs a model of state economies in the U.S. to help us think about the effects of such changes.

JY: How did you become interested in developing an economic model for land taxation?

TN: A few years ago, Dick Netzer, professor of economics and public administration at New York University, suggested that I look at the implications for the U.S. economy of replacing capital taxes with land value taxes. Most economists know of the Henry George Theorem and recognize that land taxation is efficient, but they associate his ideas with nineteenth-century economic thought. We assume that all the changes in the economy since then, and changes in the economic role of land, have left these ideas inapplicable to contemporary tax systems. So I was quite surprised that my model indicated that substituting a land value tax for capital taxes on a national level would not only be efficient, as expected, but would actually raise the value of many types of land. However, property taxes are state and local taxes, and the U.S. constitution places special impediments to a national property tax, so a land tax would not be possible on a national level. Further, since each state economy is different, the results of substituting land value taxes for other taxes will also vary from state to state.

JY: How can a tax on land increase land prices?

TN: In and of itself, a tax on land does not increase land prices; it actually reduces land prices, because it reduces the discounted present value of land rents. My research does not consider a land value tax in isolation, but as part of a revenue-neutral tax reform that replaces other, distortionary taxes with a land value tax. Lower taxes on capital will increase capital usage, and more intensive use of capital will raise land prices. For example, if constructing a building becomes more profitable because the tax on the building is lowered or eliminated, an investor may be willing to pay a higher price for its components, including the land.

JY: How did you go about estimating the magnitude of these effects?

TN: I developed a general equilibrium model of an economy that uses land, man-made capital and labor in production. A general equilibrium model is one that examines how changes in one kind of market affect all other markets. This model is then applied to different states, as well as to one hypothetical “average” state, to see how various tax reforms that substitute land value taxes for taxes on capital or labor would affect prices and production. The division of capital into land and man-made capital is a departure from standard analysis, which generally looks at capital as a single category.

One critical element is the elasticity of substitution among these factors; that is, the ease with which one can be substituted for another. Technically, it is the percentage change in one factor that results from a 1 percent change in the other. This is the key to efficiency gains from reducing the tax on man-made capital and on labor and increasing the tax on land. A lower tax on man-made capital will increase the use of that capital, which in turn will produce greater output and more hiring of labor. The easier it is to substitute man-made capital and labor for land, the greater the benefit from a switch to land value taxation.

JY: Where do the elasticity numbers come from?

TN: I use a range of estimates drawn from the economic literature. For example, most studies of the substitution between capital and land give elasticity estimates between 0.36 and 1.13. My paper uses the relatively conservative estimates of 0.75, 0.5 and 0.25 as high, medium and low values, and looks at the result under each assumption. This number is then adjusted to reflect the amount of land in the state devoted to farming, on the assumption that farmland is less easily substituted for capital in the production process. I also ask similar questions with regard to substitution between land and labor.

The elasticities of the actual supplies of man-made capital and labor are also crucial. If taxes on them are reduced, how much extra capital and labor will be available as a result of the increased after-tax return? Often in studies of this sort we make what is called a “small open economy assumption.” We assume that the economy we are looking at is small in relation to the rest of the world, and that capital and labor flow freely into and out of the jurisdiction. In that case, the elasticity of supply is infinite. The opposite extreme would be an economy with the equivalent of closed borders, where no capital could enter or leave. In that case the elasticity of supply would be zero. In looking at U.S. states, the small open economy assumption is not completely accurate, and zero elasticity is not accurate either. The right number is somewhere in between. Neither capital nor labor is as mobile internationally as within the U.S., and labor in particular is less mobile across state boundaries than within a state or a small region. The small open economy assumption may be appropriate in some circumstances for smaller states, but we have to introduce more complex assumptions in other cases.

JY: How does your model compute taxes on land and labor and man-made capital? This isn’t a standard classification of taxes.

TN: This is complicated, because it involves payroll taxes, federal and state corporate taxes, federal and state income taxes, property taxes, sales taxes, and so on. So the model looks at all these taxes and makes assumptions about who is paying them to estimate an overall tax rate on labor from all sources—federal, state and local. Similarly, the model estimates an overall tax rate on land and on man-made capital. This allows us to move from an illustrative example in which taxes on labor and capital are replaced by land value taxes to considering changes in real-world taxes, which of course are never based solely on labor or capital.

JY: How do you represent the shift in taxes from labor and man-made capital to land?

TN: This is a hypothetical policy experiment in the model. Suppose, for example, you wanted to eliminate all sales taxes in a revenue-neutral way, making up the lost collections through a land value tax. Sales taxes are the average state’s largest revenue source, so this shift would be quite ambitious. The model shows what would happen under various elasticities of substitution and elasticities of supply, as described above. The tables in the paper show what land tax would be necessary to maintain revenue, and the changes in capital investment and land prices that would result.

JY: How do you move from the hypothetical average state to the 50 individual states?

TN: You have to begin by asking what factors might cause states to have different experiences with land value taxation. We consider each state’s taxes, because the benefits of shifting to a more efficient system will vary according to how much current taxes distort economic choices. Some states have no income taxes. Some states tax property heavily, while others tax sales heavily. The other critical component concerns the state’s sources of income—how they are divided among land, labor and man-made capital. The Bureau of Economic Analysis reports income from various sources by state, but does not account separately for income from land. For that information we draw on the Census of Agriculture data on the amount and market value of farmland to estimate an income figure.

JY: What kinds of results did you obtain?

TN: Since taxation of land is always economically efficient, and since taxation of other factors is always economically inefficient, a shift to land taxes always increases capital, income and labor use. For the “typical” state it seems that most of the simulated tax reforms are feasible, particularly those that reduce taxes on capital. A 20 percent cut in the sales tax, for instance, requires a nearly 24 percent increase in the tax on land, while a similar cut in property taxes requires virtually no change (0.2 percent) in the tax on land. Even a complete elimination of the state and local property tax calls for only a 23 percent increase in the tax on land, while an elimination of the sales tax would require a whopping 131 percent increase. Landowners would be deeply and adversely impacted by reforms that cut the sales tax (losing up to two-thirds of their wealth under a complete elimination of the sales tax), while they would barely feel the impact of most reforms focused on the property tax. They would experience at most a 7 percent decline in their wealth under the complete elimination of the property tax, and an actual increase in their wealth for less dramatic property tax reforms.

But these results differ substantially by state. For instance, the percentage change in the tax on land required to maintain constant state and local government revenues as taxes on capital are eliminated ranges from -1.91 percent to over 104 percent. Similarly, the impact on land prices varies greatly, with prices barely declining (or even increasing) in some states while falling by as much as 85 percent in others. While the elimination of all state and local taxes on capital is therefore technically feasible in all states, it is clearly politically more feasible in some states than in others. Overall, of course, replacing distortionary taxes with nondistortionary taxes on land always brings growth in the employment of capital and labor and increases output—but the size of these impacts also varies greatly. Given that the main political hurdle to land taxation is the expected adverse impact on landowners, these results seem to indicate that, as in the case of the “typical” state, such reforms should emphasize the simultaneous reduction in taxes such as the corporate income tax or the property tax.

JY: What do you take as the central lessons of this work?

TN: Several broad lessons emerge from the analysis of a typical state. First, elasticity assumptions are crucial to the exercise of predicting the likely impact of tax reforms. Second, under elasticity assumptions that are both plausible and relatively conservative, this model predicts that some types of tax reforms are more likely to succeed than others. In particular, tax reforms that reduce taxation of capital in favor of land taxation will have more positive general welfare implications while minimizing the losses to landowners. So policy makers might consider reforming corporate income and property taxes rather than sales and personal income taxes. Third, since elasticities tend to be lower in the short run, it is likely that some of the positive gains of tax reforms that reduce distortionary taxes in favor of land taxes will emerge only with time.

The most striking lesson from simulating tax reforms for the 50 different states is how greatly results can vary depending on underlying economic conditions and current tax policies in those states. Thus, far from arriving at “the answer” regarding the impact of land tax reforms, this study suggests that such answers are likely to differ greatly depending on the context in which the reforms are undertaken. Reforms that raise the tax on land are likely to be more effective the larger the size of the reform, the higher the initial distortionary taxes in the state, and the lower the current level of state income. And, reforms are more likely to be politically feasible (in the sense of not causing great declines in land values) when they involve reductions in taxes on capital.

The idea that land value taxation is unrealistic or would drive land prices into negative numbers is based on a static view of the economy, where no one responds to tax changes by substituting one factor for another. Once you accept that behavior will change in response to taxes, that static view no longer applies. Under these fairly conservative assumptions, tax reforms that use land taxes to eliminate entire classes of distortionary taxes are economically feasible in virtually all states. This work shows that, far from being quaint or outmoded, the idea of taxing land value is quite relevant to the contemporary policy debate.

Working Paper Information: Thomas Nechyba. 2001. “Prospects for Land Rent Taxes in State and Local Tax Reform.” 70 pages. The complete paper is posted on the Lincoln Institute website at www.lincolninst.edu and may be downloaded for free.

Una versión más actualizada de este artículo está disponible como parte del capítulo 3 del libro Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.

La demanda por servicios urbanos sobrepasa la capacidad financiera de la mayoría de las ciudades del mundo. Para hacerle frente a este problema, muchos gobiernos municipales utilizan exitosamente el impuesto a la propiedad junto con otros instrumentos administrativos a fin de recaudar esos fondos tan necesarios. Actualmente El Salvador es el único país centroamericano que no impone una tributación sobre suelo y propiedad. Sin embargo, funcionarios públicos, expertos académicos y líderes empresariales del país han comenzado a discutir sobre la necesidad de establecer un sistema fiscal sobre la propiedad inmobiliaria, y las estrategias para su ejecución.

El sistema de tributación de El Salvador está caracterizado por la falta de equidad y una cantidad mínima de impuestos recaudados, lo cual afecta el nivel de inversiones públicas. Décadas de guerra civil y caos económico han dejado al país sin una tradición establecida de administración ni control fiscal. Los primeros cambios al sistema de tributación comenzaron a ponerse en práctica en 1993, cuando tanto el antiguo impuesto patrimonial sobre la propiedad personal y de la empresa (incluso sobre bienes inmuebles), como el impuesto sobre las ventas del 5 % fueron abolidos y sustituidos por un impuesto sobre las ventas del 13 por ciento. La recaudación de estos impuestos y de un impuesto sobre la renta corre a cargo del gobierno central.

El único impuesto municipal que existe es un tributo arcaico y complejo basado en actividades comerciales, industriales, financieras y de servicios. Debido a su limitada capacidad para aumentar sus ingresos, los municipios no tienen muchas oportunidades de obtener préstamos de bancos nacionales, y ninguna posibilidad de conseguirlos de instituciones financieras internacionales. Entre otros factores que contribuyen a debilitar la base financiera de los gobiernos municipales se cuentan las deficiencias administrativas, los problemas catastrales y las limitaciones del marco legal. Dado que la zona metropolitana de San Salvador abarca una gran área de este pequeño país, la tributación municipal y otros programas de planificación fiscal puestos en práctica allí tienen repercusiones significativas en todo el país.

En 1998, el Consejo Municipal de San Salvador propuso aumentar los impuestos a la actividad comercial, lo cual provocó protestas inmediatas por parte de representantes empresariales y funcionarios municipales. Los líderes de negocios denunciaron al programa tributario propuesto como un generador de costos adicionales que los forzaría a subir los precios de artículos de consumo y servicios, y posiblemente llevaría a un crecimiento de la inflación; como alternativa, demandaron incentivos para nuevos proyectos de desarrollo a cambio de modificaciones del sistema tributario. El Consejo Municipal defendió su propuesta, precisando que la estructura tributaria actual se caracterizaba por una seria falta de equidad porque castigaba a los negocios pequeños al mismo tiempo que ofrecía ventajas a los grandes.

El Consejo Municipal de San Salvador y la Cámara de Comercio e Industria de El Salvador formaron una comisión mixta para que investigara los complejos asuntos involucrados en la reforma fiscal propuesta y las precondiciones que la misma precisaría, tales como actualizaciones catastrales, marco legal y capacitación técnica. Si bien la discusión no estuvo centrada en los mecanismos concretos para llevar a cabo una tributación de suelo y propiedad, fue muy significativo que estos importantes grupos de interés coincidieran sobre la necesidad de imponer un tributo inmobiliario en el futuro.

Beneficios de una perspectiva internacional

En enero de 1999 se realizó una reunión extraordinaria de funcionarios públicos y grupos de interés privado, en la que el Instituto Lincoln y la Oficina de Planificación del Área Metropolitana de San Salvador (OPAMSS) estudiaron muchos de los asuntos pertinentes al desarrollo y ejecución de un sistema de tributación inmobiliaria. Éste fue el tercero de una serie de programas auspiciados por el Instituto diseñados con el objetivo de compartir la experiencia internacional y ayudar a desarrollar un nuevo marco de trabajo en pro de un sistema tributario con más equidad en El Salvador.

Particularmente en un país pequeño como El Salvador, la implementación de un sistema adecuado de impuestos a la propiedad puede tener efectos positivos y estratégicos no sólo sobre las finanzas municipales, sino también sobre las políticas macroeconómicas y la revaluación del sector financiero. Alven Lam, investigador del Instituto Lincoln, explicó que la reestructuración del marco tributario ha sido el factor fundamental que ha permitido a algunos países asiáticos como Japón, Tailandia e Indonesia, recuperarse de sus crisis económicas. Los recientes problemas fiscales de Brasil y el continuo debate sobre el funcionamiento del sector financiero de El Salvador agregaron un sentido de apremio a la discusión sobre el amplio contexto económico de un impuesto a la propiedad municipal.

En el seminario también se discutió la importancia de integrar una tributación mixta de suelo y propiedad como herramienta fundamental para promover un manejo eficaz de la tierra urbana. Vincent Renard, del Laboratorio Econométrico de la Escuela Politécnica de París, elogió la iniciativa del Consejo Municipal de San Salvador y de otros gobiernos municipales para modificar sus estructuras tributarias, haciendo énfasis en la importancia de no aislar dichas políticas de los mercados de bienes raíces. Asimismo, Renard criticó ciertas estrategias de planificación urbana, tales como la tendencia actual que hay en El Salvador de regularizar en exceso el uso de la tierra mediante medidas legales que están totalmente desvinculadas de la tributación de la tierra y de incentivos fiscales.

Una tercera área de preocupación durante el debate consistió en las implicaciones políticas y económicas de la tributación a la propiedad. Entre otras cosas, es crítico que los funcionarios involucrados en establecer un sistema de tributación sobre la propiedad consideren la cultura política de la sociedad, la consolidación de autonomía municipal, la transparencia de los mercados de bienes raíces, y el uso del impuesto a la propiedad como una herramienta para el desarrollo económico y social. Julio Piza, de la Universidad Externado de Bogotá, describió diferentes aplicaciones del impuesto a la propiedad en Colombia, realzando la existencia de un problema común: la dificultad de medir la base impositiva de la tierra y los bienes debido en gran parte a los obsoletos sistemas catastrales y a la falta de otros sistemas de información.

Aunque la discusión sobre la reforma fiscal en El Salvador ha sido eclipsada por las recientes elecciones nacionales, el nuevo presidente ha expresado interés en una política de tierra y tributo. Al seminario asistieron dirigentes municipales y nacionales de los sectores políticos y comerciales, quienes expresaron un interés profundo en modernizar sus programas de manejo fiscal y tributación municipal. El solo hecho de haberse reunido para discutir abiertamente estos complejos asuntos es una señal esperanzadora. Para que haya progreso, es necesario contar con la voluntad política, la participación continua de la comunidad comercial y el reconocimiento de que el impuesto constituye tanto un instrumento financiero práctico para satisfacer necesidades inmediatas como también una herramienta importante para lograr crecimiento económico y desarrollo urbano.

Al igual que otros países en estado de transición social y económica, El Salvador se enfrenta ahora al desafío de establecer estipulaciones eficaces y justas para llevar a cabo las valuaciones catastrales y la recaudación de impuestos. El proceso puede facilitarse si se comienza con una estructura de tasas simple y se van introduciendo gradualmente instrumentos más sofisticados. Otros factores tales como métodos innovadores de manejo de la tierra y la posibilidad de capturar los aumentos en el valor de la tierra son críticos para el futuro crecimiento fiscal de El Salvador.

Ingresos municipales Área Metropolitana de San Salvador, 1993

Fuentes de ingresos:

• Impuestos municipales
• Aranceles y tarifas de usuario
• Transferencias del gobierno federal
• Otros ingresos municipales
• Préstamos
• Otras fuentes

Patricia Fuentes es Subdirectora de Control de Desarrollo Urbano y Mario Lungo es el Director Ejecutivo de la Oficina de Planificación del Área Metropolitana de San Salvador (OPAMSS).

Growing recognition of the economic and social importance of land, housing and real property markets is focusing attention on the need for good policies and good data to monitor the performance of these markets and their effects on the international economy.

Much of the impetus for addressing these issues came with the United Nations General Assembly’s unanimous endorsement in 1988 of the document Global Strategy for Shelter to the Year 2000. This report described the social and economic role of housing and called on governments to undertake enabling policies to create well-functioning land and housing markets.

Within a few years, the World Bank published its own housing policy paper, Housing: Enabling Markets to Work, which set out a stylized set of “do’s and don’ts” for housing policymakers to use in making choices about policies, regulations and institutions that influence the performance of the housing sector. Each of these documents makes it clear that the stakes of getting housing policies right are considerable, especially those policies having to do with urban land.

The Importance of the Housing Sector

Housing, together with the land under it, is the single most important asset of households in most of the world’s cities. Housing investment and the flow of housing services account for a total contribution to GNP of between 7 and 18 percent in most countries. However, these figures fail to convey fully how the performance of the housing sector is intertwined with that of the broader economy through real, financial and fiscal circuits.

Since housing comprises 15 to 35 percent of consumer spending in most countries, inflation in housing prices is a significant element of overall consumer price inflation. Housing loans comprise some 15 to 20 percent of the consolidated assets of the banking systems of the most industrialized countries, making the integrity of these loans crucial to the overall soundness of the financial sector.

Housing subsidies, particularly in formerly planned economies, have contributed to budgetary deficits which have aggravated inflationary pressures, and poorly planned housing policies have often led to limited residential and labor mobility. Even in the United Kingdom, research indicates that inappropriate housing policies have increased structural unemployment rates, increased consumer prices and interest rates, adversely affected the balance of payments, and led to a significant decline in rates of household savings. Real estate booms and busts have also become a prominent feature of urban and national economies, notably in the United States and Japan.

Given the importance of the housing sector and the high cost of policy failures, it is surprising that many countries underestimate the objectives and instruments of housing policy. As a result, housing problems are often aggravated by ill-conceived or poorly executed public policies, and the performance of the sector falls beneath its potential.

Policies Affecting Housing

The provision of infrastructure, the regulation of land and housing development, the organization of the construction and materials industry, and the involvement of the public sector in housing production all have direct bearing on the production of housing and its responsiveness to shifts in demand. But other policies are also important—for example, those that relate to the physical and legal security of renters and owners, and the ability to use housing as collateral for long-term financing.

These policies influence the desirability of, and demand for, real estate and housing as an asset and, therefore, the amount of housing that investors want to build. In turn, these policies affect the quantity and affordability of housing available to meet the needs of final consumers of housing services. Investment decisions also influence the cost, availability, quality and production of informal housing, which accommodates much of the urban population in many developing countries.

Recent data on 53 countries collected by the Housing Indicators Program, a joint program of the United Nations’ Centre for Human Settlements and the World Bank, supports the importance of policy differences in shaping housing sector outcomes. Two key types of indicators are physical measures, such as crowding or structural durability, and measures related to price, such as house values, rents and the ratio of house value to income (also called the house-price-to-income ratio), which often reflects the relative efficiency of housing markets.

Comparisons of such indicators suggest, for example, that in Thailand, where land and housing regulation is simple and efficient, housing supply is more than 30 times as responsive to shifts in demand than in either Korea or Malaysia, where regulation is complicated and cumbersome. This is reflected in striking differences in housing prices, quality and affordability among the three countries.

Enabling and Non-enabling Policies

“Enabling” countries are considered more market friendly because their housing policies support housing demand through appropriate housing finance, property rights and subsidies. Such countries facilitate housing supply by providing infrastructure, pertinent regulation and a competitive housing development industry. Figure 1 shows how a number of important housing outcomes vary with both the level of economic development (as measured by per capita income) and the policy environment for four groups of countries.

Housing prices at lower income levels among non-enablers are often the equivalent of two annual incomes higher than they are among enablers. Home ownership rates among enablers are generally 15 to 25 percentage points higher. Crowding, as measured by floor area per person, is significantly less among enablers. Residential mobility (percentage of population moving annually) is higher among enablers—a factor that facilitates upgrading housing conditions and enhancing job mobility.

A comparison of U.S. cities shows that house prices in non-enabling cities with stricter regulatory policies have risen in relative terms some 30 to 60 percent over a 15-year period (see Figure 2). This trend suggests important consequences for quality of life and competitiveness among cities with different degrees of market flexibility. Relative shifts in housing costs are in some cases equivalent to doubling potential residents’ combined federal and state income tax, creating powerful disincentives for moving and for the functioning of labor markets.

These and similar findings suggest that systematic policy mistakes have been made, that their costs have been high, and that it is time for a general change in thinking about the aims and instruments of land and housing policy.

Stephen K. Mayo, a visiting fellow of the Lincoln Institute, is developing research and education programs on land prices, land markets and the broader economy. On November 7-8, 1997, the first in a series of conferences on this topic will be held at the Institute to examine land prices and land information systems.

FYI

References

Angel, Shlomo, Stephen K. Mayo, and William Stephens. “The Housing Indicators Program: A Report on Progress and Plans for the Future,” Netherlands Journal of Housing and the Built Environment, 1993.

Malpezzi, Stephen, “House Prices, Externalities, and Regulation in U.S. Metropolitan Areas,” Journal of Housing Research 7,2, 1996.

United Nations Centre for Human Settlements. Global Strategy for Shelter to the Year 2000. United Nations, New York, 1988.

World Bank. Housing: Enabling Markets to Work. World Bank Housing Policy Paper. Washington, DC, 1993.

Figure 1 Housing Outcomes for Four Groups of Countries

Source: Based on data from 53 countries collected by the joint World Bank/UN Centre for Human Settlements Housing Indicators Program (HIP). The Enabling Index was developed using HIP data on policies, regulations and institutional arrangements.

Figure 2 Average Housing Price Changes for U.S. Cities

Source: Based on hedonic price indices for rental and owner-occupied housing (weighted by the proportion of renters and owners in each market) for U.S. Standard Metropolitan Areas. The classification of U.S. cities as enablers or non-enablers is based on an index of regulatory stringency originally developed and applied by Stephen Malpezzi.

As part of the American Planning Association (APA) 2003 national conference held in Denver in March, the Lincoln Institute assembled a group of planning directors from large and small western cities to discuss a set of topics they had previously identified as being important, including infill housing, maintaining the core vs. sprawling at the edge, paying for infrastructure, and transportation and land use. To explore these issues and exchange case histories, the planners met for a weekend retreat organized by Peter Pollock, Boulder’s planning director, before presenting their findings at an APA session titled “Urban Challenges and Opportunities in the Rocky Mountain West.” This report highlights key discussion points raised during both the retreat and the APA panel.

The West remains one of the fastest growing regions in the country. Not surprisingly, the liveliest discussions among western city planners center on issues of infill housing and the need to protect and maintain the viability of the urban core in the face of continued regional growth. As Chris Knight of Las Vegas noted, “protecting the core is important to the health of the entire region.” Louis Zunguze of Salt Lake City emphasized that “the core area has a real responsibility for the pace of sprawl,” adding that there is a practical need “to keep the area attractive from many perspectives.”

Neighborhood Responses to Infill Development

Part of that challenge has to do with neighborhood resistance to change and increased density. In Billings, Montana, for example (metro population approximately 100,000; county population 140,000), sprawl is becoming a significant issue, according to Ramona Mattix. Yet, despite substantial capital support for downtown revitalization and favorable zoning densities, the city faces considerable resistance from its residents, many of whom are attached to their traditional wide-open spaces.

Bill Healy of Colorado Springs (population 368,000) spoke of his earlier experience as a planner in Salem, Oregon (population 137,000), when he addressed the problem of how to “sell density” in older neighborhoods. As in Billings, the greatest opposition to infill housing in Salem, which involved rezoning established neighborhoods to accommodate multifamily housing, came from existing residents who would grow increasingly vocal if growth was slated to occur in their “back yard.” Healy explained, “The way we sold density [in Salem] was to couple it with better design standards.” People there found density much more acceptable if new development was designed compatibly with existing neighborhoods. A further benefit was that the city obtained new design standards. “Public acceptance of infill is like a sine curve,” Healy explained. “In urban areas there is great acceptance. But as you get out to the first-ring suburbs, there is a real fear of density. Way out where populations are sparce it’s not an issue.” In Colorado Springs, Healy noted, there is little economic incentive for infill. “Half our land area is vacant, so that is a disincentive for infill development. It’s an issue from a planning standpoint.”

Not all western city planners cited neighborhood opposition to infill development as a major obstacle to accommodating growth, however. Ellen Ittleson, for example, discussed Denver’s (population 555,000) recent success in “planning around resistance” in the city’s most recent plan, Blueprint Denver. While preparing the plan, the city looked at growth projections over the next 20 years and devised a way to accommodate the addition of 132,000 predicted new residents and 109,000 new jobs to the city and county. The metro area is expected to receive an additional 760,000 new residents over the same period. “Once we accepted the growth,” remarked Ittleson, “the real task became figuring out where to put it, because where the market or zoning would have put it was not acceptable.”

The Blueprint Denver plan identifies two types of infill areas. “Areas of change” are those parts of the city that would benefit from increased population densities, such as areas of economic need where land use change and transportation initiatives could go hand-in-hand with realizing mixed-use, pedestrian-oriented and transit-oriented development. The only strictly residential area of change is Cherry Creek, which is being transformed from a single-family neighborhood to one with single-family and attached housing. “Areas of stability” are represented primarily by traditional residential neighborhoods, but also include small commercial and even industrial districts where the effort will focus on how to protect the character of these areas rather than adding new households or jobs.

“There has been great consensus on where growth should be and where it should not be,” Ittleson remarked. Yet, there remains considerable controversy “at the edge, that is, how to transition from areas of change to areas of stability,” she continued. Another major obstacle facing the city’s housing initiative is land assembly. “We have the Denver Urban Renewal Authority, but it’s a politically supercharged thing to use. It’s expensive and politically complicated,” she added. Another difficulty is Denver’s “archaic legislation,” which offers far less acceptance of inclusionary zoning than in the East.

Salt Lake City (population 182,000; metro population 1 million) also has demonstrated considerable acceptance of the need for more infill and density downtown. Renowned for its abundant natural amenities, the city has a thriving tourist industry and has become a magnet for growth. As a result, land costs are very high to accommodate the new population, and there are serious discussions between the mayor, the city council and the development community on how to make the city more viable in the face of this challenge. Louis Zunguze remarked that the city is keenly aware that “what happens around us has a lot to do with what we do in the core.”

As part of its efforts to contain the pace of sprawl and attract new development to the downtown, Salt Lake City is putting together a major housing initiative and has studied downtown sites suitable for infill. With the ambitious goal of creating 40,000 new housing units in and around the downtown area, amounting to a three-fold increase in density, a considerable challenge will be to “strike a balance” with more traditional neighborhoods. Strategies include block consolidations for small subdivisions and amending the zoning ordinance to allow for more height in certain appropriate areas, “so more density can be accommodated gradually.”

Salt Lake City has considerable assets working in its favor, notably the Church of Jesus Christ of Latter Day Saints (the Mormon Church), whose world headquarters is located downtown. “The Church is a significant entity from both a social and financial standpoint,” Zunguze noted. In addition to complementing the city on key housing and economic initiatives, the Church works hard to induce corporations to relocate downtown near the Church’s own headquarters. The Church partners with new development and redevelopment in other ways as well. For example, it has built a new conference center and recently bought the Crossroads Mall located downtown (that is still taxable) and other projects as additions to Church facilities.

Cheyenne (population 53,000; county population 81,000) is the largest community in Wyoming but the smallest city represented on the APA panel and it does not have issues with infill housing. “We’re a landlocked, small community,” notes Mike Abel. “Residential areas are close by, so residential development downtown is not a huge issue right now. We’re more interested in community development issues . . . our infill focus is on commercial redevelopment.”

Regional Planning

According to John Hester, Reno (population 200,000; metro population 550,000) relies heavily on regional planning. The city has a state-mandated regional plan, updated every five years and designed to account for growth and development over a 20-year period. The recently revised plan promotes the objective of directing development to existing areas and infrastructure. It also introduces a new conceptual framework for identifying and prioritizing those districts and transit corridors most suitable for infill and development. On a broad scale the plan presents the idea of Municipal Service Areas designed to capture what has already been built and approved. Urban and suburban land uses are allowed only in these service areas. Then, within these areas, the plan identifies activity centers and auto-dependent transit corridors most suitable for high-intensity land use and development. One specific target for the city, noted Hester, “is to capture 35 percent of all regional metro housing over the next 20 years within the McCarran Ring, a four-mile radius from downtown.”

For David Richert, the cities of Phoenix (population 1.4 million; metro population 3 million) and Reno appear to share similar planning approaches toward managed growth. The Phoenix plan identifies six growth areas as overall targets for development and infill. To alleviate traffic congestion within and among the designated growth areas, the plan also recommends redirecting growth to certain strategic perimeter areas. “They become edge cities within a village system,” he explained. “There are one hundred years worth of growth in the Phoenix plan. We’re putting in infrastructure where we think growth is going to occur.” Richert noted, however, that it was important to keep in mind that “getting the infill requires getting the people who want it, too. . . . Among our goals is to get a fair share of everything that happens in the valley and to set a good example.”

Las Vegas (population 500,000; metro population 1.5 million) has been the nation’s fastest growing region for more than 60 years. But, according to Chris Knight, “the city is still young, with an outward focus and large expanses of vacant land. We tear things down if we don’t like them. If it’s bad, we just blow it up and move elsewhere. Redevelopment is difficult because some of the more prominent redevelopment tools such as eminent domain are taboo.” Downtown Las Vegas is perceived to be in trouble, and its revitalization is at the top of the mayor’s agenda. “One obstacle is that the private owners of downtown properties need to buy in on fixing the problem,” Knight explained. Another problem he noted is that “a number of downtown property owners believe they own the site of ‘the next big casino,’ so land prices are very inflated.”

The mayor of Las Vegas has been a champion of regional planning and recognizes that protecting the core is vital to the health of the region. “The mayor wants to leave the legacy of a new downtown,” Knight added. Part of that legacy would include the introduction of new medical research facilities and 40,000 units of housing to the downtown area. “Big retailers are already coming in,” added Knight, and the city is “looking for tall buildings.” The city is also beginning to investigate transportation-related development to support the existing monorail system, “but our zoning standards may be archaic and will be in the way. We have to figure out how to remove them,” he explains.

Infrastructure and Land Management

Maintaining control of a city’s services and proper fiscal strategies may help in managing growth. Salt Lake City is well endowed with transportation facilities: light rail, bus (local and Greyhound) and train (Amtrak) services, and an airport that is within ten miles of downtown. Moreover, the streets in Salt Lake are so wide that it’s easy to install new rail lines down the center for new transit services. The city also has three large malls within the downtown area, which help keep the city viable. In addition, there is considerable willingness on the part of developers “to look at the barriers in the way of the kind of the development we want downtown (i.e., mixed-use along transit),” Louis Zunguze noted. In Salt Lake, “the city development and finance communities are beginning to come to the table together to discuss what type of housing should be developed and how to finance it. . . .The banks are willing to look at new ways to finance mixed-use developments,” he noted. While work still needs to be done in terms of putting the most viable financing tools together, Zunguze cited land use regulations as the city’s major obstacle to its infill efforts. The city is faced with “contradictions of wanting to do things but the process being very slow. . . . Developers seem to have no problem assembling land, but projects are seriously challenged by the review and permitting processes,” he explained.

Reno has less than half the population of Las Vegas, but as the second largest city in the nation’s fastest growing state, growth management is a high priority. John Hester cited two other factors, in addition to strong regional planning, that have been instrumental in shaping the city’s response to growth. First is the need to work within the limitations imposed by the city’s physical constraints: Reno is landlocked and must also contend with limited water supplies. Second is the city’s concern for fiscal equity and accountability. Taxpayers subsidize growth, and the city, in consultation with outside fiscal consultants, has made concerted efforts to ensure that only those who receive municipal services pay for them, and that taxpayers in one area are not subsidizing the provision of municipal services elsewhere. “A lot of what we try to do is use the fiscal system to make people realize they can’t keep building out,” says Hester. He also noted that the city has a unique tax structure that enables depreciation.

David Richert considers the situation in Phoenix to be very similar to that in Reno only on a bigger scale. “We have our land constraints—the Indian reservations . . . and the state trust lands. Only 13 percent of the State of Arizona is in private hands,” he explained. However, the city itself has no constraints on water. “Phoenix is in the business. It sells water to other communities,” he noted. But controlling the allocation of water “provides a measure of growth control in other areas. In Arizona, you need a 100-year water supply for everything you do.”

Phoenix is also trying to achieve “a balance of transportation,” with efforts to enhance existing transportation rather than building new. Greenspace planning is also becoming increasingly important within the Phoenix region. As an example, Richert cited the recent introduction of special zoning for drainage washes and meanders. The city also passed a bill to collect taxes to pay for park acquisition. “It won’t be enough,” he added, “because once you start buying land you create a market. Land values go up and you can’t buy as much.”

Cheyenne is a city poised for change. As the “northern anchor” of the Colorado Rocky’s Front Range, Cheyenne is only 90 miles from urban Denver. Because of its strategic location on north-south and east-west highways and railroad lines, the city is looking to capitalize on its potential as a major regional transportation hub. “Regionally, we have a lot going for us as a transportation center. Businesses are looking at Cheyenne because of its proximity to other major centers,” Abel explained. Moreover, for businesses Wyoming has a very attractive tax structure, and Cheyenne is also proving popular for commercial development because it is “ready to build.” The city has many greenways, and the strong pedestrian orientation within the community is appealing to new development and infill initiatives. Already, Abel stated, “once-vacant city blocks are beginning to change, and there’s a new parking structure downtown.” Growth is not without obstacles, however. Specifically, water will be the limiting factor in the city’s growth cycle. Like many western cities, noted Abel, “we’re dependent on our water resources and future enhancements. Without sufficient snowpack to balance out the high mountain reservoirs during a drought situation such as we have now, Cheyenne could be out of water in less than three years.”

Despite this sobering prospect, the city remains more than optimistic about its future. Recently, a local property owner offered the city a massive 17,000-acre ranch that appears to have several water sources, and with them significant development capability. The city has taken the option to purchase the ranch for its water rights, but the city would acquire both the land and its water. “With this purchase, we could double the size of Cheyenne overnight,” exclaimed Abel, adding that “it will force the city to look differently at land use in the area for commercial and urban development. It’s an opportunity to develop the next generation of Cheyenne.” David Richert commented, “17,000 acres is huge. . . . You’ll need a lot of expertise from the private sector. But you’re doing a very progressive thing; your government has a chance to control development.”

Armando Carbonell is a senior fellow and cochairman of the Lincoln Institute’s Department of Planning and Development, and Lisa Cloutier is a research assistant in the department.

photo:

Participants in the Lincoln Institute-sponsored retreat for planning directors of western cities: Top row, from left: Mike Abel, Cheyenne; Bill Healy, Colorado Springs; Chris Knight, Las Vegas; John Hester, Reno. Middle row: Louis Zunguze, Salt Lake City; Ramona Mattix, Billings; Ellen Ittleson, Denver. Bottom row, from left: Armando Carbonell, Lincoln Institute; David Richert, Phoenix; Peter Pollock, Boulder. Photo credit: Lisa Cloutier