This fall marked the 15th anniversary of the Peking University–Lincoln Institute Center for Urban Development and Land Policy (PLC). Established in 2007, the center has become a leading authority on land policy issues in China, including the property tax, municipal finance, land and housing policies, and land conservation. To celebrate this milestone, the PLC held an event on November 4 that included commemorative remarks, a formal recommitment to the partnership between the two institutions, and several academic presentations on urban development and climate change. 

“The Lincoln Institute works globally on topics largely relating to land policy, and the joint center is an exceptional platform for our China program,” said Katie Lincoln, chief investment officer and board chair of the Lincoln Institute, who delivered congratulatory remarks by video. “During the past 15 years, the center has held numerous conferences, undertaken research and demonstration projects, shared in scholarly exchanges, and happily gained recognition both in and out of China.” 

In addition to Lincoln, several current and former leaders from the two institutions joined the celebration virtually or in person, including Jin Zhang, vice president of Peking University; Jianhua Lin, former president of Peking University; Yansong Li, former vice president of Peking University; George W. McCarthy, president of the Lincoln Institute; Gregory Ingram, former president of the Lincoln Institute; and Joyce Man, former director of the PLC. 

“We are now at a difficult time of Sino-U.S. relations,” said former PKU President Lin. “But I believe that the mutual trust between our two institutions and the confidence about the value of what we do will continue to be a foundation for us to cooperate and move forward.” 

During the event, Zhang and McCarthy signed an agreement for continued collaboration between the two organizations. “In the next few years, the PLC will add a new focus on land use and climate change, in support of China’s ambitious goal of achieving net-zero carbon goals by 2060,” noted McCarthy. “The PLC also will help the Lincoln Institute in its global efforts to address the climate crisis. The unique cooperation between the Lincoln Institute and PKU over the last 15 years has been fruitful for China, the United States, and the world in [finding land-based solutions to] economic, social, and environmental challenges. We are excited to embark on another five-year journey together.” 

The center, which conducts research, training, policy analysis, academic exchanges, advisory services, and demonstration projects throughout China, also invited several scholars, fellowship recipients, and others who have been involved with its work over the years to share reflections.  

“I worked with PLC for more than ten years, from winning the Peking University–Lincoln Center scholarship, to guiding students to participate in the center’s fund application, to becoming a partner of the center’s work and research,” said De Tong, associate professor at Peking University Shenzhen Graduate School. “Scholars at the center have become my inspiring mentors and friends, and colleagues at the center have also become comrades-in-arms at work and friends in life.” 

The center has launched an essay contest open to those who have been involved with the PLC over the years, from scholarship recipients to business collaborators to conference participants. Five winning essays, selected in January, will receive a small monetary prize; a copy of the Lincoln Institute book Infrastructure Economics and Policy: International Perspectives, coedited by José A. Gómez-Ibáñez and Zhi Liu, who leads the PLC as director of the Lincoln Institute’s China program; a copy of Advanced Economic Geography by Canfei He, dean of the College of Urban and Environmental Sciences at PKU and associate director of the PLC; and publication on the PLC website. 

The second half of the day’s events was structured as an online forum on climate change and urbanization in the context of China’s dual-carbon goal, which seeks to reach peak carbon by 2030 and achieve carbon neutrality by 2060. Leading policy makers and scholars from China, Hong Kong, and the United States shared their latest thoughts and studies on topics including green building, urban equity, and urban-rural integration, drawing an audience of more than 600 researchers, planners, and others.  

“The dual-carbon goal is a major challenge for China, but also presents new opportunities for China’s continuing urbanization,” said PLC Director Liu. “Urbanization and carbon net-zero has been a hot topic in China’s policy debates, which have been getting more substantive and concrete over the last two years. I found myself learning a lot from these presentations, which deepened my understanding about the challenges and opportunities that the goal of carbon net-zero will bring to our urbanization for the next few decades.” 

Forum topics and presenters included: 

• the evolution and future of green building, by Dr. Baoxing Qiu, former Deputy Minister of the Ministry of Housing and Urban-Rural Development; 
• carbon reduction models for commercial real estate, by Professor Siqi Zheng of the Department of Urban Studies and Planning of MIT; 
• equity and governance under China’s dual-carbon goal, by Professor Shenjing He from the Department of Urban Planning and Design of the University of Hong Kong; 
• carbon reduction through urban agglomeration, by Professor Ming Lu from Antai School of Economics and Management, Shanghai Jiao Tong University; and  
• urban-rural integration and rural revitalization, by Professor Shouying Liu from the School of Economics of Renmin University. 

Visit the “Our Work” section of our website to learn more about the PLC and to find information about how to connect with the center on WeChat. 

Lead image: Lincoln Institute President and CEO George W. McCarthy and Peking University Vice President Jin Zhang celebrate the renewal of the collaborative agreement that established the Peking University-Lincoln Institute Center for Urban Development and Land Policy. Credit: Courtesy of PKU.

Local property taxes and state aid each have flaws, but a thoughtful combination of these two revenue sources is the most effective recipe for funding a high-quality K–12 education for  all students, according to a new Policy Focus Report published by the Lincoln Institute of Land Policy. 
 
In Rethinking the Property Tax–School Funding Dilemma, authors Daphne A. Kenyon, Bethany Paquin, and Andrew Reschovsky explain how local property taxes foster civic engagement and provide stable funding, while state aid is critical in reducing disparities among school districts caused by differing levels of property wealth and differences in the money needed to provide high-quality education. 
 
The report explains the advantages of the property tax compared to other local taxes and demonstrates how states can adopt policies to address criticism of the property tax. A well- designed system of state aid can offset differences in per-pupil property values and in the costs of providing quality education. State-funded property tax credits can reduce economic hardships for taxpayers facing high property tax burdens, especially those with low incomes. And unjustified differences in property tax bills among owners of similar properties can be addressed through more frequent and accurate assessments. The authors explain why the majority of states still fail to provide all students an adequate education and recommend policies to strengthen both funding sources with the specific goal of improving student outcomes. 

Five state-level case studies illustrate the practical nuances of state education finance and property tax policies and offer important lessons for policy makers. California’s Proposition 13 limited property taxation and accelerated a shift toward state funding at the expense of local control and student academic performance. A more modest property tax limit in Massachusetts proved more flexible and, combined with targeted state aid and robust accountability standards, has not impeded strong academic results. 

South Carolina’s implementation of a local-for-state tax swap in 2007, which fully exempted homeowners from paying local school property taxes and increased reliance on the sales tax to fund education, demonstrated how unreliable sales taxes can be in an economic downturn. Despite a long history of school funding litigation, Texas still relies heavily on property taxes to fund its schools. Failure to continually adjust its state funding formula for rising costs and property values has led to higher property tax burdens on homeowners. Last, in Wisconsin, the state’s property tax revenue limit restricts school districts’ ability to increase spending, and the state equalization aid formula does not account for differences in school districts’ needs and costs. 

“As a former state education official, I would have loved to have had a report like this to help me get up to speed on the critical issues around school finance policy,” said Carrie Conaway, former chief strategy and research officer at the Massachusetts Department of Elementary and Secondary Education and senior lecturer at the Harvard University Graduate School of Education. “The report provides a very clear explanation of the role played by the property tax in funding public education and describes the complex issues involved in designing effective state aid systems. Anyone involved in or interested in school funding policy will benefit from reading this report.”  

“A perennial target in state education finance legislation, the property tax remains a much-discussed and asked-about topic in my work with state legislatures,” National Conference of State Legislatures Senior Fellow Daniel G. Thatcher agreed. “This report will guide policy conversations about how to improve the sustainability, stability, and fairness of property tax systems, and also in education finance systems writ large.”  

Rethinking the Property Tax–School Funding Dilemma offers specific reforms that state governments—as well as localities—can make to balance revenue needs, funding realities, and other considerations. Notably, states must resist calls to stop using local property taxes to fund schools while also improving the equity and efficiency of their property tax systems.  

The authors also recommend that states maintain sufficient “rainy day funds” to draw upon when state tax revenues decline and that they target more local aid toward schools that require additional support to provide their students with an adequate education. Finally, the federal government also has a role to play in supplementing funding in low-spending states according to need, as well as in helping remedy learning losses from the COVID-19 pandemic. 

“Understanding the relationship between local property taxes and state school aid is critical for understanding how public schools are funded,” said Lawrence O. Picus, professor of education finance and policy at the University of Southern California Rossier School of Education. “This Policy Focus Report provides concise guidance about the use of property taxes and the importance of state funds to equalize disparities in property tax revenues for schools. It is a must-read for anyone interested in, or part of, the school finance policy process, and an excellent introduction for those who want to dig deeper into these relationships.”  

While specific reforms will necessarily vary across different states and localities, the authors stress that targeting state education funding is essential in closing equity gaps and overcoming the persistent effects of the COVID-19 pandemic and their disproportionate impact on students of color, English-language learners, and disabled students.  

Equally important is a well-functioning property tax system that avoids overly burdensome restrictions while offering “circuit breakers” and other forms of targeted relief to homeowners in need. Ultimately, the authors offer readers the tools for “overcoming the shortcomings of both funding sources, enabling state school funding systems to give all students an adequate, quality education equitably and efficiently.” 

The report is available for download on the Lincoln Institute’s website: https://www.lincolninst.edu/publications/policy-focus-reports/rethinking…

Allison Ehrich Bernstein is principal at Allative Communications.

Image by kali9 via Getty Images. 

Mayor Yvonne Denise Aki-Sawyerr took office in Freetown, Sierra Leone, in May 2018, after serving as head of the Freetown City Council. A finance professional with over 25 years of experience in the public and private sectors, she had previously been involved with the campaign against blood diamonds and was instrumental in the response to the Ebola crisis in 2014. She has delivered two TED talks, about turning dissatisfaction into action and the capital city’s initiative to plant a million trees, and was named to the Time 100 Next list of emerging leaders and the BBC’s 100 Women list.

A leader in the C40 Cities global network, Aki-Sawyerr launched the Transform Freetown planning initiative and appointed Africa’s first chief heat officer, to confront the impacts of climate change. She holds degrees from the London School of Economics and Freetown’s Fourah Bay College, and is married with two children. She spoke with Senior Fellow Anthony Flint in the fall. Their conversation has been edited for length and clarity.

Anthony Flint: Could you talk about the Transform Freetown initiative as a planning and action framework, and your assessment of its progress?

Yvonne Aki-Sawyerr: I ran for office in 2018, motivated by concerns around the environment and sanitation. My campaign message, “for community, for progress, for Freetown,” translated into Transform Freetown. It focuses on four categories: resilience, human development, healthy city, and urban mobility.

Resilience includes environmental management; it also includes urban planning, because you cannot separate the two, and revenue organization, because sustainability will only come from the city’s ability to sustain and generate revenue itself. The healthy city cluster includes sanitation, which goes very closely with environmental management for Freetown and many African cities. If you think about climate change, our teeny-weeny contribution to climate change, a lot of it actually comes from methane, from open dumping, but it also has huge health implications. So in the healthy city category was sanitation, health, and water.

What we did was, having come into office with those high-level areas of concern, we had 322 focus groups with about 15,000 residents to get their views on affordability, accessibility, and availability of services across those sectors. We invited the public sector, private sector, and the international community via development partners and NGOs to participate in roundtable discussions.

Out of that process came 19 specific, measurable targets that we’re working toward under Transform Freetown. We report against them every year back to the city, back to our residents. It really has been a way of introducing greater accountability, of holding our own feet to the fire, and it’s very much community owned and community driven.

AF: Among all the climate threats the city faces, you appointed a chief heat officer. Why was a chief heat officer necessary and what have been the results thus far?

YA: I’m asked often, how do you get ordinary people interested in climate change? In our case it’s not hard, because the consequences of climate change are intensely felt in our parts of the world. We suffer greatly from flooding and landslides, hence my concern with the environment and being able to mitigate those impacts.

The [Atlantic Council’s Adrienne Arsht-Rockefeller Foundation Resilience Center] really got us thinking about the fact that there are more deaths from extreme heat than there are from the more visible and tangible disasters like the floods and landslides. Extreme heat, particularly where water is in short supply, is a major impact of the warming climate.

In our case, the vulnerable are mainly those living in informal settlements. That’s 35 percent of our city’s population, and in those informal settlements, the housing structures are typically made from corrugated iron. With increased temperatures, you’re effectively living in an oven. The other aspect of that is we have an informal economy. Around 60 percent of women in our city are involved in trading. Most of our markets are outdoors, so you’re sitting in the sun all day long. Doing that under the intense heat means that [other] negative health consequences are exacerbated.

With the chief heat officer, we now are going to be able to embark on some research, collecting data to identify the heat islands; anecdotally, we have a sense of where those are, mainly in the informal settlements, but potentially also in the middle of the city. We need to be able to make arguments to challenge what’s going on with the lack of building permits, and land use planning being devolved to the city, and the massive deforestation that continues unabated.

The chief heat officer has worked with market women and gotten funding from Arsht-Rock to install market shade covers in three of our open markets. It’s great to see the enthusiasm of the women and them saying, “Are we going to get this all the way along the market? We can see where it’s starting, where it stops, but we need it too.”

AF: What are your hopes for other climate mitigation projects, including the initiative to plant a million trees? How did that come about, and how is it going?

YA: Well, it came about because there’s an appreciation that we were losing our vegetation and that [worsens] the effect of extreme weather events, [as when heavy rains led to massive mudslides in 2017]. The lack of forestation is a major part of that. The goal is to increase vegetation cover by 50 percent.

Planting the million trees is the long-term plan, but in the meantime, you still have the runoff from the mountains filling the drains with silt. Our annual flood mitigation work identifies the worst of these areas and clears the silt so that when the rains come, the water can still flow. On a smaller scale, we’ve also been able to build something like 2,000 meters of drainage in smaller communities. Beyond that, we’ve invested heavily in disaster management training and capacity building.

The thing about climate change impacts is they are really pervasive. If people are experiencing crop failure outside of Freetown, it will eventually drive a rural-urban migration because they’re unable to sustain their livelihoods and they’re going to come to the city looking for some means of making a living.

That pressure of population growth in the city is something else that we have to deal with—whether it’s introducing the cable car to improve transportation and reduce greenhouse gas emissions [or encouraging] the government to devolve land use planning and building permit functions so that we can actually introduce land management actions, which save life and save property but also protect the environment and prevent people from building properties in waterways and streams and canals, which currently happens. All of this is made worse by not using legislation and urban management tools such as land use planning and building permitting in a constructive manner.

AF: Could you describe Freetown’s property tax reform efforts, and the outcomes you’ve seen, in the overall context of municipal fiscal health?

YA: We worked on this property tax reform moving from 37,000 properties in the database of a city that’s a capital city with at least 1.2 to 1.5 million people—37,000 properties. When I came in, it was clear that that was not reflective of reality, but also the manual system that they operated, literally with a ledger book, was not really fit for purpose in the 21st century.

One of our 19 targets is to increase property tax income fivefold. To go about doing that, we secured funding and partnerships to digitize. We changed from an area-based system to a point-based system. We worked on that by taking a satellite image of the entire city and building an algorithm to give weightings to features [like roofs, windows, and location], then comparing that against a database of 3,000 properties whose values were determined by real charter surveyors. We got the old-type assessment done. We were able to identify outliers and refine the model and eventually build a model which we now use as our property base.

Through that process, we moved from 37,000 properties to over 120,000 properties. That meant we were able to meet our target of increasing our property tax revenue from [$425,000 to over $2 million]. That in itself is the pathway to sustainability and being able to invest.

A big part of fiscal health is that sustainability, but . . . unfortunately, the Ministry of Local Government [halted collections while developing national tax reform guidelines]. We were without revenue for about a year. We have started re-collecting, but as you can imagine, compliance levels will take a long time to recover.

AF: Where do you find inspiration in the face of so many challenges?

YA: From the fact that we have been able to make a difference in the lives of Freetonians. We’ve been able to test and to see how much can be achieved if one is given the space to do so. We know that so much is possible and so we keep going.

Anthony Flint is a senior fellow at the Lincoln Institute, host of the Land Matters podcast, and a contributing editor to Land Lines.

Lead image: Mayor Yvonne Aki-Sawyerr. Credit: Courtesy photo.

The property tax has great potential as a source of local government revenue in Asia, but its implementation has been uneven. The Lincoln Institute’s new book Property Tax in Asia: Policy and Practice provides the first comprehensive analysis of how this essential fiscal instrument has performed throughout the world’s largest continent. 

Written by a team of leading experts and edited by William McCluskey, Roy Bahl, and Riël Franzsen, the book provides a comparative analysis and detailed recommendations, with 13 in-depth case studies covering a region that is home to nearly half the world’s population. 

“Our case studies of these 13 countries and regions found that methods to modernize the property tax vary widely among them, including how they capture its advantage as a revenue-raising measure and make it an instrument for rationalizing land use policy and promoting social equity,” the editors write. 

A resource for scholars and policy makers alike, the book provides the most thorough review to date of the laws, administrative practices, reform proposals, technologies, and political debates that shape the property tax across countries of all sizes and income levels.  

The book finds that, in general, wealthier countries such as Japan, Korea, and Singapore have well-functioning property tax systems, although they face challenges—for example, unclear ownership of Japan’s growing number of abandoned homes. In China and Vietnam, which do not allow private ownership of land, local governments rely heavily on one-time land-use fees, which are less reliable and stable than recurrent taxes. In addition, many lower-income countries suffer from narrow tax bases, undervaluation of property, poor compliance, and political challenges. 

To represent roughly 50 countries, the editors selected 13 cases in based on the use of the property tax, innovative administration, use of technology, and history with the property tax. The case studies include all the largest economies in South and East Asia, all jurisdictions with recurrent property taxes of at least 1 percent of GDP, and a range of lower-income countries throughout Asia. The cases include China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Pakistan, the Philippines, Singapore, Taiwan, Thailand, and Vietnam. 

Acknowledging that conditions vary widely, the book recommends the following 10 directions for reform: 

• Develop a property and land tax strategy 
• Take a comprehensive approach to reform 
• Clarify the different roles of national, provincial, and local government 
• Eliminate unnecessary tax exemptions 
• Simplify the tax rate structure 
• Rationalize the use of property transfer taxes 
• Improve the quality of valuations and compliance with statutory revaluation cycles 
• Improve voluntary compliance with the property tax 
• Simplify and improve public management 
• Harness the power of information technology 

Property Tax in Asia: Policy and Practice is the latest in a series of Lincoln Institute books analyzing the property tax in large regions of the globe, including Property Tax in Africa: Status, Challenges, and Prospects (2017) and Property Tax Systems in Latin America and the Caribbean (published in Spanish, 2016). 

Image: View of Mt. Fuji, Tokyo Tower and crowded buildings in downtown Tokyo. Credit: yongyuan via Getty Images.