Finding Fiscal Inspiration in São Paulo

By Jon Gorey, Agosto 2, 2025

In São Paulo, Brazil, wedged among the sky-scraping office towers, luxury retailers, and high-end hotels of the Vila Olímpia neighborhood, sits a 272-unit social housing development. Built on the site of the former Coliseu favela, the high-rise condo building isn’t just a safer, new home for hundreds of low-income families who lived in the informal settlement for decades, enduring fires, floods, and rats. It’s proof, advocates say, that neighborhood investment doesn’t have to result in resident displacement, and that social housing can be built even in the most expensive area of a city.

In March, the Lincoln Institute of Land Policy invited a diverse group of researchers and practitioners from around the world to join several of its staff members for a four-day study tour. Blending classroom sessions with site visits, the study tour allowed participants to explore firsthand this well-known example of land value capture. Sometimes called land value return, land value capture refers to any set of policies that allows a community to recover and reinvest increases in land value that result from public investment or other government action, such as a new transit station or a change in zoning requirements.

“In São Paulo, we have at least two good examples of slums that were upgraded in places where land is very expensive,” explains Paulo Sandroni, an economist who co-developed the course with urbanist Camila Maleronka. “We had the idea to present to people and explain the instruments that we used—first, to capture land increment value, and second, to maintain the people living in slums in the same place they were living, but now in very good apartments.”

The process works like this: The city chooses an area to receive some public intervention as part of an “Urban Operation.” Developers who wish to build larger structures than what’s allowed in that zone can purchase Certificates for Additional Construction Potential, or CEPACs, which are sold on the public stock exchange—meaning the private sector ultimately sets their price. The revenue from those CEPAC auctions then funds public works and social housing in the same neighborhood.

But just because it’s possible to capture and reinvest land value increments into social housing doesn’t mean it’s inevitable, especially in pricey neighborhoods. “The community of Coliseu had to fight against many odds, many forces, from developers, from neighbors that didnt want them to stay there, including some people from the administration,” Sandroni says. “But the leaders of this movement, they said, ‘We have the right to be here. The legislation gave us the tools to stay here, and there is money to build these buildings. It was a wonderful example of inclusionary urban development.”

A soft focus, head and shoulders portrait of a woman in a colorful striped dress. In the foreground, her hand is in focus, holding a key ring with a metal, house-shaped keychain. The words on the keychain are in Portuguese and the translation is 'City of Sao Paulo Housing.'
A Coliseu resident with the key to her new home. Credit: Marcelo Pereira/SECOM via City of São Paulo.

São Paulo’s value capture tools have been the focus of many case studies—but seeing their results in person, in place, helped bring the concept to life for many participants, who hailed from organizations like the Organisation for Economic Cooperation and Development (OECD), the European Bank of Reconstruction and Development (EBRD), and the Centre for Affordable Housing Finance in Africa, among others.

“I was really struck by what I saw in São Paulo,” says Line Algoed, an urban anthropologist at Vrije Universiteit Brussel. “I knew about land value capture, but I had never seen the results in person. I didn’t know about CEPACs, and the other instruments used in São Paulo—it puts this city at the forefront of innovative urbanism.”

The results in São Paulo haven’t been perfect, Algoed adds, “but it is so good to see that the local government is trying to mitigate the consequences of unbridled land speculation.”

Hiro Ito joined the course with a curiosity about financial mechanisms that could help cities pay for climate infrastructure. Ito is the program manager for the EBRD’s Green City Action Plan, where he works with municipal governments to identify investments and policies that can help them prepare for environmental challenges and climate change. “We’ve developed action plans with 47 cities,” Ito says. “But many of those actions, particularly those related to nature or climate adaptation, are being left unimplemented,” often due to a lack of funding.

“Nature-based solutions, flood protection, mitigation for urban heat island effect—these projects are not traditionally revenue generating,” Ito explains. “Hopefully this will be another way to strengthen municipal finances so that cities around the world can do a lot more in those spaces.”

On a walking tour that included both the Coliseu building and São Paulo’s iconic Octavio Frias de Oliveira bridge, Ito was impressed with the scope and scale of the city’s investments—and wondered whether a similar land value capture tool could work in Ankara, Turkey, where EBRD is helping to finance the construction of a new metro line. Right after the trip, Ito and colleagues began studying “how we could potentially implement a land-based financing tool for the Ankara Metropolitan Municipality,” he says, since there are several publicly owned sites that could be developed nearby. “Could we introduce mechanisms like CEPACs to collect fees from that redevelopment? Ultimately, it’s to cover the cost of the metro extensions, but potentially those urban regeneration sites could incorporate other social and environmental benefits.”

Rosana Maria dos Santos speaks to a group of listeners who are gathered on an outdoor brick walkway with trees behind them. She is wearing jeans and a white T-shirt and gesturing with her hands.
Participants in the Lincoln Institute São Paulo study tour listen to Coliseu community leader Rosana Maria dos Santos. Credit: Lincoln Institute.

Ito appreciated that the course instructors, Sandroni and Maleronka, explained some of the shortcomings, limitations, and challenges of São Paulo’s approach as well. He recognizes that similar success hinges on certain conditions.

“We are testing this in Turkiye, because the urban population is growing, so theres a strong demand for more housing—it makes sense to some developers to buy additional rights,” Ito says. “But not all of the countries where the EBRD operates have a similar population trend,” he adds, noting that the real estate markets of smaller cities in Bulgaria or Romania, for example, may not be strong enough to support land-based financing. “But we did really like the idea of this market-based approach to set the price … I think that was a very clever way of getting the most out of the space.”

What resonated most with Kecia Rust, founder and executive director of the Centre for Affordable Housing Finance in Africa, was the state’s assertion that air rights are a public good.

“The overall approach that made Coliseu and other social housing investments, as well as the delivery of São Paulo’s iconic bridge, the monorail, roads, bicycle paths, and other public works investments possible, comes from an underlying philosophy that private property rights can extend in terms of longitude and latitude, but not in height,” Rust wrote in a blog post reflecting on the course. “Air rights are a public good, which the public sector sells to generate revenue to invest in public works and social housing,” she continued. “The city doesn’t have to go into debt when it invests in the construction of roads, bridges, and social housing.”

“I think the key challenge we face in an African context is that we don’t really have the data or the management capacity at local city level to do the extent of what we saw being done in São Paulo,” Rust says. “But what I saw and understood was so inspiring.”

Several Lincoln Institute staff joined the course as well, many of whom, outside of the Latin America team, had never had the chance to see this prominent global example of land value capture in person. “This whole idea of development without displacement, of how to safeguard or de-risk displacement when you invest in communities—thats a topic that is front and center with so much work that we’re doing at the institute,” says Enrique Silva, chief program officer at the Lincoln Institute. Silva intentionally invited staff from across the organization: “This idea of learning together, sharing and learning and exchanging, is something I would love to see happen more.”


Jon Gorey is a staff writer at the Lincoln Institute of Land Policy.

Lead image: The 272-unit Coliseu social housing complex, surrounded by the taller buildings of São Paulo’s Vila Olímpia district, is an example of land value capture. Credit: City of São Paulo.