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Una versión más actualizada de este artículo está disponible como parte del capítulo 4 del libro Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.
El 18 de julio de 1997 el Congreso de la República de Colombia aprobó una innovadora Ley de Desarrollo Territorial con objetivos ambiciosos que permiten que los municipios y distritos recuperen el valor de la tierra creado socialmente, es decir, las plusvalías. Específicamente, la Ley 388 establece que los ciudadanos tienen derecho a “participar” en el aumento del valor de la tierra cuando el marco legal que regula su uso aumenta el potencial de desarrollo. Se distinguen tres categorías de acción urbanística:
Para expresarlo de forma breve, la legislación estipula que el precio del metro cuadrado de tierra se calculará antes y después de cualquier acción urbanística. Cualquier municipio, por iniciativa del alcalde, podrá exigir su “participación” y así podrá recuperar entre el 30 y el 50 por ciento (según lo decida el mismo municipio) de la plusvalía generada. El precio se determina multiplicando los dos precios en metros cuadrados por el área de cada predio individual en cuestión y restando el precio antes de la acción urbanística del nuevo precio de referencia. Se fijó una tasa máxima del 50 por ciento para garantizar que siguiera habiendo motivación financiera para los promotores inmobiliarios.
Con esta legislación, Colombia ha dado fuerza de ley nacional a la premisa fundamental de los postulados de Henry George, quien sostenía que los ciudadanos tienen el derecho moral de recuperar el valor creado socialmente, como se evidencia en este caso con el aumento del precio de la tierra generado por las tres categorías de acción urbanística mencionadas anteriormente. Tal vez con la única excepción de Taiwán, pocos países, por no decir ningún otro, han intentado incorporar de manera tan directa los principios de George en una ley verdadera de carácter nacional.
Procedimientos para la aplicación
La legislación actual es apenas el primer paso. Según las prácticas colombianas, el Congreso actúa para trazar las políticas generales, pero su aplicación depende del seguimiento que se haga en el nivel ejecutivo nacional y en el nivel municipal. Para hacer el peritazgo crítico por metro cuadrado anterior y posterior a la acción urbanística con la mayor objetividad posible, una entidad independiente llamada Instituto Geográfico Agustín Codazzi llevará a cabo los avalúos de acuerdo a las directrices establecidas en la ley para cada una de las tres categorías.
Las tasas (denominadas participaciones en la ley) deben pagarse cuando el propietario solicita una licencia de urbanización o construcción, cuando cambia el uso del inmueble, cuando hay transferencia del dominio sobre el inmueble o cuando se adquieren títulos valores (representativos de los derechos adicionales de desarrollo y construcción). Estas tasas deben quedar asentadas en el registro de escrituras de propiedades para garantizar el cumplimiento del pago, y el dominio del inmueble no podrá ser transferido en dicho registro hasta que se paguen las tasas mediante alguna de estas modalidades de pago:
Es de esperar que la mayoría de los promotores privados preferirá asociarse con los municipios en lugar de pagar dinero efectivo. De hecho, la legislación prevé a manera de incentivo un descuento del 10 por ciento sobre el monto de la participación al utilizar la modalidad (6) y un descuento del 5 por ciento al utilizar las modalidades (2) y (4).
Los municipios y distritos deben destinar los recursos provenientes de las participaciones en las plusvalías para fines específicos:
Posibles repercusiones de la ley
Esta legislación aborda muchos aspectos de las políticas de la tierra que por mucho tiempo han sido de interés para el Instituto Lincoln. Martim Smolka, director del Programa para América Latina y el Caribe del Instituto y otras instituciones asociadas realizan seminarios y programas de capacitación con el propósito de compartir las experiencias adquiridas durante los procedimientos de implementación, posiblemente brindar asistencia en los proyectos piloto y seguir la evolución del experimento colombiano.
Uno de estos programas fue un taller de tres días impartido en marzo y copatrocinado por la Universidad Nacional de Colombia y la Escuela Superior de Administración Pública de Bogotá. El taller comprendía las observaciones formales e informales de un amplio espectro de partes interesadas en el tema, tanto de Colombia como de otros países. Puesto que es obvio que Colombia ha dado un paso atrevido y existen pocos precedentes que sirvan de orientación, los funcionarios públicos responsables de la implementación deben actuar de manera innovadora. En el taller se identificaba un número de posibles complicaciones que pueden presentarse a medida que avanza la implementación.
Aspectos constitucionales: La nueva ley se fundamenta inequívocamente en el artículo 82 de la Constitución de Colombia de 1991, que en sí mismo es un documento sumamente novedoso en muchos aspectos de la reforma de políticas de tierra urbanas. Para expresarlo de forma sencilla, el artículo 82 establece que cuando las acciones urbanísticas aumentan el potencial de desarrollo de la tierra, los ciudadanos tienen el derecho de participar en la plusvalía generada por tales acciones, de manera que se sufrague y distribuya equitativamente el costo del desarrollo urbano.
El debate legal y constitucional tiene dos facetas: 1) ¿Pueden los municipios actuar con base únicamente en la ley o deben esperar hasta que el gobierno nacional decrete “regulaciones” para luego ceñirse a ellas por completo? y 2) ¿debe la ley limitarse a establecer los principios generales comunes, dado que la Constitución de 1991 confiere la responsabilidad de los impuestos territoriales exclusivamente a los municipios?
Efectos prácticos de la sindéresis municipal: En el taller también se señaló que la naturaleza voluntaria de la ley puede tener consecuencias negativas y posiblemente imprevistas. Puesto que es el alcalde de cada municipio quien da inicio a la tasación de la “participación”, puede verse sometido a una presión considerable, tanto financiera como de otra índole. En áreas de rápido desarrollo, una tasa entre el 30 y el 50 por ciento del incremento en el valor de la propiedad puede ser una suma altísima. Un vocero, por ejemplo, aseguró que en Cali el 60 por ciento de las plusvalías generadas por las decisiones de planificación equivalían al monto total del presupuesto municipal. Por otra parte, la ley puede facilitar negociaciones y asociaciones de beneficio mutuo entre los municipios y los promotores inmobiliarios, las cuales no ocurren en este momento.
Cuidado del electorado: El ambiente político que produjo esta valiente legislación abarcaba casos escandalosos de fortunas repentinas que surgieron a raíz del cambio de zonificación en Bogotá y de la decisión de extender el perímetro urbano de Cali. En este último caso, se dijo que el precio de la tierra llegó a multiplicarse, ¡más de mil veces!
Además de la implementación inicial, se plantea la cuestión sempiterna de mantener un electorado que permita la efectiva implementación de dicha ley de cara a la resistencia poderosa y bien financiada que oponen los terratenientes y promotores inmobiliarios privados. Por otra parte, la habilidad de cualquier gobierno nacional que haya aprobado una ley de este tipo es de por sí un logro que despierta interés especial en aquellos que consideran la “recuperación de plusvalías” como un elemento esencial de la política de desarrollo urbano.
Objetividad de los avalúos: A pesar de los procedimientos tan específicos estipulados en la ley con la finalidad de lograr la mayor objetividad y transparencia posibles, no será fácil para el Instituto Codazzi cumplir a cabalidad con el avalúo previo y posterior a la acción urbanística dadas las limitaciones de tiempo que establece la ley. Más aún, las distintas alternativas de transferencia para el pago de las tasas con dinero efectivo, que seguramente gozarán de mayor popularidad, dependen de la apreciación local que se haga de lo que se considera “valor equivalente”. Varios oradores señalaron que este proceso podría ser una invitación a la corrupción.
Aspectos técnicos: Los oradores también hicieron mención a un número de problemas de avalúo técnico con las directrices establecidas en la ley. Por ejemplo, si la zonificación restrictiva hace que un propietario pierda valor de su propiedad, y esto a su vez aumenta el valor de un propietario adyacente, ¿qué disposición puede estipularse para proteger al primer propietario sin dejar de recuperar la plusvalía del segundo? Es más, puesto que el mercado anticipa la acción urbanística, ¿se reflejará ya en el avalúo “previo” el aumento de valor que provoca la probabilidad de la acción? O, si las regulaciones del uso de la tierra o de la construcción aumentan el valor de los propietarios de bajos ingresos con predios o inmuebles pequeños, es posible que éstos no cuenten con el dinero efectivo necesario para pagar las tasas por desarrollo, y a pequeña escala tampoco serían viables las otras modalidades de pago. Esto podría traer como resultado ventas forzadas o el desplazamiento de los habitantes pobres. Estos asuntos plantean un reto para la viabilidad de la política: ¿Es mejor seguir adelante y resolver las dificultades a medida que se presenten o intentar una modificación legislativa de los problemas técnicos antes de proseguir?
Efectos económicos: Aunque legalmente se describe como participación pública en el aumento del valor que generan las acciones urbanísticas, la legislación también puede ser considerada como una forma de impuesto a las ganancias de capital. ¿Con qué frecuencia se aplicará? ¿La implementación tenderá a bajar los precios de las tierras afectadas o será el consumidor final el que absorba los cambios en el valor? Si ocurre esto último, la ley podría tener un efecto negativo sobre las viviendas de precio asequible. Por esta razón el artículo 83 (4) exonera del cobro de la participación a los inmuebles destinados a “viviendas de interés social”, según la definición que de esto hace el gobierno nacional. ¿Se convertirá esto en una ruta de escape para la evasión masiva? Existe poca experiencia internacional para responder estas interrogantes.
Planes de ordenamiento territorial: La Ley 388 de 1997 también estipula que todos los municipios y distritos deben elaborar planes de ordenamiento y proporciona descripciones bastante detalladas de dichos planes en los artículos 9 al 35. Sin duda la planificación altera las expectativas de los propietarios y, por ende, el valor de los inmuebles. La interacción administrativa y económica del proceso de planificación de la ciudad y la recuperación de las plusvalías seguramente será un asunto complejo.
Conflictos en los objetivos: Como suele suceder con los instrumentos fiscales, los nuevos cambios buscan alcanzar varios objetivos que no siempre son compatibles: financiar un mejor desarrollo urbano, reducir la especulación inmobiliaria, darle mayor equidad y carácter progresivo a la tributación y cerrar algunas de las vías predilectas para la corrupción de los funcionarios municipales.
Aprendizaje mediante la innovación
Pese a estas inquietudes, Colombia continúa la tradición de ser una de las naciones más innovadoras del mundo en el campo de la planificación de desarrollo urbano, legislación y finanzas. Bogotá fue la primera ciudad importante del mundo en crear un distrito de zonificación especial que reconocía las realidades de las prácticas de vivienda para sectores de ingresos menores. Con el estímulo producido por las ideas y la influencia del fallecido Lachlin Currie, asesor económico del gobierno nacional durante aproximadamente 30 años, la ciudad utilizó distritos de avalúo especial (llamados contribuciones de valoración) para llevar a cabo una transformación física de envergadura en los años 1960. Las leyes colombianas sobre el desarrollo territorial de 1989 y 1991, modificadas y ampliadas por esta ley de 1997, se encuentran entre los enfoques más integrales de la planificación urbana desde la ley británica para el control del desarrollo urbano promulgada en 1947 (British Town and Country Planning Act of 1947). Asimismo, la constitución colombiana prácticamente es única en mencionar el derecho moral que tienen los ciudadanos a las plusvalías generadas por las acciones urbanísticas.
Como cabría esperarse, algunas de estas innovaciones a la larga no llenarán las expectativas iniciales. De hecho, algunos participantes del taller sostenían que los esfuerzos invertidos en la recuperación de la plusvalía podrían ser de mayor utilidad en el mejoramiento de la eficacia de los impuestos a la propiedad convencionales. Por otra parte, la nueva ley está abordando y resolviendo algunos problemas causados por legislaciones y políticas anteriores, y el país está aprendiendo de esta experiencia. La conclusión de los participantes en el taller fue que el proceso bien ha valido la pena y que la nueva ley debe entenderse y evaluarse comparándola con otros instrumentos para la recuperación de plusvalías establecidos anteriormente y la política fiscal en general.
William A. Doebele es profesor emérito de planificación urbana y diseño en la Escuela de Postrado en Diseño de la Universidad de Harvard y miembro asociado del cuerpo docente del Instituto Lincoln. La preparación de este artículo contó con las valiosas colaboraciones de Martim Smolka, miembro superior de los programas para América Latina, Fernando Rojas, docente invitado del Instituto, y Fernanda Furtado, asociada del cuerpo docente y de investigación del Instituto.
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Over the past decade, the Lincoln Institute has developed and presented many courses on the interaction of land and tax policies and on the development of value-based land and real property taxation for policy makers and senior government officials from countries transitioning to market economies in Central and Eastern Europe and the Baltics. These courses address the economic and legal basis for value-based taxes as well as practical problems in their implementation.
As private property markets evolve, property changes hands and new wealth is invested in real estate. The introduction of ad valorem taxation is a natural step in the development of market-based economies. With economic growth and development, the revenue capacity of a value-based tax increases, and the tax can contribute to other important transition objectives such as privatization, government decentralization, infrastructure improvement and efficient land use. Nevertheless, the introduction of value-based taxation confronts both political and practical difficulties in developing an appropriate legal and administrative framework, as well as effective valuation, appeals and information systems.
The Baltic countries of Estonia, Latvia and Lithuania have been in the forefront of implementing value-based taxes on land (Malme and Youngman 2001). Estonia was the first of these new independent states to recognize the benefits of land taxation and to introduce a value-based land tax in 1993, followed by Latvia in 1998. Lithuania has been a leader in integrating and unifying real property cadastral, registration and valuation systems to strengthen nascent real estate markets and support real property taxation. Progress toward value-based taxation in Lithuania began with the integration of real property administrative units and the development of an automated central database of real property information in a self-funded state enterprise known as the State Land Cadastre and Register (SLCR). In 2001 the Ministry of Finance funded the SLCR to plan and develop a mass valuation system in preparation for the anticipated passage of laws that will introduce value-based taxation of real property throughout Lithuania. The first phase of this program was the development of land value maps that were completed and made public in 2003.
The Lincoln Institute and SLCR (renamed the Lithuanian State Enterprise Centre of Registers [SECR] in 2002) have worked collaboratively since 1997 to offer educational programs and document Lithuania’s progress (Malme 2001; Sabaliauskas and Aleksienė 2002). In 2003 the Institute and SECR developed a new executive course, Introducing a Market Value-Based Mass Appraisal System for Taxation of Real Property, for lawmakers and senior government representatives preparing to implement value-based taxes in other countries experiencing rapid political and economic change.
The course uses Lithuania’s experiences in market valuation as a case study, and SECR executives and specialists join core international faculty in the Institute’s Department of Valuation and Taxation to address the principles, strategies and practical problems raised by mass valuation of real property. The Lithuanian case study demonstrates how those responsible for developing that mass valuation system dealt with the problems they faced.
The first offering of the week-long course was presented in Vilnius, Lithuania, in October 2003 to a delegation from the Russian Federation, led by Alexey Overchuk, deputy chief of the Federal Land Cadastre Service of Russia (see related article). Participants included senior administrators of land valuation boards from various regions of Russia, officials from the federal ministries of Economic Development, Finance and Property Relations, and representatives from private companies involved in valuation system development. Two delegates from the National Cadastral Agency of the Republic of Belarus also participated. This course will be offered again in Vilnius in fall 2004 for a delegation from another country that is undertaking mass valuation for land or real property taxation.
Jane H. Malme is a fellow at the Lincoln Institute. She developed the new course on mass valuation with Lincoln Institute faculty Richard Almy, John Charman and Robert Gloudemans, together with SECR representatives Albina Aleksienė, Arvydas Bagdonavičius, Bronislovas Mikūta, Rimantas Ramanauskas, Antanas Tumelionis and Lidija Zavtrakova.
References
Malme, Jane H. 2001. Market value-based taxation of real property. Land Lines 13(1):8–9.
Malme, Jane H. and Joan M. Youngman. 2001. The Development of Property Taxation in Economies in Transition: Case Studies from Central and Eastern Europe. Washington, DC: The World Bank. Available at http://www1.worldbank.org/wbiep/decentralization/library9/malme_propertytax.pdf
Sabaliauskas, Kestutis, and Albina Aleksienė. 2002. Progress toward value-based taxation of real property in Lithuania. Land Lines 14(4):11–13.
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Sally Powers has been a visiting fellow in the Department of Valuation and Taxation at the Lincoln Institute of Land Policy since 2009. She was director of assessment for the City of Cambridge for thirteen years until 2001, when she became an international consultant. That work has taken her to Kosovo, Montenegro, South Africa, the Kyrgyz Republic, and Turkmenistan, among other countries, where she has participated in projects on property taxation, market value revaluations, and establishment of a valuation profession for a transition economy.
Her career as an assessment administrator and consultant has involved all aspects of property taxation: legal framework, property appraisal, value defense, local government finance, tax policy, project planning and execution, public information, software specification and testing, cadastral/GIS (geographic information systems) mapping and analysis platforms, and tax collection and enforcement. Her research interests focus on mass appraisal, specifically the application of econometric techniques to analyze market activity and develop models to estimate the market value of properties that have not sold. She has written on topics as diverse as appraisal modeling, implementation of the local property tax in Kosovo, and property tax collection strategies.
Powers received her bachelor’s degree in anthropology from the University of Chicago, and she holds a Master of Science degree from the Boston College Carroll School of Management.
LAND LINES: How does your work fit within the research and education program of the Lincoln Institute?
SALLY POWERS: The Lincoln Institute is a leader in property tax policy, and its work influences the local government officials responsible for the property tax in thousands of jurisdictions across the United States and internationally. The Department of Valuation and Taxation presents a variety of conferences, seminars, and courses for property tax professionals, and I have served as faculty for a number of these programs since the 1990s. I’m also involved in working directly with local tax practitioners and in research projects that will continue to challenge the conventional wisdom about the property tax.
LAND LINES: What are some of your current projects?
SALLY POWERS: One major project deals with a joint venture between the Lincoln Institute and the George Washington Institute of Public Policy to create a free, downloadable property tax database for all 50 U.S. states and the District of Columbia. The Significant Features of the Property Tax Web site was launched in June 2009, and the information is updated every year to keep current with changes in the legislation that regulates the property tax in each state.
We regularly expand the subject matter to be included, and have made the site a central access point for information about the property tax from a variety of federal, state, and scholarly sources. For example, the only nationwide study of effective tax rates is published by the Minnesota Taxpayers Association, and this publication is now available for downloading from the Significant Features site. The next topic we plan to organize for presentation on the Web site is the various forms of property classification for tax purposes.
LAND LINES: Can you clarify what an effective tax rate and classification mean, and why they are important aspects of this database?
SALLY POWERS: The property tax rate by itself does not explain much about the property tax burden in a particular community or provide any basis for comparison across jurisdictions. A high tax rate may simply reflect low property values, and a low tax rate may reflect very high values. Effective tax rates are calculated by comparing the amount of the property tax bill for a property to its market value, which may or may not be the same or even close to its assessed value. Effective tax rates, where they are available, thus make it possible to understand the impact of a tax bill intuitively and to make better informed cross-jurisdictional comparisons.
Classification of property is undertaken by many states, either legislatively or in the state’s constitution, to identify property categories based on use, the most common uses being residential, commercial, and industrial. In some states the classifications are applied for identification and reporting purposes only. However, it is employed more frequently to tax favored classes at lower rates than other classes. The most favored classes are generally residential and agricultural uses.
LAND LINES: Based on your research, how well is the property tax holding up as a primary local revenue source during the current recession?
SALLY POWERS: There are two major components to a property tax bill: the property value and the tax rate, as discussed above. In states where local tax jurisdictions are not encumbered with extreme limits on tax rates, the property tax can be quite resilient, because when values decrease the tax rate may be increased. In addition, the value always represents an assessment as of a specific date prior to the issuance of the tax bill. It is not unusual for this assessment date to be a year and a half or more before the date of issuance of tax bills. This “assessment lag” gives local jurisdictions a cushion in times of rapidly changing markets, with time to plan for the eventual change in the level of assessed values and to investigate other local revenue sources. To date, research on property tax revenues during the current down-turn has borne out these features of the property tax.
LAND LINES: It’s clear that the American property tax is a complex affair. How does this compare to your experience in other countries?
SALLY POWERS: International experience with the property tax varies greatly, depending on the maturity of the property tax system, the culture, and the legal underpinnings for the tax. The projects I worked on in Eastern Europe were introducing a market value based property tax. Political leaders and central and local public officials had no difficulty with the concept of market value. Valuation methods were uncomplicated and directly related to sales. A common theme in the U.S. and many other countries, however, is the desire to make the burden of the property tax smaller for residences than for businesses. Some of the proposed formulas to provide tax relief are extremely complicated, such as relating property value to household size and ages of household members.
LAND LINES: How widespread is the property tax?
SALLY POWERS: It is quite surprising how many countries assess some form of tax or fee on property or property rights. Another Lincoln Institute project I am working on is the African Tax Institute (ATI), a joint venture with the University of South Africa at Pretoria. More than ten research fellows at ATI have visited one or more of 38 countries to develop in-depth reports on the various forms of tax on property (Franzsen and Youngman 2009). Most of those reports and supplemental appendices are posted on the Lincoln Institute Web site as working papers. In every country studied the researchers found some sort of tax or fee on ownership or use of property. In many countries all land is owned by the government, but the rights to use the land are owned by individuals and companies that pay fees and taxes on their use rights.
In countries of the former Yugoslavia, for example, the property tax is a familiar concept. In the early 1990s, the Federal Republic of Yugoslavia established a privatization program that transferred ownership of government-owned apartment flats to individual owners. An annual tax was assessed on the owners, based on the characteristics of the property.
LAND LINES: Can you describe more about your interest and experience in econometrics applied to property market data.
SALLY POWERS: I was plunged into multiple regression analysis on my very first property tax job for the City of Boston in 1982. I was part of the team hired to use statistical analysis to develop models (formulas) that could be applied to property data to estimate market value. I was fortunate because the city hired some of the top experts in this emerging field to train us in these methods. Since then, both as an assessor and later as a consultant, I have continued to use econometric tools to estimate market value for property tax application.
It has been fascinating to participate in the increasing sophistication and effectiveness of CAMA (computer assisted mass appraisal) to generate AVMs (automated valuation models). The biggest leap in this technology takes advantage of GIS capabilities to analyze location and property value. I am looking into an econometric tool for CAMA application that analyzes data around median values rather than the mean. This is interesting because the current statistical standards for value accuracy and uniformity are calculated around the median because, compared to the mean, it measures average value with less bias from extremely high or low values.
LAND LINES: Do you have any other observations about the Institute’s work in the current volatile realm of property taxation?
SALLY POWERS: As a visiting fellow at the Lincoln Institute, I have found it especially gratifying to see the increasing public interest in the Significant Features of the Property Tax database. The Web site has been cited by many scholars in the field of local public finance, and the authors of two papers presented at recent Institute seminars used data from the site for their analyses.
Adding to its Web-based resources, the Lincoln Institute has produced more than 10 online courses on such diverse topics as property tax policy, modern valuation technologies, property tax reform in Massachusetts, and introduction of the property tax in transition economies. The IAAO (International Association of Assessing Officers), the leading membership organization for tax assessors and other property tax professionals, has recognized the value of these courses, and now its members can receive continuing education credit for taking them.
Finally, the Institute has inspired more economists to become interested in property tax valuation and equity issues. For example, economists from the University of Illinois and Florida State University are conducting studies of assessment equity that introduce contemporary econometric tools to both display and analyze patterns of overvaluation and undervaluation of property in assessing jurisdictions.
Visiting fellow Dan McMillen (2011), working with a rich data-set that includes the City of Chicago, will present his analysis and conclusions at the next annual conference of the IAAO. I will be on hand to help make his innovative findings accessible not only to the statistical analysts in the audience, but also to property tax assessors who are interested in improving values in their own jurisdictions.
References
Franzsen, Riel C. D., and Joan M. Youngman. 2009. Mapping property taxes in Africa. Land Lines 21(3): 8-13.
McMillen, Daniel P. 2011. Assessment regressivity: A tale of two Illinois counties. Land Lines 23(1): 9-15.
Significant Features of the Property Tax. www.lincolninst.edu/subcenters/significant-features-property-tax
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La vivienda es un componente importante tanto del patrimonio neto de un hogar como de la riqueza nacional agregada o el inventario de capital residencial. La riqueza residencial agregada es la suma de los valores de todas las unidades de vivienda. En Brasil, las estructuras residenciales representan alrededor de un tercio de los activos netos totales, de manera que su valor es importante para la política económica y social. El presente análisis se hace las siguientes preguntas: ¿Qué variables determinan los valores del inventario de la propiedad residencial? ¿Cómo afectan a estos valores la ubicación de las viviendas y las condiciones del barrio? ¿Cuál es la riqueza residencial agregada en la Región Metropolitana de Rio de Janeiro (Metro Rio)? ¿Cuál es su distribución entre los grupos de ingresos familiares y valores inmobiliarios? En otras palabras, ¿qué genera la riqueza residencial? ¿Cuánta riqueza residencial existe? ¿Quién la tiene? ¿Dónde está ubicada? (Vetter, Beltrão y Massena 2013.)
Metodología para estimar la riqueza residencial
Para responder a estas preguntas, primero calibramos un modelo hedónico de renta residencial con microdatos de muestra del censo de población de 2010 realizado por el Instituto Brasileño de Geografía y Estadística (IBGE). Las unidades de análisis son las familias que viven en unidades de vivienda privadas permanentes en áreas urbanas de Metro Rio. La cantidad total de hogares en 2010 era 3,9 millones, y nuestra muestra fue de 223.534 (5,7 por ciento). Usamos los 41.396 inquilinos en la muestra para calibrar nuestro modelo y después estimar la renta para los propietarios de vivienda y los propietarios de unidades exentas de alquiler. Finalmente transformamos las rentas reales e imputadas en valores de vivienda dividiéndolas por la tasa de descuento mensual de 0,75 por ciento (9,38 por ciento de tasa anual), según la práctica estándar para estudios de riqueza residencial en Brasil (Cruz y Morais 2000, Reiff y Barbosa 2005, y Tafner y Carvalho 2007).
La suposición subyacente en estos estudios es que los precios hedónicos de las características en el modelo y la tasa de descuento son similares para unidades de alquiler y exentas de alquiler. Estas son suposiciones importantes pero necesarias para aplicar la metodología con los microdatos de censo existentes. La suma de los valores estimados de las viviendas es nuestra medida de riqueza residencial. El objetivo es estimar el valor agregado de todas las unidades de vivienda y sus valores promedio.
Al calcular los precios promedio de las viviendas para estos grupos, no controlamos por tamaño de vivienda u otras características, como se haría para los índices hedónicos de precios de viviendas. Con el uso de microdatos del censo, también podemos estimar la riqueza residencial por ingresos familiares así como para unidades espaciales más pequeñas dentro de las municipalidades, como barrios o distritos. Si bien la muestra de unidades de alquiler es relativamente grande, el tamaño de la muestra cae rápidamente a medida que los alquileres y los ingresos familiares aumentan, y las varianzas son particularmente altas para el grupo abierto en el extremo superior de la distribución de ingresos. Como no tenemos datos sobre el valor de las hipotecas, nuestra medida es de riqueza residencial bruta en vez de neta.
El uso de los valores de alquiler del censo o una encuesta de hogares se compara favorablemente con otros métodos usados comúnmente para estimar riqueza residencial para las cuentas nacionales de Brasil y estudios asociados (Garner 2004), tales como pedirles a los propietarios que estimen el precio de venta o el alquiler mensual de sus casas, usar los precios de oferta de viviendas a la venta o usar los registrados cuando se efectúa la venta propiamente dicha. Si bien los inquilinos saben cuánto pagan mensualmente de alquiler, los encuestados quizás tengan muy poca información sobre las tendencias vigentes en los precios de las viviendas, y el precio de oferta inicial es frecuentemente más alto que el precio de venta final. En Rio de Janeiro, el gobierno municipal usa sus propias estimaciones de los precios de venta en función de los precios de oferta, en vez del valor registrado utilizado en el cálculo del impuesto de transferencia inmobiliaria, porque los vendedores y compradores muchas veces registran la venta a un valor más bajo.
En nuestro modelo hedónico de renta residencial, la variable dependiente es un vector de rentas residenciales, y las variables independientes son las matrices de las características estructurales de la unidad de vivienda, el acceso a empleo y las características del barrio, incluyendo indicadores de acceso a infraestructura y servicios urbanos. Las variables utilizadas son para el hogar propiamente dicho y también para el área del censo en que está ubicado. La figura 1 muestra las 336 áreas del censo de Metro Rio y los límites municipales más amplios, agrupados en seis subregiones de acuerdo a los indicadores analizados en este estudio y en estudios previos (Lago 2010).
El indicador de acceso al empleo mide el tiempo promedio de viaje al trabajo para los residentes de cada área del censo. La figura 2 muestra que el tiempo promedio de viaje al trabajo aumenta con la distancia al centro, pero no tanto como era de esperar, parcialmente debido a una mayor congestión de tráfico en todas las áreas y a que Metro Rio es policéntrico, con muchos centros subordinados.
Los indicadores de la calidad de la infraestructura y los servicios del barrio incluyen el acceso del hogar al sistema público de alcantarillado y agua, recolección de basura y condiciones de la manzana (por ejemplo, si las calles están pavimentadas y tienen bocas de alcantarillado). Como estos indicadores están altamente correlacionados, los resultados de componente de un análisis de componentes principales se utilizan como las variables independientes en el modelo hedónico. El primer componente principal explica el 46,6 por ciento de la varianza y muestra cargas altamente positivas sobre las condiciones e infraestructura adecuada de la manzana, y cargas altamente negativas sobre condiciones de manzana inadecuadas (por ejemplo, basura en las calles y alcantarillado abierto), identificando aquellas áreas que tienen un alto nivel de atractivo o deseabilidad (figura 3). Si bien los resultados más bajos están claramente concentrados en las áreas periféricas, los patrones de atractivo varían considerablemente. Como con los tiempos de viaje al trabajo, el patrón de distribución de los resultados de atractivo revela la complejidad de la estructura espacial de Metro Rio.
Nuestro modelo hedónico explica el 73 por ciento de la varianza de la renta residencial. Las variables independientes clave son estadísticamente significativas; la calidad del barrio y el acceso al empleo explican casi dos tercios de la varianza, mientras que las características estructurales de la vivienda explican sólo alrededor de un tercio de la varianza. En otras palabras, gran parte del valor de la vivienda es el valor capitalizado del acceso al empleo y a infraestructura y servicios del barrio, todos los cuales están determinados en gran medida por los gastos públicos. La figura 4 (pág. 20) muestra la distribución de los valores promedio estimados de la vivienda para las áreas del censo en dólares estadounidenses, de acuerdo a la determinación de nuestra metodología. (La tasa de cambio promedio para 2010 es de US$1=R$1,76). Estos valores tienden a ser más altos en áreas donde el viaje al trabajo es relativamente corto y hay buen acceso a infraestructura y servicios urbanos.
Distribución de la riqueza residencial
¿Qué parte de la riqueza residencial les corresponde a los propietarios de viviendas y qué parte les corresponde a los propietarios de unidades de alquiler y unidades exentas de alquiler utilizadas por empleadores, familiares u otros? Nuestra estimación de la riqueza residencial agregada de Metro Rio, tanto en unidades ocupadas como desocupadas en 2010, es de alrededor de US$155.100 millones (94,2 por ciento del PIB de Metro Rio de 2010 de US$164.100 millones) y US$140.200 millones solamente para unidades ocupadas (84,2 por ciento del PIB de Metro Rio). Del total de unidades ocupadas, el 74,8 por ciento de esta riqueza residencial (alrededor de US$105.000 millones) corresponde a unidades ocupadas por sus dueños, y el resto pertenece a propietarios de unidades de alquiler o que no cobran alquiler. En el caso de hogares de menores ingresos, los propietarios podrían ser otra familia de menores ingresos.
La tabla 1 muestra que el porcentaje de propietarios es bastante similar para todos los grupos de ingresos familiares. Por ejemplo, los propietarios abarcan casi tres cuartas partes de los hogares en el grupo de familias de menores ingresos (con menos de dos salarios mínimos o un ingreso promedio anual de solamente US$4.407). Una razón clave para este alto porcentaje de propiedad de la vivienda es que aquellos que viven en favelas u otros tipos de viviendas informales se pueden declarar propietarios, aunque no tengan derecho legal al suelo donde se encuentra ubicada su casa. El censo de 2010 identificó más de 520.000 hogares (más del 15 por ciento de todas las viviendas urbanas privadas permanentes) en estos tipos de asentamientos en Metro Rio. La propiedad del suelo en estos asentamientos es una cuestión legal compleja, sobre la cual ni siquiera los abogados se pueden poner de acuerdo, ya que la probabilidad de desalojo (o por lo menos de desalojo sin compensación) es bastante baja, y, según la ley brasileña, aquellos que viven en suelos sin título legal pueden adquirir derechos de ocupación después de cinco años.
Si bien el 25,3 por ciento de todos los hogares ingresaba menos de dos salarios mínimos (US$6.960 por año), los propietarios de este grupo tenían solamente el 15,3 por ciento de la riqueza residencial agregada de todos los propietarios. En contraste, sólo el 15,6 por ciento de los hogares ganaba 10 o más salarios mínimos (US$34.800 por año), pero los propietarios de este grupo de ingresos tenía el 34,5 por ciento de la riqueza residencial agregada. De todas maneras, los hogares de menores ingresos tienen más riqueza residencial de lo que uno podría esperar, en parte debido a que frecuentemente son propietarios en asentamientos informales.
La figura 5 muestra la curva de Lorenz para la distribución de riqueza residencial agregada de los propietarios, por grupos de valor inmobiliario. Esta distribución es bastante desigual, porque casi el 23,7 por ciento que no son propietarios no tienen esa riqueza (tal como se ve donde la curva de Lorenz corre a lo largo de la parte inferior del eje) y porque aquellos que viven en viviendas de mayor precio tienen mayor riqueza residencial.
Distribución de riqueza residencial por subregiones
Gran parte de la riqueza residencial agregada está en manos de aquellos que viven en los suburbios y la periferia de Metro Rio, si bien el valor promedio de sus unidades de vivienda es menor. La tabla 2 muestra que esas subregiones (4 y 6) representan en su conjunto el 79 por ciento del total de hogares en Metro Rio (3,1 millones) y el 58,1 por ciento de la riqueza residencial agregada (US$80.900 millones). La subregión 2 (los barrios de altos ingresos más antiguos a lo largo de la bahía y la costa) representa solamente el 6,3 por ciento de los hogares de Metro Rio (alrededor de 242.000), pero el 19,0 por ciento de su riqueza residencial.
El porcentaje de inquilinos, 28,6 por ciento, es mayor en los grandes asentamientos informales (subregión 5), con un 2,7 por ciento adicional de unidades exentas de alquiler. Las tasas de propiedad de la vivienda son mayores (80,4 por ciento) en la periferia (subregión 6), donde muchos propietarios viven en suelos sobre los que no tienen un título legal pleno, si bien estas áreas generalmente no son asentamientos informales de acuerdo a la definición del IBGE.
Distribución espacial de los ingresos de los hogares
Un resultado de la interacción de las fuerzas de mercado que conforman los precios de alquiler y de viviendas residenciales es que la distribución de los ingresos agregados de los hogares tiende a reflejar la distribución de riqueza residencial agregada. En otras palabras, hay un nivel de segregación relativamente alto por grupo de ingresos, con las familias de menores ingresos concentradas en los grandes asentamientos informales, y en los suburbios y la periferia (subregiones 4, 5 y 6). La alta concentración espacial de hogares de mayores ingresos genera un ingreso agregado y demanda mayores en áreas que ofrecen servicios de mayor nivel, lo cual a su vez hace que estas áreas sean más atractivas para propietarios e inquilinos de mayores ingresos. La figura 6 (pág. 22) muestra que los ingresos anuales promedio de los hogares en las áreas del censo de 2010 reflejan en gran medida la distribución de los valores promedio de las viviendas (figura 4), los tiempos de viaje (figura 2) y el atractivo del barrio (figura 3).
En 2010, el área de altos ingresos de Barra de Tijuca (subregión 3) abarcaba solamente el 2,1 por ciento de todos los hogares de Metro Rio, pero generaba el 8,1 por ciento de los ingresos agregados de los hogares y el 7,6 por ciento de la riqueza residencial agregada. En comparación, los cuatro grandes asentamientos informales de la subregión 5 abarcaban el 2,5 por ciento de todos los hogares pero generaban sólo el 1,0 por ciento de los ingresos agregados de los hogares y el 1,4 por ciento de la riqueza residencial. De todas maneras, el valor residencial agregado de estos cuatro grandes asentamientos informales fue de casi US$2.000 millones, y el valor promedio de la vivienda fue de casi US$21.000. Estos resultados muestran una concentración espacial relativamente alta tanto de ingresos agregados de los hogares como de riqueza residencial, lo cual está ligeramente atenuado por el porcentaje de propietarios de vivienda en asentamientos informales.
Implicaciones para la metodología y las decisiones políticas
La metodología usada en este análisis brinda un panorama interesante sobre la importancia macroeconómica y social de la riqueza residencial; las variables que la genera; su distribución en función de la tenencia de la vivienda, los ingresos familiares y grupos de valor inmobiliario; y su distribución en las distintas subregiones, desde los barrios de ingresos más altos hasta los asentamientos informales. Se deben tener en cuenta las importantes suposiciones requeridas para el uso de esta metodología al interpretar sus resultados. Se podrían usar más adelante datos de registros de propiedades u otras fuentes con información más detallada sobre el tamaño de las unidades para complementar esta metodología.
Los servicios, las inversiones y las acciones reguladoras del gobierno pueden generar beneficios (por ejemplo, acceso al empleo, servicios urbanos y equipamientos) y costos (por ejemplo, impuestos, aranceles e impactos medioambientales negativos) que se capitalizan en el valor de las viviendas de los barrios afectados. Para los propietarios, los beneficios netos positivos de las acciones gubernamentales aumentan su riqueza residencial, porque se capitalizan en el valor de su vivienda. No obstante, para inquilinos y nuevos propietarios, estas mismas acciones gubernamentales pueden hacer aumentar los alquileres y los precios de las viviendas, junto con los beneficios netos mencionados anteriormente. Algunos hogares, especialmente los inquilinos y compradores de vivienda de menores ingresos, quizás tengan que dejar el área beneficiada, y otros nuevos propietarios potenciales quizás no puedan asentarse en el área. Por lo tanto, la tenencia de la vivienda es importante para determinar si un hogar recibe o no los beneficios netos de las inversiones y acciones reguladoras del gobierno.
La capitalización de los beneficios netos de las acciones gubernamentales sería claramente un problema para más del 30 por ciento de los hogares que viven en los cuatro grandes asentamientos informales y que no son propietarios, y también para aquellos que están accediendo al mercado de la vivienda. Si bien no hay datos confiables sobre la rotación de viviendas, sabemos que el número total de hogares urbanos en Metro Rio aumentó más del 20 por ciento, o 657.000 unidades, entre 2000 y 2010. Este incremento fue un 14 por ciento mayor que el número total de hogares en la Municipalidad de Curitiba (la capital del estado de Paraná) en 2010 y bastante más que el doble de Washington, D.C. Todos estos nuevos hogares, más todos los inquilinos (alrededor de un quinto del total de hogares) y los propietarios que se quieran mudar deberán pagar mayores alquileres y precios de viviendas debido a los beneficios netos de las acciones gubernamentales.
Estos resultados demuestran la necesidad de contar con políticas que aseguren que el aumento de los alquileres y los precios de las viviendas no excluyan a ciertos hogares en áreas donde se están mejorando los servicios públicos y la infraestructura. Por ejemplo, parte del programa de mejoras se podría destinar a ayuda económica para la compra de una vivienda. Una manera de financiar estos programas de inversión y viviendas de interés social sería recuperar parte de la plusvalía generada por las inversiones de infraestructura de los hogares de mayores ingresos. La recuperación de parte de la plusvalía generada por las inversiones urbanas podría ayudar a financiar subsidios de vivienda adicionales para familias de menores ingresos y también inversiones adicionales, generando una especie de multiplicador de inversiones.
Sobre los autores
David M. Vetter (Ph.D., Universidad de California) ha trabajado por más de cuatro décadas en financiamiento urbano y temas económicos en América Latina para entidades brasileñas, en el Banco Mundial y en Dexia Credit Local, y también como consultor.
Kaizô I. Beltrão (Ph.D., Universidad de Princeton) fue decano e investigador senior en la Escuela Nacional de Estadística (perteneciente al IBGE) y es ahora profesor titular e investigador senior en la Fundación Getulio Vargas.
Rosa M. R. Massena (Doctorado, Universidad de Burdeos) fue investigadora principal en IBGE durante 23 años y desde entonces ha trabajado como consultora en programas de indicadores sociales para Hábitat, el Banco Mundial, PNUD y otras entidades.
Recursos
Cruz, Bruno. O. y Maria P. Morais. 2000. Demand for Housing and Urban Services in Brazil: A Hedonic Approach. Paper presented at the European Network for Housing Research Conference, Gavle, Sweden (Junio).
Garner, Thesia I. 2004. Incorporating the Value of Owner-Occupied Housing in Poverty Measurement. Prepared for the Workshop on Experimental Poverty Measures, Committee on National Statistics. Washington, D.C.: The National Academies.
Lago, Luciana C. 2010. Olhares Sobre a Metrópole do Rio de Janeiro: Economia, Sociedade e Território. Rio de Janeiro, Brazil: Observatório das Metrópoles, FASE, IPPUR/UFRJ.
Reiff, Luis. O. y Ana L. Barbosa. 2005. Housing Stock in Brazil: Estimation Based on a Hedonic Price Model. Paper No. 21. Basel, Switzerland: Bank for International Settlements. Tafner, Paulo y Marcia Carvalho. 2007. Evolução da Distribuição Familiar da Riqueza Imobiliária no Brasil: 1995–2004. Revista de Economia 33(2) (Julho-Dezembro): 7–40.
Vetter, David M., Kaizô I. Beltrão, y Rosa R. Massena. 2013. The Determinants of Residential Wealth and Its Distribution in Space and Among Household Income Groups in the Rio de Janeiro Metropolitan Region: A Hedonic Analysis of the 2010 Census Data. Working Paper. Cambridge, MA: Lincoln Institute of Land Policy.
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The Lincoln Institute has supported the authors’ work on property taxation in South Africa for several years, and in February 2002 the Institute published Property Taxes in South Africa: Challenges in the Post-Apartheid Era. Edited by Bell and Bowman, the book presents major portions of their own work, together with chapters by several of their colleagues in the U.S. and in South Africa. This article provides an overview of seminars on property tax issues conducted by Bell and Bowman in South Africa in March 2002.
The end of apartheid in South Africa nearly a decade ago presented new opportunities and challenges to every aspect of national life, including fiscal issues. The government faced the task of extending the property tax to previously untaxed areas and adapting it to provide services through a set of radically restructured local governments. The final reorganization of local government took effect in December 2000, and the new governments now must develop comprehensive property tax (rates) policies.
Several key pieces of apartheid-era legislation had established the spatial basis for racial separation:
These policies greatly complicated efforts to amalgamate former white and black local authorities (WLAs and BLAs), with important implications for property taxation. Specifically, for local governments, the legacy of apartheid includes:
Post-Apartheid Local Government Structure
The dismantling of apartheid began in the mid-1980s and was essentially complete by the early 1990s. At the end of 1993, the Local Government Transition Act (LGTA) was signed by then-President de Klerk and, symbolically, by Nelson Mandela, leader of the African National Congress (ANC). The LGTA provided for short-, medium- and long-term transformation of local governments to create nonracial self-government. It created two-tier local governments in metropolitan areas, with powers and responsibilities shared between a geographically larger unit and two or more smaller units within the same area. The Municipal Structures Act of 1998, providing for single-tier metropolitan government, was implemented after the local elections of December 2000 as part of a general and final redemarcation of local governments that reduced the number of authorities from approximately 845 to less than 300.
Amalgamation of municipalities brought new areas into the property tax base, including former BLAs, bantustans and their associated rural R293 towns, but the residents of these newly incorporated areas had never before paid property taxes. Thus, it was necessary to develop the information and administrative infrastructure needed to value properties, determine tax liabilities, distribute tax bills to those responsible, and collect the taxes due, all in an equitable manner. Moreover, the new tax system had to overcome the psychology of payment boycotts, sometimes characterized as a “culture of nonpayment,” an important resistance technique used against the apartheid government.
Combining formerly taxed areas with different valuation rates or systems into a single municipality produces inconsistencies within the property tax roll of the amalgamated area, multiplying inequities among property owners with different effective tax rates. Both those new to the tax and those who historically have paid property taxes often question whether their tax shares are equitable and how the resulting revenue is being spent. In some instances, tax boycotts have occurred in former WLAs.
National Property Tax Policy
Although property taxation remains a local tax in South Africa, the 1996 Constitution authorizes central government regulation of property taxation. A national Property Rates Bill, scheduled for adoption in 2002, will replace current provincial property tax laws. Each locality now must adopt an explicit and comprehensive property rates policy.
Our seminars took place in this context of national legislation, municipal consolidation and municipal property rates policies. We collaborated with local institutions of higher education: Port Elizabeth Technikon in Nelson Mandela Metropolitan Municipality and the University of North West in Mafikeng Local Municipality. Seminar participants included current and former elected city councilors, newly enfranchised and long-time non-elected officials, and students and faculty of the educational institutions.
Nelson Mandela Municipality is one of South Africa’s six metropolitan municipal governments, the only local government within its geographic area. Its population and business center is the former city of Port Elizabeth. Principal property tax concerns raised at the seminar included: (1) unifying the tax rolls of the various jurisdictions making up the metropolitan area, since their valuation dates range over a number of years; (2) bringing former black local authority (BLA) areas into the property tax base; (3) deciding on the appropriate way to deal with rural (agricultural) land, previously not taxed but now part of the municipal area; and (4) accomplishing these things in a manner that is sensitive to the special circumstances of those with very low incomes.
Mafikeng, the capital of the North West Province, lies within the Mmbatho District Municipality in the former Bophuthatswana homeland near the Botswana border. Some property tax concerns raised at the Mafikeng seminar were the same as in Nelson Mandela Municipality. In addition, Mafikeng is wrestling with incorporating tribal (traditional authority) areas and the black urban agglomerations (R293 towns) of the former bantustan. Tribal areas present two special problems: property ownership is communal, not private; and the traditional authority structure remains in place, even though these areas now are included within municipal borders, creating a dual authority structure that further complicates amalgamation.
Key Property Taxation Themes
Policy Framework
New national legislation requires each local government to produce a property rates policy to address such issues as whether to include all real properties in the tax base; whether to apply uniform or differential rates to the many categories of property included in the tax base; and what form of property relief should be given, and to whom. If the property tax is to be a viable local revenue source, local rates policies must be guided by the following principles:
These fundamental characteristics of a property tax system provide a framework for restructuring property taxes in South Africa, with tradeoffs made through an open and transparent political process at the local level.
Monitoring
The property tax base is fair market value. Because most properties do not sell in a market transaction each year, however, estimating market value is the task of trained assessment professionals. Differences in location, depreciation and other characteristics make valuation partly an art, not strictly a scientific or technical endeavor. Uniformity relative to market value may not always result, even though it is required and the assessors follow the procedures intended to achieve that result. Thus, a system for monitoring valuation outcomes is needed, which may include three dimensions of assessment quality:
Formal assessment/sales ratio studies have not been done in South Africa, but we calculated simple ratios for several cities. The results in Table 1 indicate that assessment uniformity generally needs to be improved, since coefficients of dispersion across the case study cities are typically high and the price-related differentials are generally substantially above one.
Targeting Tax Relief
Although property taxation is a tax on value, it is paid out of current income, and thus may place an unacceptable burden on property owners with low incomes. Property tax relief is any reduction in tax liability. Indirect relief results from changes that take pressure off the property tax: reduced expenditures or increased revenue from alternative sources. Alternatively, direct relief comes from a change in the calculation of property tax liability.
Direct relief was the focus of our studies and the seminar discussions. In South Africa direct residential property tax relief typically is a uniform percentage credit, termed a rebate, which generally is 20 percent or 25 percent of gross property tax liability. The rebate approach has two limitations. First, most of the tax relief goes to those with the most expensive properties. Second, low-income property owners are still required to pay most of their property tax liability, which still could be burdensome relative to income.
While an income-based circuit breaker is our preferred approach for targeting tax relief to those in need, it would be extremely difficult to administer in South Africa because income information is not readily available, in part because of the extensive informal economy. An alternative way to target property tax relief to those most in need is to exempt a fixed amount of the base from taxation.
Table 2 illustrates the effects of moving from a 25 percent rebate to a R20,000 exemption (US$1,740). Under the partial exemption alternative, the lowest valued properties, including those hardest to value at this time, are removed from paying taxes, and net taxes are reduced on all properties up to about R100,000 (US$8,700). The aggregate cost of property tax relief under this approach is substantially reduced because each property receives the same exemption. Durban and Johannesburg now are experimenting with the partial exemption approach to property tax relief.
Dealing with Previously Untaxed Areas
As a result of the local government restructuring in December 2000, South Africa now has local governments throughout country. Three types of areas previously outside the property tax now are to be brought into the tax: former BLAs and R293 townships, agricultural areas and tribal areas. In the former BLAs and R293 townships property is being transferred to private ownership and these areas must be surveyed by the national Surveyor General to establish individual property boundaries and identifications necessary to administer the property tax. Different localities are at different stages in this process.
Property taxes were levied on rural agricultural lands in the past, but these lands have not been in the property tax base since the late 1980s. Bringing them into the tax base now poses two problems. The first is developing the property record information necessary for tax administration. The second is the question of how taxes on such properties should relate to taxes levied in the urban portions of a municipality, as farmers often provide themselves and their workers with services typically associated with local government. One possibility is use-value assessment of agricultural land, an approach endorsed by a national commission that reviewed the taxation of rural lands. Alternatively, differential rates for different categories of property are allowed under current provincial property tax laws and the draft national Property Rates Bill. If there is to be differentiation in effective tax rates, imposing a lower rate on market value assessments provides greater transparency and understanding of the tax and should be part of the local government rates policy.
Bringing tribal areas into the tax base presents another set of issues. First, given communal land tenure systems existing in these traditional authority areas, how does one establish ownership, a necessary condition for the application of property tax based on the principle of private property? Second, because there is no land market per se, how are estimates of market value to be made? Finally, given the two competing governance structures that now exist in tribal areas, how does one make the payment of a property tax acceptable to residents who did not previously pay the tax? These issues are clearly the most intractable ones that must be addressed in the newest round of local government reform in South Africa.
Conclusion
The property tax has been an important part of local finance in South Africa for centuries and is likely to play an increasingly important role in the future, as newly amalgamated local governments wrestle with addressing the legacies of apartheid and the requirements of new national property tax legislation. There is no single right answer to many of the perplexing questions surrounding the design and implementation of a local property tax, but it will continue to evolve to meet changing circumstances and needs.
Michael E. Bell is president of MEB Associates, Inc., in McHenry, Maryland. John H. Bowman is professor of economics at Virginia Commonwealth University in Richmond.
References
Bell, Michael E. and John H. Bowman. 2002. Property Taxes in South Africa: Challenges in the Post-Apartheid Era. Cambridge, MA: Lincoln Institute of Land Policy.
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On July 18, 1997, the Congress of the Republic of Colombia passed an innovative new Law of Land Development with ambitious goals for permitting municipalities to recover socially created land values, known in Spanish as plusvalía. Specifically, Law 388 declares that the public has a right “to participate” in increases in land values created when land use regulations increase the potential for development. Three categories of public actions are covered:
(1) changing a designation of rural land (in which development is extremely limited) into land for urban or suburban development;
(2) modification of zoning or other land use regulations;
(3) modification of regulations that permit greater building density.
Briefly stated, the legislation provides that the square-meter value of the land shall be determined before any public action and then after the action. Any municipality, at the initiative of its mayor, may demand that it “participate” by being able to recapture 30 to 50 percent (as it chooses) of the increase in value. The value is determined by multiplying the two square-meter values by the area of the parcel concerned and subtracting the pre-action value from the post-action value. A maximum of 50 percent was established to ensure that developers would still be financially motivated.
With this legislation, Colombia has enacted into national policy the basic premise of Henry George’s writings: that the public has a moral right to recover socially created values, as manifested in this case by increases in land values released by the three categories of public decisions mentioned above. With the possible exception of Taiwan, few if any other countries have attempted to so directly incorporate Georgian principles into actual legislation at the national level.
Implementation Procedures
The current legislation is only the first step. Under Colombian practice, acts of Congress set general policies, but implementation depends on follow-up at the national executive level and at the municipal level. To make the critical before and after square meter evaluations as objective as possible, an independent organization known as the Agustín Codazzi Geographical Institute will carry out assessments according to guidelines established in the law for each of the three categories.
Fees (called participaciones in the law) must be paid when a landowner applies for permission to subdivide or to construct on the property, when the use of the property is changed, when the property is transferred, or when development rights (representing rights for additional construction) are acquired. These fees are to be recorded in the registry of titles to assure compliance, and land cannot be transferred in the registry until the fees are paid in one of various forms:
(1) by paying cash;
(2) by transferring to a public body a portion of the property that is of equivalent value;
(3) by exchanging urban land of equivalent value at other locations;
(4) by making the public body a partner in the execution of the project with an interest of equivalent value;
(5) by providing needed infrastructure or open space of equivalent value; or
(6) by giving back a portion of the development rights created by the public action that is equivalent in value.
It may be anticipated that most developers will prefer to partner with municipalities instead of paying cash. Indeed, the legislation provides an incentive to use method (6) since it carries a 10 percent discount on the fees, or methods (2) or (4), which have a 5 percent discount.
Municipalities must earmark the revenues produced from participation in socially created land values for specific purposes:
Potential Implications of the Law
This legislation touches on many land policy issues that have long been of concern to the Lincoln Institute. Martim Smolka, director of the Institute’s Latin America and Caribbean Program, and other Institute associates are holding seminars and training programs to share experiences in working out implementation procedures, possibly assist in pilot projects, and carefully monitor the Colombian experiment as it unfolds.
One such program was a three-day workshop cosponsored in March with the National University of Colombia and the Advanced School of Public Administration in Bogotá. The workshop consisted of both formal and informal commentaries from a broad range of interested parties from Colombia and other countries. Since Colombia has obviously taken a bold step and there are few precedents for guidance, the appropriate officials must be innovative as they proceed toward actual implementation. The workshop identified a number of potential issues that will have to be faced as further steps are taken.
Constitutional Issues: The new law is squarely based on Article 82 of the Colombian Constitution of 1991, itself a remarkably innovative document on many aspects of urban land reform. Article 82, in simplified terms, states that when public actions increase the development potential of land, the public has a right to participate in the increased value (plusvalía) produced by such actions, so that the costs of urban development will be defrayed and distributed equitably.
The legal/constitutional debate is twofold: 1) Can the municipalities act on the sole basis of the law, or should they wait until the national government issues “regulations” and remain subject to these regulations? and 2) Should the law be limited to establishing the common, general principles, since the 1991 Constitution attributes the responsibility of land taxation exclusively to municipalities?
Practical Effects of Municipal Discretion: The workshop also pointed out that the voluntary nature of the law may have negative and possibly unintended consequences. Since it is the mayor of each municipality who initiates the imposition of the “participation,” he or she may well come under considerable pressure, financial or otherwise. In rapidly developing areas, a 30 to 50 percent share of increasing property values might be a very large sum. One speaker, for example, asserted that in Cali 60 percent of the increases in land values caused by planning decisions would be equal to the entire municipal budget. On the other hand, the law may facilitate mutually useful negotiations and partnerships between municipalities and developers that do not occur now.
Maintaining a Political Constituency: The political environment that made this bold legislation possible included scandalous cases of overnight fortunes being made from a zoning change in Bogotá and a decision to expand the urban perimeter in Cali. In the latter case, land prices were said to have multiplied by more than one thousand times!
Beyond initial implementation there is the long-range question of maintaining a political constituency for the effective implementation of such a law in the face of powerful and well-financed resistance by landowners and developers. On the other hand, the ability of any national government to have passed such a law in the first place is an achievement of exceptional interest to those concerned about “value recapture” as an essential element in urban land policy.
Maintaining Objectivity in Assessments: In spite of very specific procedures in the law designed to make it as objective and transparent as possible, it will not be easy for the Codazzi Institute to make the required before and after assessments accurately under the time constraints defined in the statute. Moreover, the various transfer alternatives to cash payment of the fees, which are sure to be popular, are dependent on a local determination as to what constitutes “equivalent value.” A number of speakers pointed out that this process might be an invitation to corruption.
Technical Issues: Speakers also pointed out a number of technical assessment problems with the guidelines as set forth in the law. For example, if restrictive zoning causes one owner to lose value, which in turn increases value for an adjoining owner, what provision can be made for compensating the former while recovering the increased value from the latter? Moreover, since the market anticipates public action, will the “before” assessment already reflect increased values arising from the probability of the action? Or, if land use or building regulations increase values of low-income, small property owners, they may not have the cash to pay for development fees, nor would the other forms of payment be feasible at a very small scale. Forced sales or displacement of the poor could result. These matters raise the policy calculation: Is it better to stride ahead and work things out over time or attempt legislative correction of technical problems before proceeding further?
Economic Effects: Although legally described as public participation in the increased values that public actions have created, the legislation may also be seen as a form of capital gains tax. How often will it be used? Will implementation tend to push down the price of the land affected, or will changes in value be passed on to the ultimate consumer? If it is the latter, the law could have a negative effect on affordable housing. For this reason Article 83(4) exempts land to be used for “housing of social interest,” as defined by the national government. Will this become a loophole for widespread evasion? There is little international experience to answer such questions.
Master Planning: Law 388 of 1997 also requires all municipalities to prepare master plans (Planes de Ordenamiento) and contains fairly detailed descriptions of them in Articles 9 through 35. Obviously, planning alters expectations of owners, and therefore of land values. The administrative and economic interaction of the city’s planning process and its recapture of increased land values will surely be a complex one.
Conflicts in Objectives: As is often the case with fiscal tools, the new changes seek several objectives that are not always compatible: financing better urban development; reducing land speculation; introducing increased equity and progessivity into taxation; and closing some of the favorite avenues for corruption of municipal officials.
Learning from Innovation
In spite of these concerns, Colombia continues its tradition as one of the world’s most innovative nations in urban land planning, law and finance. Bogota was the first major city in the world to create a special zoning district that recognized the realities of low-income housing practices. Stimulated by the ideas and influence of the late Lachlin Currie, an economic advisor to the national government for some 30 years, the city used special assessment districts (contribuciones de valorización) to carry out a major physical transformation during the 1960s. Colombia’s laws on territorial development of 1989 and 1991, to which this 1997 law is a modification and supplement, are among the most comprehensive approaches to land planning since the British Town and Country Planning Act of 1947. Furthermore, the Colombian constitution is virtually alone in specifically mentioning the moral claim of the public to increases in land values caused by public action.
As might be expected, some of these innovations eventually fell short of initial expectations. Indeed, some participants at the workshop argued that the energies going into the recovery of plusvalía might be more usefully spent on increasing the efficiency of conventional property taxes. On the other hand, the new law is addressing and resolving some problems of earlier legislation and policies, and the country is learning from its experience. The conclusion of the workshop participants was that the process has been worthwhile, and that the new law must be understood and evaluated in its relationship to previously established instruments of value capture and fiscal policy in general.
William A. Doebele is professor of urban planning and design, emeritus, at Harvard University Graduate School of Design and a faculty associate of the Lincoln Institute. This article was prepared with important contributions by Martim Smolka, senior fellow for Latin America Programs, Fernando Rojas, visiting fellow of the Institute, and Fernanda Furtado, faculty and research associate of the Institute.
See also Fernando Rojas and Martim Smolka, “New Colombian Law Implements Value Capture,” Land Lines, March 1998.
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The collapse of communism in the early 1990s launched an era of political and economic reforms in Russia and throughout the former Soviet Union that introduced democracy and the free market economy to countries that previously had no experience with either of these concepts. In Russia privatization of land was one of the first items on the reform agenda, and by the end of 1992 the Russian Parliament had adopted the federal law On the Payment for Land. This law set normative land values differentiated by regions to be used for taxation, as well as a basis for land rent and purchase. At the time the country had no land market, so this was considered a very progressive measure. Lands that were previously held in public ownership were rapidly distributed to individuals, and by 1998 some 129 million hectares of land were privately held by some 43 million landowners. Introduction of private ownership rights in land also meant the introduction of the land tax, since owners or users of land plots became eligible to pay for their real property assets.
Economic reforms in Russia were accompanied by inflation that ran thousands of percent annually. To maintain revenue yields, local and regional authorities adjusted normative land values accordingly. As land market activity started to develop in the mid-1990s, some of these authorities used market price information to make land value adjustments. As a result land taxes became absolutely inconsistent with the economic situation, and tax amounts were not comparable for similar properties located in different jurisdictions.
By the late 1990s the land tax system had developed faults that required tax reform on a nationwide scale. The basic outline of the tax reform included the following features:
Reform of the land tax is seen as part of a wider property tax reform. The current property tax system in Russia includes a number of taxes: individual property tax; enterprise property tax; land tax; and real property tax. While the first three are operational, the fourth tax has been tested as an experiment since 1997 in two cities, Novgorod Veliky and Tver (Malme and Youngman 2001, Chapter 6). It is expected that when Russia is in a position to introduce the real property tax nationally, the first three taxes will be canceled.
In 1999 the Land Cadastre Service of Russia, a land administration authority of the federal government, was delegated the responsibility to develop mass valuation methods and to implement the country’s first mass valuation of all land. The government chose mass valuation, identifying the sales comparison, income and cost approaches as the basic valuation models that needed to be developed. Land is valued at its site value as if it were vacant.
Implementation of a mass valuation system has been constrained by the lack of reliable land market data, however. The housing market is the only developed market in Russia that can be characterized by a large number of sales transactions. These transactions are spread unevenly throughout the country, with large cities characterized by many transactions and high prices for apartments, whereas small towns and settlements have few examples of real estate sales. The national land market recorded some 5.5 million transactions annually, with only about 6 percent of them being actual buying and selling transactions. Official data from land registration authorities could not be used as a data source because transacting parties often conceal the true market price to avoid paying transfer taxes.
This lack of reliable market data has forced the developers of mass valuation models to identify other factors that may influence the land market. The model developed for valuation of urban land included some 90 layers of information that were geo-referenced to digital land cadastre maps of cities and towns. Apart from available market information, these data layers included features of physical infrastructure such as transport, public utilities, schools, stores and other structures. Environmental factors also are taken into consideration.
Mass valuation methods in Russia have identified 14 types of urban land use that can be assigned to each cadastral block. Thus, the model can set the tax base according to the current or highest and best land use. The actual tax base established for each land plot is calculated as the price of a square meter of land in a cadastral block multiplied by the area of the plot.
It took one year of development and model testing and two years of further work to complete the cadastral valuation of urban land throughout Russia. Actual valuation results suggest that the model works accurately with lands occupied by the housing sector. The correlation between actual market data and mass valuation results is between 0.6 and 0.7 on a scale of 0 to 1.0, with greater accuracy in areas where the land market is better developed.
Cadastral valuation of agricultural land is based on the income approach, since availability of agricultural land market information is extremely limited. Legislation allowing the sale of agricultural land became effective in early 2002. The data used to value agricultural land included information on soils and actual farm production figures over the last 30 years. Mass valuation of forested lands was also based on the income approach. Russian land law also identifies a special group of industrial lands located outside the city limits that includes industrial sites, roads, railroads, and energy and transport facilities. These lands proved to be a difficult subject for mass valuation because there are so many unique types of structures and objects on them; individual valuation is often applied to them instead.
Over the past four years, some 95 percent of Russia’s territory has been valued using mass valuation methodology. The Federal Land Cadastre Service continues to refine and improve its methods in preparation for the enactment of relevant legislation authorizing the introduction of a new value-based land tax. During this period, the Cadastre Service organized a Workshop on Mass Valuation Systems of Land (Real Estate) for Taxation Purposes, in Moscow in 2002, under the auspices of the United Nations Economic Commission for Europe. It also assembled a delegation for the Lincoln Institute’s course Introducing a Market Value-Based Mass Appraisal System for Taxation of Real Property, in Vilnius in 2003 (see related article).
Alexey L. Overchuk is deputy chief of the Federal Land Cadastre Service of Russia and deputy chairman of the United Nations Economic Commission for Europe (UNECE) Working Party for Land Administration.
Reference
Malme, Jane H. and Joan M. Youngman. 2001. The Development of Property Taxation in Economies in Transition: Case Studies from Central and Eastern Europe. Washington, DC: The World Bank. Available at http://www1.worldbank.org/wbiep/decentralization/library9/malme_propertytax.pdf
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Housing is an important component of both a household’s net worth and aggregate national wealth or stock of residential capital. Aggregate residential wealth is the sum of the values of all housing units. In Brazil, residential structures represent about one-third of total net fixed capital, so their value is important for economic and social policy. This analysis asks: What variables determine the stock values of residential property? How do location and neighborhood conditions affect these values? What is the aggregate residential wealth in the Rio de Janeiro Metropolitan Region (Metro Rio)? What is its distribution among household income and housing value groups? In other words, what generates residential wealth? How much residential wealth is there? Who holds it? Where is it located? (Vetter, Beltrão, and Massena 2013.)
Methodology for Estimating Residential Wealth
To address these questions, we first calibrated a hedonic residential rent model with sample microdata from the 2010 population census conducted by the Brazilian Institute of Geography and Statistics (IBGE). The units of analysis are households living in private, permanent housing units in urban areas of Metro Rio. The total number of households in 2010 was 3.9 million, and our sample is 223,534 (5.7 percent). We used the 41,396 renters in the sample to calibrate our model and then estimated the rents for homeowners and the landlords of rent-free units. Finally, we transformed the actual and imputed rents into housing values by dividing them by the monthly discount rate of 0.75 percent (9.38 percent annual rate), as is standard practice for Brazilian residential wealth studies (Cruz and Morais 2000, Reiff and Barbosa 2005, and Tafner and Carvalho 2007).
The underlying assumption in these studies is that the hedonic prices of the characteristics in the model and the discount rate are similar for rental and nonrental units. These are strong but necessary assumptions for the application of the methodology with the existing census microdata. The sum of estimated housing values is our measure of residential wealth. The objective is to estimate the aggregate value of all housing units and their average values.
In calculating average housing prices for these groups, we do not control for housing size or other characteristics, as would be done for hedonic housing price indices. Using census microdata, we can also estimate the residential wealth by household income as well as for smaller spatial units within municipalities, such as neighborhoods or districts. Even though the sample of rental units is relatively large, sample size drops rapidly as rents and household incomes rise, and the variances are particularly high for the open group at the top end of the distribution. Because we do not have data on the value of mortgages, our measure is of gross rather than net residential wealth.
Using rents from the census or a household survey compares favorably with other commonly used methods for estimating residential wealth for the Brazilian national accounts and related studies (Garner 2004), such as asking homeowners to estimate the selling price or monthly rent of their homes, using the asking prices for home sales, or using the prices registered when recording the sale. Whereas renters know their monthly rent payment, the informants may have little understanding of current trends in housing prices, and the original asking price is often higher than the final sale price. In Rio de Janeiro, the municipal government uses its own estimates of the sale prices based on asking prices, rather than the value registered in calculating the real estate transfer tax, because buyers and sellers often register lower prices.
In our hedonic residential rent model, the dependent variable is a vector of residential rents, and the independent variables are matrices of the structural characteristics of the housing unit, access to employment, and neighborhood characteristics, including indicators of access to urban infrastructure and services. The variables used are for the household per se and also for the census area in which it is located. Figure 1 shows Metro Rio’s 336 census areas and the larger municipal boundaries grouped into six subregions based on indicators analyzed in this and previous studies (Lago 2010).
The indicator for access to employment measures the average commute time to work for residents in each of the census areas. Figure 2 (p. 16) shows that the average commute time increases with distance from the center, but not by as much as one might expect—partly due to increased traffic congestion in all areas and to the fact that Metro Rio is polycentric with many subordinate centers.
The indicators of the quality of neighborhood infrastructure and services include the household`s access to the public sewer and water systems, garbage collection, and block conditions (e.g., street paving and drainage). As these indicators are highly intercorrelated, the component scores from a principal components analysis serve as the independent variables in the hedonic model. Component 1 explains 46.6 percent of the variance and shows high positive loadings on adequate block conditions and infrastructure, and high negative loadings on inadequate block conditions (e.g., garbage in the street and open sewers), indicating which areas have a higher level of attractiveness or desirability (figure 3). Although the lowest scores are clearly concentrated in the outlying areas, the patterns of attractiveness vary considerably. As with commute times, the distribution pattern of the attractiveness scores reveals the complexity of Metro Rio’s spatial structure.
Our hedonic model explains 73 percent of the variance of residential rent. The key independent variables are statistically significant; neighborhood quality and access to employment explain nearly two-thirds of the variance, while the structural characteristics of the housing explain only about one-third of the variance. In other words, the bulk of housing value is the capitalized value of access to employment and to neighborhood infrastructure and services, all of which are determined in large part by public expenditures. Figure 4 (p. 18) shows the distribution of average estimated housing values for census areas in US$ determined by our methodology. (The average exchange rate for 2010 is US$1=R$1.76.) These values tend to be highest in areas affording relatively low commute times and good access to urban infrastructure and services.
Distribution of Residential Wealth
How much residential wealth is the property of homeowners versus the landlords of rental properties and rent-free units used by employers, family members, or others? Our estimate of Metro Rio’s aggregate residential wealth of both occupied and unoccupied units in 2010 is US$155.1 billion (94.2 percent of Metro Rio’s 2010 GDP of US$164.4 billion) and US$140.2 billion for occupied units only (84.2 percent of Metro Rio’s GDP). Among total occupied units, 74.8 percent of this residential wealth (about US$105 billion) belongs to owner-occupied units, and the rest belongs to landlords of rented and rent-free units. In the case of lower-income households, the landlords could be another lower-income family.
Table 1 shows that the percent of homeowners is quite similar for all household income groups. For example, homeowners occupy nearly three-quarters of the households in the lowest household income group (with fewer than two minimum salaries or an average annual income of only US$4,407). A key reason for these high homeownership levels is that those living in favelas, squatter settlements, or other types of informal housing can declare themselves homeowners, even if they do not legally own the land on which their home is located. The 2010 Census showed more than 520,000 households (more than 15 percent of the total private permanent urban households) living in these types of settlements in Metro Rio. Land ownership in these settlements is a complex legal question on which even lawyers may not agree, since the chances of removal (at least removal without compensation) are quite low, and those living on land without a legal title may be eligible for squatter’s rights after five years under Brazilian law.
Although 25.3 percent of total households earned less than two minimum salaries (US$ 6,960 per year), the homeowners in this group held only 15.3 percent of the aggregate residential wealth of all homeowners. By contrast, only 15.6 percent of households earned 10 or more minimum salaries (US$34,800 per year), but homeowners in this income group held 34.5 percent of the aggregate residential wealth. Nonetheless, lower income households have more residential wealth than one might expect, in part because they are often homeowners in informal settlements.
Figure 5 (p. 19) shows the Lorenz Curve for the distribution of aggregate residential wealth of homeowners by housing value groups. This distribution is quite unequal, because the nearly 23.7 percent who are not homeowners have no such wealth (as shown where the Lorenz curve runs along the bottom of the axis) and because those living in higher-priced housing have greater residential wealth.
Distribution of Residential Wealth by Subregions
The bulk of aggregate residential wealth is held by those living in the suburbs and periphery around Metro Rio, although the average value of their housing units is lower. Table 2 shows that those subregions (4 and 6) together represent 79 percent of Metro Rio’s total households (3.1 million) and 58.1 percent of aggregate residential wealth (US$80.9 billion). Subregion 2 (the older, higher-income neighborhoods along the bay and coast) holds only 6.3 percent of Metro Rio’s households (about 242,000) and 19.0 percent of its residential wealth.
The percentage of renters is highest in the large squatter settlements (subregion 5), at 28.6 percent, with an additional 2.7 percent of rent-free units. Homeownership rates are highest (80.4 percent) in the periphery (subregion 6), where many owners live on land for which they do not have full legal title, though these areas generally are not squatter settlements as defined by IBGE.
Spatial Distribution of Household Income
One result of the interplay of market forces that shape residential rent and housing prices is that the distribution of aggregate household income tends to mirror the distribution of aggregate residential wealth. In other words, there is a relatively high residential segregation by income groups, with lower-income families concentrated in the large squatter settlements and in the suburbs and periphery (subregions 4, 5, and 6). High spatial concentration of higher-income households generates higher aggregate income and demand in areas that support higher-level services—in turn making these areas more attractive to higher-income homebuyers and renters. Figure 6 (p. 20) shows that the average annual household incomes for the census areas in 2010 reflect to a large extent the distribution of average housing values (figure 4), commute times (figure 2), and neighborhood attractiveness (figure 3).
In 2010, the high-income Barra da Tijuca area (subregion 3) held only 2.1 percent of total households in Metro Rio but 8.1 percent of aggregate household income and 7.6 percent of aggregate residential wealth. By comparison, the four large squatter settlements of subregion 5 held 2.5 percent of total households but only 1.0 percent of aggregate household income and 1.4 percent of residential wealth. Nonetheless, the aggregate residential value in these four squatter settlements was nearly US$2 billion, and the average housing value was almost US$21,000. These results show a relatively high spatial concentration of both aggregate household income and residential wealth that is tempered slightly by the home-ownership rate in squatter settlements.
Implications for Methodology and Policy Decisions
The methodology used in this analysis provides interesting insights into the macroeconomic and social importance of residential wealth; the variables that generate it; its distribution among household tenure, income, and housing value groups; and its allocation among subregions ranging from high-income neighborhoods to squatter settlements. The strong assumptions required in using the methodology must be taken into account when interpreting the results. Data from property registries or other sources with more detailed information on unit size could eventually be used to complement this methodology.
Government services, investments, and regulatory actions can result in benefits (e.g., access to employment, urban services, and amenities) and costs (e.g., taxes, fees, and negative environmental impacts) that are capitalized into the value of housing in the affected neighborhoods. For homeowners, positive net benefits from government actions increase their residential wealth, because they are capitalized in the value of their housing. However, for renters and new homebuyers, these same government actions can cause rents and housing prices to rise along with the net benefits. Some households, especially the lower-income renters and homebuyers, may have to leave the benefited area, and other potential new owners may be unable to locate in the area. Thus, housing tenure is important in determining whether or not a household receives the net benefits of government investments and regulatory actions.
Capitalization of the net benefits of government actions would clearly be an issue for the more than 30 percent of households in the four large squatter settlements that are not homeowners, as well as for those entering the housing market. Although there are no reliable data on housing turnover, we know that the total number of urban households in Metro Rio increased more than 20 percent, by almost 657,000, between 2000 and 2010. This increment was 14 percent higher than the total number of households in the Municipality of Curitiba (the state capital of Paraná) in 2010 and well over twice the number in Washington, D.C. All these new households, plus all the renters (about one-fifth of total households) and homeowners wishing to move, would be subject to increased rents and housing prices generated by the net benefits of government actions.
These results demonstrate a need for policies to ensure that rising rents and housing prices do not exclude some households from areas where public services and infrastructure are being improved. For example, financial assistance for home purchases could be part of the improvement program. One way of financing the needed lower-income housing and investment programs would be to capture part of the value being generated by infrastructure investments from higher-income households. Capturing part of the value generated by urban investments could help finance additional housing subsidies for lower-income families, as well as added investment, thereby providing a kind of investment multiplier.
About the Authors
David M. Vetter (Ph.D. University of California) has worked for more than four decades on urban finance and economics issues in Latin America for Brazilian entities, at the World Bank and Dexia Credit Local, and also as a consultant.
Kaizô I. Beltrão (Ph.D. Princeton University) was the dean and a senior researcher at the National Statistics School (an entity of IBGE) and is now a full professor and senior researcher at the Fundação Getúlio Vargas.
Rosa M. R. Massena (Doctorate, Université de Bordeaux) was a senior researcher at the IBGE for 23 years and since then has worked as a consultant on social indicators programs for Habitat, the World Bank, UNDP, and other entities.
Resources
Cruz, Bruno. O. and Maria P. Morais. 2000. Demand for Housing and Urban Services in Brazil: A Hedonic Approach. Paper presented at the European Network for Housing Research Conference, Gavle, Sweden (June).
Garner, Thesia I. 2004. Incorporating the Value of Owner-Occupied Housing in Poverty Measurement. Prepared for the Workshop on Experimental Poverty Measures, Committee on National Statistics. Washington, D.C.: The National Academies.
Lago, Luciana C. 2010. Olhares Sobre a Metrópole do Rio de Janeiro: Economia, Sociedade e Território. Rio de Janeiro, Brazil: Observatório das Metrópoles, FASE, IPPUR/UFRJ.
Reiff, Luis. O. and Ana L. Barbosa. 2005. Housing Stock in Brazil: Estimation Based on a Hedonic Price Model. Paper No. 21. Basel, Switzerland: Bank for International Settlements.
Tafner, Paulo and Marcia Carvalho. 2007. Evolução da Distribuição Familiar da Riqueza Imobiliária no Brasil: 1995–2004. Revista de Economia 33(2) (Julho-Dezembro): 7–40.
Vetter, David M., Kaizô I. Beltrão, and Rosa R. Massena. 2013. The Determinants of Residential Wealth and Its Distribution in Space and Among Household Income Groups in the Rio de Janeiro Metropolitan Region: A Hedonic Analysis of the 2010 Census Data. Working Paper. Cambridge, MA: Lincoln Institute of Land Policy.
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It is with great sadness that we announce that Arlo Woolery passed away on February 28, 2002, at his home in Sun City West, Arizona.
Arlo brought zest, courtesy and unfailing curiosity to all of his endeavors over 82 years. Even before graduation from Luther College in Decorah, Iowa, in 1943, he turned his gift for public speaking to early success as a radio broadcaster. He provided play-by-play radio descriptions of baseball games, complete with sound effects for hits and cheering crowds, guided only by wire service score reports. Later he held several executive positions in radio and television, dealing both with broadcasting, equipment manufacturing and the first development of cable television networks.
He became an expert on public utility regulation and valuation, earning the Certified Assessment Evaluator (CAE) designation from the International Association of Assessing Officers and serving as chairman of its education committee. He was an expert witness in numerous utility valuation cases and taught in the annual Wichita State University program on railroad and utility valuation for many years. The Supreme Court of Utah reflected the respect with which he was regarded when it described him as a “well-educated, long experienced and highly qualified appraiser.” From 1967 to 1976 he served as director of the Property Tax Program for the state of Arizona, dealing with issues of valuation and tax administration and taking the lead in the development of computer-assisted mass appraisal.
Arlo was the first executive director of the Lincoln Institute of Land Policy, from 1974 to 1986, and upon retirement was named the Archibald M. Woodruff Fellow. He led the Institute’s move to Cambridge and its establishment as a center for education on land use and land-related tax issues. He organized and participated in numerous international symposiums on property taxation, land policy and computer-assisted valuation. He assisted in the development of the International Center for Land Policy Studies and Training (formerly the Land Reform Training Institute) in Taiwan and served on its Board of Directors from 1975 to 2000. He also wrote and edited many books, including The Art of Valuation (1978); Introduction to Computer Assisted Valuation (1985); Property Tax Principles and Practice (1989); and Valuation of Railroad and Utility Property (1992).
“Arlo’s legacy to the Lincoln Institute is its solid academic underpinnings,” notes Kathryn J. Lincoln, Chairman of the Board. “Even after his official retirement, Arlo remained involved with the Lincoln Foundation, and his continuing leadership and teaching at the International Center for Land Policy Studies and Training were instrumental in the development of that Lincoln program. We shall miss his wisdom and guidance.”
