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Until recently, a foreclosure on an owner-occupied home in the United States was a relatively rare event. According to data from the Mortgage Bankers Association (MBA), foreclosure proceedings were initiated on approximately 0.3 percent of all owner-occupied housing units with a mortgage in each quarter from 1979:Q1 through 2006:Q2 (figure 1). Since mid-year 2006, foreclosure proceedings have more than tripled and now occur at the rate of at least 1 percent per quarter.
To place these percentages in context, in the 27 ⅟2 year period between 1979 and mid-2006, a cumulative total of 7.5 million foreclosure proceedings had been initiated at a rate of 275,000 per year. In the 3 ⅟2 year period between mid-2006 and year-end 2009, 6 million foreclosure proceedings had been initiated, at a rate of 1.7 million per year, a more than six-fold increase. The conditions for high foreclosure rates are in place for at least the next two years, suggesting that another 4 to 5 million owner-occupied homes will enter into foreclosure in 2010 and 2011.
What is a Foreclosure?
A house is seized by a mortgage lender in a foreclosure proceeding after three steps have occurred. First, the homeowner fails to make contractually obligated mortgage payments, a condition commonly known as default. If homeowners fail to make one or two monthly payments, they are known as 30- and 60-days delinquent, respectively. In many of these cases, the homeowner “self-cures” by making the missed payment(s) in full and paying an additional (contractually pre-specified) penalty. A homeowner who misses three consecutive monthly payments is known as 90-days delinquent, and the probability increases that the house will end up in foreclosure (Tanta 2007).
In the second step, the lender initiates foreclosure proceedings. This process varies by state and can take between 6 and 18 months to complete. In the third and final step, the court system assigns the ownership of the house back to the mortgage lender. In some states, after a foreclosure occurs lenders may try to obtain a “deficiency judgment,” which implies that the foreclosed homeowner must compensate the lender in an amount equal to the difference between the value of the house after the foreclosure and the outstanding loan balance of the mortgage (Ghent and Kudlyak 2009).
What Factors Lead to Foreclosure?
We learn about the root causes of foreclosure by first exploring how foreclosure rates vary across places and over time. Figure 2 shows a graph of 90-day delinquency rates by state in the second quarter of 2009, when the 90-day delinquent rate ranged from 1 percent to 6.5 percent. Two variables explain almost three-quarters of the cross-sectional variation in delinquency rates across states: (1) the statewide unemployment rate in August 2009; and (2) the percentage change in house prices over the three-year period from 2006:Q2 to 2009:Q2.
Table 1 shows the highest and lowest five states in terms of foreclosure rates in 2009:Q2. The states with the steepest declines in house prices and highest unemployment rates have the highest percentage of seriously delinquent borrowers. The two states with the most disparate outcomes are Nevada and North Dakota. In Nevada, house prices fell almost 50 percent; the unemployment rate was 13.2 percent in August 2009; and the 90-day delinquency rate on mortgages was 6.5 percent. In North Dakota, homes appreciated by almost 11 percent; the unemployment rate was a low 4.3 percent; and the 90-day delinquency rate on mortgages was only 1.0 percent.
Figure 3 shows the time-series patterns of the nationwide 90-day delinquency rate, the national unemployment rate less 4 percent, and an index of commonly tracked house prices known as the Case-Shiller-Weiss (CSW) index. The vertical line on the graph at 2006:Q2 marks the height of the housing boom. Over the 2006:Q2–2007:Q4 period, nationwide 90-day delinquency rates started rising after house prices started to decline, despite relatively stable unemployment rates. During the recession, unemployment increased, house prices continued to fall, and the 90-day delinquency rate rose dramatically.
Both figures 2 and 3 suggest that foreclosures are associated with two “triggers”—falling house prices and rising unemployment rates. The double-trigger theory of foreclosures posits that the potential for a foreclosure is highest when (1) a homeowner is “under water,” meaning the house is worth less than the outstanding loan balance of the mortgage (plus any applicable fees); and (2) the homeowner experiences a significant disruption to income, such as unemployment, divorce, or a health event. In addition to the aggregated state-level and nationwide data shown here, the double-trigger theory of foreclosures has been shown to fit foreclosure patterns in loan-level data sets as well (Foote, Gerardi, and Willen 2010).
The double-trigger theory suggests that being under water is a necessary condition for a foreclosure, because it means the homeowner cannot sell the house unless he or she is willing to write the mortgage holder a check at closing to make up the difference of the value of the house and the outstanding loan balance of the mortgage. Recent estimates by the First American Core Logic company suggest that more than 10.5 million properties—20 percent of all residential properties with mortgages—are currently under water; many of them were purchased between 2005 and 2007.
Figure 4 shows that house prices have declined by 40 percent in nominal terms (50 percent after accounting for overall consumer price inflation) from the peak of the housing market in 2006:Q2 through the end of 2009. Standard underwriting calls for a homeowner to make a 20 percent down payment on a house. Given the decline in house prices, homeowners who bought at the peak of the market using a standard down payment are still approximately 33 percent under water. For example, if a homeowner buys a house for $100,000 with an $80,000 mortgage at origination and it then loses 40 percent of value, it is worth only $60,000. The house is now 33 percent under water ($80,000 – $60,000) / $60,000.
Most economists believe that being under water is not a sufficient condition to lead to a foreclosure, although there is some debate on this issue (Goodman et al. 2009; Foote et al. 2010). As long as the house value is not too far below the outstanding loan balance of the mortgage, there is a nontrivial probability that the house will appreciate such that its price will be greater than the mortgage in a reasonable amount of time, and this probability has value called “option value.” Given this value, and given that foreclosure is costly for homeowners, economic theory suggests that many homeowners who are under water should not “optimally” default on their mortgage. In many cases, the available data support this prediction.
Once a homeowner is under water, however, the data suggest that an additional shock to a homeowner’s income strongly increases the odds of foreclosure. Consider the experience of a homeowner who is under water and suddenly loses his or her main source of income due to unemployment or illness. In this case, the house is worth less than the mortgage, so the owner cannot sell or pull equity from the house. Furthermore, the homeowner has reduced income, so after depleting savings cannot make the mortgage payment in full.
To illustrate the quantitative relevance of this point, table 2 shows state-level maximum unemployment benefits (UI) and average mortgage payments for the set of ten states shown in table 1. In many states, UI benefits are not large enough for a one-income family to make a full mortgage payment. In all states, the average mortgage payment consumes a sizeable percentage of monthly UI benefits, leaving little income for food, transportation, clothing, health care, and other essentials.
Should Foreclosures Be Prevented?
A foreclosure seems like a simple transfer of an asset (the house) from the current equity holder (the borrower) to the current debt holder (the mortgage holder), which occurs whenever the borrower defaults on a mortgage obligation. If a foreclosure is just a simple transfer of assets across agents in the economy, then a case can be made that society should not care about foreclosures, the same way that normal people typically do not care how many electric guitars trade hands on eBay in any given month.
However, a case can be made that foreclosures are an undesirable outcome for society in some cases. Many economists think that foreclosures have externalities, meaning people not directly involved in the foreclosure process bear costs every time a house enters foreclosure. For example, foreclosures are estimated to reduce the resale value of nearby homes (Lin, Rosenblatt, and Yao 2007). In addition, foreclosures are associated with other costs that may be socially undesirable, such as the well-being of children (Kingsley, Smith, and Price 2009).
Has the Government Prevented Foreclosures?
Since 2007, the federal government has established initiatives and put into place a set of policies to try to reduce foreclosures. One of the first major initiatives, called Hope for Homeowners, was established in the spring of 2008. This program tried to address the first trigger directly to reduce the number of homeowners who were under water by encouraging institutions and investors holding mortgages to “write down” principal on those mortgages until homeowners were no longer under water. Participation in the program by mortgage holders was voluntary, and the program was structured in such a way that few mortgage holders participated (Cordell et al. 2009). For example, only one person received assistance in the first six months of the program’s launch (Arnold 2009).
In February 2009, the Obama administration announced another major initiative to reduce foreclosures, the Home Affordable Modification Program (HAMP) program, funded with $73 billion of TARP money. Implicit in the HAMP program is the notion that delinquencies and foreclosures have occurred because mortgages underwritten during the housing boom were often exotic, expensive, and ultimately unaffordable.
Until recently, HAMP’s solution to reduce foreclosures was to modify the terms of these mortgages (by reducing the interest rate, extending the amortization period, and offering some forbearance) for the purposes of making the mortgage “affordable,” meaning the mortgage payment would not exceed 31 percent of the borrower’s income after the mortgage was modified. As originally written, the HAMP program did not require the mortgage lender to reduce any of the borrower’s mortgage balance, and many unemployed did not qualify to receive a mortgage modification.
Figure 5 shows data from the Mortgage Bankers Association on 90-day delinquency rates for subprime adjustable-rate mortgages and prime fixed-rate mortgages over the 1998–2009 period. It is clear that subprime adjustable-rate mortgages are much more likely to be seriously delinquent than prime fixed-rate mortgages. These data might help explain why policy makers crafting the HAMP program have, until recently, focused on refinancing people out of exotic or expensive mortgages and into more conventional or less expensive mortgages as a method of reducing aggregate foreclosure rates.
These policy makers might have presumed that refinancing people from mortgages associated with high default rates to mortgages associated with low default rates would, by construction, reduce the overall default rate on all mortgages. There are two problems with this logic. First, people most likely to default are least likely to get a prime mortgage. This implies the mortgage choice at origination may be indicative of the underlying default risk of the borrower. In other words, defaults of subprime mortgages are high because, in some cases, subprime mortgage borrowers had high default risk and could only get a subprime mortgage.
Second, and more important, the recent data suggest that the majority of mortgages currently in default are not subprime mortgages (table 3). Given the current situation, it seems that a program designed to reduce foreclosures in the aggregate should focus on the inherent reasons that households with good mortgages or good credit are defaulting: the double-trigger theory.
Will We Have More Foreclosures?
Both foreclosure triggers are still in place. Unemployment rates are high, and the Congressional Budget Office (2010) is forecasting the national unemployment rate will remain above 9.0 percent in both 2010 and 2011. And, many homeowners are still under water. Assuming that house prices and housing rents will increase at the same rate over the next few years—not an unreasonable assumption given the behavior of historical rent and price data prior to 1996 (Davis, Lehnert, and Martin 2008)—then house prices should be expected to rise in nominal terms by somewhere between 1 and 2.5 percent per year for the next two years. Given the slow expected pace of house-price growth, many homes now under water will continue to be under water in two years.
Against this gloomy backdrop, Congress and the Obama administration have taken steps recently to prevent more foreclosures. First, on March 26, the administration revised the HAMP program so that the recently unemployed will be offered between three and six months of payment reductions (forbearance). This adjustment to HAMP is in line with the recommendations of a well-known plan to reduce foreclosures, written by economists at the Federal Reserve Board and the Federal Reserve Bank of Boston, commonly called the Boston Fed plan (Foote et al. 2009). It is also similar to an existing plan in the State of Pennsylvania that makes loans to unemployed homeowners to enable them to pay their mortgage, called HEMAP. In addition, mortgage investors will be subsidized by the HAMP program for writing down principal when borrowers are under water.
Second, the Obama administration has set up a “Hardest-Hit” fund distributing $2.1 billion to state housing finance agencies in ten states with severe house price decline and high unemployment rates. The state agencies are free to design programs to reduce foreclosures, subject to some guidelines (Housing Finance Agency 2010).
My colleagues and I have worked on foreclosure relief policy and are hopeful these new initiatives—the modification to HAMP and the Hardest-Hit fund—might significantly reduce foreclosure activity over the next few years.
About the Author
Morris A. Davis is an associate professor in the department of real estate and urban land economics at the University of Wisconsin School of Business, and a fellow at the Lincoln Institute of Land Policy. He was one of the authors of the Wisconsin Unemployment and Foreclosure Relief Plan, which was designed to reduce foreclosure activity of the unemployed. He also maintains and updates the Lincoln Institute Web site database on Land and Property Values in the U.S. (http://www.lincolninst.edu/subcenters/land-values).
Acknowledgments
I have benefited greatly from conversations, help, and advice from Chris Foote, Jeff Fuhrer, Kris Gerardi, Eileen Mauskopf, François Ortalo-Magné, Erwan Quintin, Steve Malpezzi, and Paul Willen. All mistakes and errors are my own.
References
Arnold, Chris. 2009. Investors support overhauling homeowner program. NPR broadcast, April 16. www.npr.org/templates/story/story.php?storyId=103148855
Congressional Budget Office. 2010. Current Budget Projections: Selected Tables from CBO’s Budget and Economic Outlook, Table E-1 (January). www.cbo.gov/ftpdocs/108xx/doc10871/economicprojections.pdf
Cordell, Larry, Karen Dynan, Andreas Lehnert, Eileen Mauskopf, and Nellie Liang. 2009. The incentives of mortgage servicers: Myths and realities. Uniform Commerical Code Law Journal 41: 347–374.
Davis, Morris A., Andreas Lehnert, and Robert F. Martin. 2008. The rent-price ratio for the aggregate stock of owner-occupied housing. Review of Income and Wealth 54(2): 279–284.
Foote, Christopher, Jeff Fuhrer, Eileen Mauskopf, and Paul Willen. 2009. A proposal to help distressed homeowners: A government payment-sharing plan. Public Policy Brief No. 09-1. Boston: Federal Reserve Bank of Boston. www.bos.frb.org/economic/ppb/2009/ppb091.htm.
Foote, Christopher, Kristopher Gerardi, Lorenz Goette, and Paul Willen. 2010. Reducing foreclosures: No easy answers. NBER Macroeconomics Annual 24(1): 89–138.
Foote, Christopher, Kristopher Gerardi, and Paul Willen. 2010. Should modifications ‘re-equify’ borrowers? A look at the data. Real Estate Research Blog, March 2. http://realestateresearch.frbatlanta.org/rer/2010/03/should-modifications-reequify-borrowers-a-look-at-the-data.html#more
Ghent, Andra C., and Marianna Kudlyak. 2009. Recourse and residential mortgage default: Theory and evidence from U.S. states. Working Paper No. 09-10. Richmond, VA: Federal Reserve Bank of Richmond.
Goodman, Laurie, Roger Ashworth, Brian Landy, and Ke Yin. 2009. Negative equity trumps unemployment in predicting defaults. Amherst Mortgage Insight, November 23: 1–8.
Housing Finance Agency. 2010. Innovation Fund for the Hardest-Hit Housing Markets (HFA Hardest-Hit Fund): Frequently asked questions, March 5. http://makinghomeaffordable.gov/docs/HFA%20FAQ%20–%20030510%20FINAL%20%28Clean%29.pdf
Kingsley, G. Thomas, Robin E. Smith, and David Price. 2009. The impacts of foreclosures on families and communities. Washington, DC: The Urban Institute.
Lin, Zhenguo, Eric Rosenblatt, and Vincent W. Yao. 2007. Spillover effects of foreclosures on neighborhood property values. The Journal of Real Estate Finance and Economics 38(4): 387–407.
Tanta. 2007. Delinquencies and defaults for ubernerds. Calculated Risk Blog, July 6. www.calculatedriskblog.com/2007/07/delinquencies-and-defaults-for.html
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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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Imagínese por un instante que usted es un líder político –un primer ministro, presidente o gobernador– y que se despierta con la noticia de que se produjo un desastre natural. Hubo víctimas, se derrumbaron edificios, la infraestructura está colapsando y los líderes locales necesitan desesperadamente recursos adicionales y soporte.
Usted responde inmediatamente, enviando personal y equipos a la zona del desastre y prometiendo ayuda adicional a los líderes locales. Su país, como muchos en el mundo, ha institucionalizado un sistema de respuesta escalonado, que va incorporando por niveles a los gobiernos regional, estatal y nacional a medida que las demandas de la catástrofe exceden la capacidad de respuesta local. Pero a los pocos días, o incluso horas –incluso antes de haber tratado a todas las víctimas y de haber hecho un recuento de todos los ciudadanos, antes de haber quitado los escombros de las calles y de haber restaurado los servicios básicos– otros líderes y los medios de comunicación ya están exigiendo respuestas a cuestiones que usted no ha tenido siquiera tiempo para considerar. ¿Cuánto dinero se destinará a la reconstrucción? ¿Qué criterios se usarán para guiarla? ¿Se permitirá a todos los propietarios que reconstruyan sus propiedades? ¿Quién dirigirá el proceso? ¿Es necesaria una nueva institución o estructura de gobierno para reducir las trabas burocráticas y acelerar la reconstrucción?
Este artículo reseña las investigaciones en curso sobre el papel de los diversos niveles de gobierno en la recuperación y reconstrucción exitosa después de una catástrofe (tabla 1). Representa la síntesis de dos décadas de investigaciones y prácticas de planificación sobre recuperación después de algunos de los desastres más grandes de nuestra era en los Estados Unidos, Japón, China, Taiwán, Indonesia, India, Nueva Zelanda, Australia, Chile y otros lugares. Su propósito es extraer lecciones comunes en estos ambientes tan diversos y ayudar a facilitar la recuperación de comunidades afectadas por desastres en el futuro.
La gestión de recuperación en el mundo
Los gobiernos responsables de la reconstrucción después de catástrofes enfrentan una serie extraordinaria de desafíos de gestión. El primer desafío es la compresión de las actividades en el tiempo y concentradas en el espacio, ya que ciudades construidas en el curso de décadas, si no siglos, se destruyen o dañan de improviso, y se deben reconstruir en una fracción del tiempo que se tardó en edificarlas. Esta tensión genera un segundo desafío: una aguda tensión entre velocidad y reflexión, ya que los diversos actores del proceso de recuperación en las comunidades afectadas tratan de tomar con urgencia decisiones bien pensadas y meditadas que aseguren recuperación óptima a largo plazo. Estos dos fenómenos generan un tercer desafío: la necesidad de acceder inmediatamente a una gran cantidad de dinero e información, las dos monedas más valiosas en la recuperación posterior a una catástrofe.
Para satisfacer estas demandas, los gobiernos de todos los países crean nuevas agencias de ayuda o reorganizan de manera significativa sus organizaciones existentes después de cada catástrofe importante. La causa más común de estas transformaciones en el gobierno después de una catástrofe es la falta de capacidad. Los gobiernos siguen teniendo que atender sus actividades diarias normales, y al mismo tiempo coordinar la reconstrucción o reinvención de las comunidades afectadas, de manera que crean o designan una entidad que pueda centrarse diariamente en la reconstrucción y coordinar las actividades pertinentes de las múltiples agencias gubernamentales. Estas agencias de recuperación, designadas generalmente para una variedad de propósitos e instancias gubernamentales, se hacen cargo de una gama de funciones esenciales, a medida que se reconstruyen la infraestructura, las viviendas y la actividad económica. Difieren en el tipo y escala de coordinación que brindan; el alcance de su autoridad, especialmente con respecto al flujo de dinero e información; y el nivel de gobierno en el que actúan, ya sea nacional, estatal o intergubernamental.
Los gobiernos nacionales gestionan las catástrofes de gran envergadura al nivel político más alto, movilizando los recursos financieros de las reservas nacionales o de ayuda internacional, y proporcionando el nivel de respaldo necesario a los niveles menores de gobierno en la localidad afectada por el desastre. Cuando se producen grandes catástrofes que transcienden los límites estatales o provinciales, los gobiernos nacionales también adoptan un papel activo en el desarrollo de las políticas de recuperación, y crean organizaciones para asistirlos. Algunos ejemplos son la Agencia de Reconstrucción Nacional de Japón, establecida después del terremoto y maremoto de 2011; la Autoridad de Recuperación del Terremoto de Canterbury en Nueva Zelanda, creada después de la secuencia de terremotos de 2010 y 2011 en Christchurch; y el Cuartel General de Ayuda para Terremotos en China, después del desastre de 2008 en Wenchuan. Cada uno de estos organismos internacionales se atenía a la dirección de la administración nacional, su autoridad derivaba de los niveles más altos de gobierno y articulaban sus políticas con la aprobación de la administración vigente.
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Tabla 1: Experiencias de gestión de recuperación alrededor del mundo
Australia
Autoridad de Reconstrucción y Recuperación de Incendios Forestales de Victoria
Autoridad de Reconstrucción de Queensland
Chile
Ministerio de Vivienda y Urbanismo—MINVU
China
Cuartel General de Ayuda para Terremotos
India
Autoridad para la Gestión de Catástrofes del Estado de Gujarat (GSDMA)
Abhiyan
Unidad de Gestión de Proyectos
Indonesia
Agencia de Reconstrucción y Rehabilitación—BRR
Equipo de Coordinación para la Rehabilitación y Reconstrucción—TTN
Japón
Agencia de Reconstrucción Nacional
Nueva Zelanda
Autoridad de Recuperación del Terremoto de Canterbury
Taiwán
Comisión de Recuperación Post-Terremoto del 921
Consejo de Reconstrucción Post-Desastre de Morakot
Estados Unidos
Corporación de Desarrollo del Bajo Manhattan
Autoridad de Recuperación de Luisiana
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De forma similar, las agencias de recuperación a nivel estatal en general se crean como respuesta directa a catástrofes que afectan una región u otra jurisdicción subnacional. La autoridad y legalidad de estas entidades están más limitadas por la posición secundaria y subnacional de la entidad que les otorga autoridad en el gobierno. Ejemplos de estas entidades son la Autoridad de Gestión de Catástrofes del Estado de Gujarat (GSDMA), creada después del terremoto de 2001 en India Occidental; la Autoridad de Recuperación de Luisiana, fundada después del huracán Katrina en 2005; la Autoridad de Recuperación y Reconstrucción de Incendios Forestales (VBRRA) del estado de Victoria, establecida después de los incendios forestales de 2009 en Australia; y la Autoridad de Reconstrucción del estado de Queensland, establecida después de las inundaciones en Australia en el verano de 2010-2011.
Existe una tercera clase de organizaciones diseñadas para operar entre distintos niveles de gobierno, como la Corporación de Desarrollo del Bajo Manhattan, creada como una asociación entre el estado y la ciudad para planificar y financiar las actividades de recuperación después de los ataques terroristas del 11 de septiembre de 2001 en la Ciudad de Nueva York. Otro ejemplo, la Agencia de Rehabilitación y Reconstrucción (BRR), creada en Aceh, Indonesia, después del maremoto de 2004, consistía en tres agencias independientes cuya composición provenía de una amplia gama de actores locales y nacionales. En forma similar, el Equipo de Coordinación para Rehabilitación y Reconstrucción (TTN) del gobierno indonesio después del terremoto de 2006 en Yogyakarta y Java Central fue diseñado como puente entre agencias nacionales y locales, y también supervisó e investigó los problemas de implementación a nivel local.
En algunos casos, los gobiernos deciden modificar o adaptar instituciones y procedimientos existentes para ayudar a gestionar la recuperación. Por ejemplo, Chile estableció un comité interministerial a nivel nacional después del terremoto y maremoto de 2010, pero el Ministerio de Vivienda y Urba-nismo existente amplió sus funciones y responsabilidades, y coordinó los esfuerzos de planificación e implementación a nivel nacional.
El control del dinero, la información, la colaboración y el tiempo
Considerando estos factores comunes a todos los entornos de recuperación posteriores a catástrofes, nuestra investigación demuestra que la clave para gobernar efectivamente estas crisis de gran envergadura es el control del dinero, la información, la colaboración y el tiempo. Ofrecemos en este artículo algunos ejemplos de buenas prácticas y lecciones aprendidas en nuestros diversos estudios de organizaciones a nivel de país.
1. La gestión del dinero: obtención y distribución de fondos en forma eficiente, efectiva y equitativa para la recuperación
Cuando se tiene que movilizar una gran cantidad de fondos públicos en la reconstrucción después de desastres, el verdadero poder reside en el nivel de gobierno que controla el flujo de dinero y cómo lo adquiere, asigna, desembolsa y audita. A veces, la organización encargada de la recuperación asume algunos o todos estos poderes, y otras veces toda la autoridad de financiamiento reside en el mismo lugar que antes de la catástrofe: las ramas legislativa y administrativa. Algunas funciones importantes en el entorno posterior al desastre son la fijación de políticas y prioridades para asignar grandes sumas de dinero, y el establecimiento de sistemas de contabilidad que permitan el desembolso oportuno de fondos críticos, proporcionando al mismo tiempo transpa-rencia y minimizando la corrupción.
Algunas organizaciones, como la entidad a nivel estatal GSDMA de India, se establecen específicamente para reunir todos los fondos de recuperación en un solo lugar, para poder asignarlos y desembolsarlos más adelante. Algunas entidades, como una de las tres ramas de la agencia intergubernamental BRR de Indonesia, se crean para auditar y controlar en forma independiente los gastos de las organizaciones a cargo de implementar la recuperación. En contraste, la Autoridad de Recuperación de Luisiana, una agencia a nivel estatal, recomendaba las prioridades de financiamiento al estado y proporcionaba supervisión en la medida de lo necesario, pero no tenía control directo sobre los fondos. La Agencia de Reconstrucción Nacional de Japón recibió fondos nacionales y asignó el dinero a los ministerios nacionales y gobiernos locales pertinentes.
2. El aumento del flujo de información: recopilación, integración y diseminación efectivas de información para mejorar la toma de decisiones y las acciones de todos aquellos involucrados en la recuperación.
Una demanda crítica es acelerar y ampliar el flujo de información entre aquellos involucrados en la recuperación sobre la dinámica de las medidas de reconstrucción y las oportunidades emergentes. Este desafío comprende los procesos de planificación y participación pública que proporcionan información a los ciudadanos y las instituciones involucradas en la recuperación, facilitan la comunicación y las innovaciones entre los encargados de la recuperación, y comunican las inquietudes de los ciudadanos a agencias gubernamentales y ONG de manera oportuna. También exige intercambiar información entre organizaciones gubernamentales y no gubernamentales, y establecer foros para facilitar la coordinación.
En Victoria, Australia, después de los incendios forestales de 2009, los líderes nacionales y estatales colaboraron con las comunidades afectadas para formar más de 30 comités locales de recuperación, que tuvieron la responsabilidad de desarrollar un plan de recuperación comunitario e identificar prioridades y proyectos locales. Estos comités fueron utilizados por los gobiernos estatales y el gobierno nacional como puntos focales para la distribución de financiamiento local, y por las comunidades locales para recaudar fondos adicionales y establecer pautas normativas locales de reconstrucción. En Yogyakarta, Java, después del terremoto de 2006, TTN mantuvo mutuamente informadas a agencias locales y nacionales sobre las actividades realizadas por las demás, lo cual, a su vez, ayudó a alertar a los funcionarios sobre problemas potenciales.
Una función crítica, apropiadamente provista por una agencia con respaldo gubernamental, es la adquisición, síntesis y distribución de información básica sobre el daño causado, las actividades de reconstrucción, problemas sociales y económicos con la población, y varios indicadores de recupe-ración. Dichas agencias publican informes periódicos del progreso realizado y controlan los indicadores de recuperación, como lo han hecho tanto la Agencia de Reconstrucción Nacional en Japón y la Autoridad de Recuperación del Terremoto de Canterbury en Nueva Zelanda, usando una variedad de mecanismos de comunicación, como publicaciones en sitios web, comunicados de prensa, boletines y foros. La información frecuente de fuentes confiables puede ayudar a que todos los actores comprendan el entorno de recuperación actual, y también a reducir los rumores y la información falsa.
3. El fomento de la cola-boración: construcción de capacidad y competencia sustentable para una recuperación a largo plazo mediante la colaboración y coordinación genuinas, tanto horizontalmente entre grupos locales como verticalmente entre los distintos niveles de gobierno.
Las agencias jerárquicas organizadas verticalmente, con organigramas claros y canales de comunicación bien definidos, en general no se adaptan bien a la gestión de recuperación después de catástrofes, porque la falta de “conexión” a través de las jerarquías verticales limita la colaboración y el flujo de información nueva y actualizada entre las organizaciones. Las agencias nacionales de los Estados Unidos involucradas en la recuperación, por ejemplo, son más capaces de administrar programas individuales que de resolver problemas complejos que traspasan las fronteras institucionales gubernamentales.
En contraste, las agencias organizadas horizontalmente pueden promover la coordinación entre agencias y compartir información, permitiendo que grupos individuales se adapten a nuevos contextos e información sin perder su dependencia de la organización madre. Si hay múltiples estados o jurisdicciones locales involucradas, es esencial la cooperación entre ellas. La asistencia técnica y la construcción de capacidad en los organismos claves a cargo de la recuperación también son elementos importantes para que las organizaciones locales puedan adquirir la capacidad necesaria para una recuperación a largo plazo.
Después del huracán Katrina en 2005, la gobernadora Kathleen Blanco nombró a los miembros de la Autoridad de Recuperación de Luisiana, de manera que, desde el punto de vista técnico, se trataba de una extensión de la administración estatal. Pero, finalmente, la asamblea legislativa la formalizó. Como entidad bipartidaria por diseño, operaba en forma independiente en su interacción con funcionarios nacionales de los EE.UU. y gobier-nos locales, realizaba recomendaciones de política y supervisaba las actividades de recuperación de las agencias estatales. Si bien su poder se limitaba a realizar recomendaciones de políticas, pudo ejercer una influencia considerable a múltiples niveles en una atmósfera políticamente muy contenciosa. También colaboró con las agencias nacionales para establecer normas de planificación para la recuperación a largo plazo de la comunidad, y ayudó a distribuir asistencia técnica y brindar otros recursos de planificación a escala regional, local y de barrio.
Dado que su poder emanaba de los líderes estatales, la GSMDA en India y la autoridad de reconstrucción de Queensland Australia pudieron coordinar exitosamente las actividades de otras agencias estatales. De forma parecida, el MINVU de Chile y las agencias de recuperación nacional de Taiwán contaban con una autoridad centralizada para poder coordinar las actividades de otras agencias nacionales. Abhiyan, una ONG avalada oficialmente por el gobierno de Gujarat en India, pero sin una autoridad gubernamental definida, también desempeñó un papel crucial en la coordinación del trabajo de cientos de ONG y el establecimiento de una red de subcentros locales para proporcionar información y respaldo técnico.
El proceso de recuperación jerárquico después del terremoto de 2008 en Wenchuan, China, pudo reconstruir edificios rápidamente, pero dejó poco espacio para la innovación local, ya que carecía de una auténtica construcción de capacidad local ni participación en la toma de decisiones. Debido a que no siempre se tuvieron en cuenta las condiciones locales, la recuperación económica parece haber sido dispareja.
De igual manera, en muchas comunidades afectadas por el maremoto en la región de Tohoku de Japón, la recuperación se ha frenado porque el sistema jerárquico establecido bajo el gobierno nacional y la Agencia de Recuperación Nacional no deja espacio suficiente para la innovación local. Más aún, dentro del complejo y poderoso sistema ministerial japonés, la Agencia de Reconstrucción Nacional no tiene poder suficiente para forzar a otros ministerios a tomar determinadas medidas.
Cada vez más, las investigaciones demuestran que si los residentes participan en la planificación de reconstrucción, toleran más las demoras y están más satisfechos con los resultados. Sin embargo, aun el mejor ejemplo de proceso descentralizado necesita de una agencia que la encabece para establecer el marco de referencia y las reglas. Esta tendencia sugiere que los gobiernos deberían resistir el impulso de gestionar los detalles de la reconstrucción, y actuar menos como administradores y más como coordinadores y facilitadores del proceso.
4. El equilibrio en las limitaciones de tiempo: gestión efectiva de las necesidades locales inmediatas y urgentes de la recuperación, sin dejar de aprovechar satisfactoriamente las oportunidades de mejora a largo plazo.
Los gobiernos deben equilibrar las tensiones entre velocidad y reflexión, y entre restauración y mejora a largo plazo. La manera fundamental para resolver estos desafíos es aumentar el flujo de información, tal como se describió anteriormente. Pero las agencias encargadas del proceso de recuperación han encontrado varias otras maneras específicas de ser veloces y al mismo tiempo generar mejoras.
Para acelerar la reconstrucción, frecuentemente hay oportunidades para agilizar los procesos burocráticos normales de toma de decisiones, sobre todo con respecto a permisos de edificación, sin comprometer la calidad. Como estos procesos frecuentemente involucran a múltiples agencias, una agencia de recuperación puede ser útil para facilitar u obligar a las agencias implicadas a cooperar de manera más efectiva.
El parlamento de Nueva Zelanda otorgó a la Autoridad de Recuperación del Terremoto de Canterbury (CERA) y a su ministro, una amplia gama de poderes unilaterales que permitiera una recuperación oportuna y coordinada del área de Christchurch. El Parlamento extendió los poderes de emergencia otorgados bajo la legislación anterior y postergó la fecha de vencimiento de dichos poderes a cuando se considerara adecuado, permitiendo que el ministro adquisiera suelo de forma obligatoria, y consintiendo la suspensión de todos los planes o políticas de uso del suelo nacionales, de los gobiernos locales, y de administración de transporte adoptadas bajo diferentes leyes. Ordenó a CERA que preparara un borrador de estrategia de recuperación en un plazo de nueve meses después de haberle conferido dichos poderes. Similarmente, le fijó un plazo de vencimiento de nueve meses al concejo municipal de Christchurch para crear un borrador de plan de recuperación para el distrito comercial del centro de la ciudad, que se había dañado.
La mayoría de las agencias de recuperación adopta medidas de reducción del riesgo de catástrofes en sus normas de recuperación. Un lema de recuperación común es “reconstruir mejor que antes”. El lema de la Autoridad de Recuperación de Luisiana fue: “Más seguro, más fuerte, más inteligente”. La forma más fácil de mejora después de una catástrofe es la adopción de normas de edificación resistentes a desastres. La incorporación de nuevas normas estructurales no tiene por qué retrasar el proceso de reconstrucción, pero las mejoras en el uso del suelo, como la reubicación de barrios o de comunidades enteras, puede requerir un tiempo considerable para la planificación y adquisición del suelo. Estos proyectos exigen un compromiso difícil entre rapidez, calidad de diseño y participación pública. Nueva Zelanda ha iniciado un importante proceso de compra de barrios que sufrieron graves daños en los terremotos de 2010–2011, y que siguen siendo vulnerables a futuros temblores. Japón está alentando la reubicación de comunidades costeras de zonas sensibles a maremotos, y algunos de estos proyectos tardarán hasta diez años en completarse.
Una manera de gestionar estos objetivos de forma simultánea es respaldar procesos de planificación participativa para crear mejoras a largo plazo mientras se trata al mismo tiempo de satisfacer necesidades inmediatas. En muchos casos, los planificadores profesionales trabajaron con los barrios –como en Japón, Chile, Nueva Orleans y Bhuj, India–, pero cada proyecto también exigió compromisos difíciles para poder cumplir con los plazos. La creación de comités locales para planificar la recuperación en Victoria y Queensland, no obstante, es un buen ejemplo de sistemas estatales y nacionales de respaldo que ayudaron a construir capacidad local para llevar adelante los procesos de reconstrucción a lo largo del tiempo.
Próximos pasos en nuestra investigación
Los gobiernos saben que tienen el deber de gestionar la información y el flujo de dinero entre los múltiples actores en un período de tiempo comprimido. Hasta aquí hemos identificado muchos ejemplos de cómo lograrlo. Pero, mejor aún, quisiéramos estar en condiciones de crear menús de opciones organizativas y de proceso, según lo dicte la combinación de magnitud del desastre y el alcance y los contextos económico, político, medioambiental y gubernamental.
También quedan varias preguntas: ¿Por qué siguen apareciendo los mismos problemas institucionales de una catástrofe a otra? ¿Hay alguna manera de evitar repetir algunos de ellos? ¿Cuáles son los resultados –tanto negativos como positivos– de estas disposiciones institucionales de las que pueden informar a futuros líderes que se enfrentan con desafíos de reconstrucción similares? ¿En qué tipo específico de asistencia técnica y construcción de capacidad de los gobiernos locales y organizaciones no gubernamentales se deberían concentrar los donantes internacionales y los gobiernos nacionales para que puedan mejorar su tarea durante el proceso de recuperación? En catástrofes de gran escala, ¿cómo se escalonan los objetivos entrelazados de una recuperación (reconstrucción de hogares, barrios, ciudades, regiones, naciones) en términos de consistencia, eficiencia y eficacia? Y, ¿qué pasa cuando estas organizaciones creadas para gestionar la recuperación dejan de existir? ¿Queda suficiente capacidad en el lugar para sustentar a la comunidad a largo plazo? Al estudiar las diversas experiencias nacionales y organizativas, podemos comprender mejor cómo el fenómeno de compresión del tiempo en la recuperación después de catástrofes afecta otras teorías de políticas públicas y la gestión municipal; la planificación, el desarrollo y la gestión del crecimiento del suelo; y la administración fiscal y de inversión de capital.
Sobre los autores
Los coautores de Clear As Mud: Planning for the Rebuilding of New Orleans [Claro como el fango: la planificación de reconstrucción en Nueva Orleans] (2010, APA Planners Press), Laurie A. Johnson y Robert B. Olshansky están colaborando actualmente en un libro e informe sobre enfoque en políticas de suelo sobre la gestión de recuperación después de catástrofes. Han estado investigando y practicando la planificación de recuperación después de catástrofes urbanas por todo el mundo durante las últimas dos décadas. Johnson es una planificadora urbana radicada en San Francisco, especializada en recuperación de desastres y gestión de riesgo de catástrofes. Olshansky es profesor de Planificación urbana y regional en la Universidad de Illinois en Urbana-Champaign. Contacto: laurie@lauriejohnsonconsulting.com o robo@illinois.edu.
Referencias
Alesch, Daniel J., Lucy A. Arendt, y James N. Holly. 2009. Managing for Long-term Community Recovery in the Aftermath of Disaster. Fairfax, VA: Public Entity Risk Institute.
Chandrasekhar, Divya y Robert B. Olshansky. 2007. Managing Development After Catastrophic Disaster: A Study of Organizations That Coordinated Post-Disaster Recovery in Aceh and Louisiana. Milwaukee, Wisconsin.
Olshansky, Robert B., Lewis D. Hopkins, y Laurie A. Johnson. 2012. Disaster and recovery: Processes compressed in time. Natural Hazards Review. 13(3): 173–178.
Olshansky, Robert B., Laurie A. Johnson, y Kenneth C. Topping. 2006. Rebuilding communities following disaster: Lessons from Kobe and Los Angeles. Built Environment. 32(4): 354–374.
Smith, G., y Dennis Wenger. 2007. Sustainable disaster recovery: Operationalizing an existing agenda. In Handbook of disaster research (Handbooks of Sociology and Social Research). Ed. Havidan Rodriguez, 234–257. New York, NY: Springer.
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El fortalecimiento de la salud fiscal municipal en China
Desde el año 2013, Zhi Liu se ha desempeñado como investigador senior y director del Programa para China del Instituto Lincoln de Políticas de Suelo. También es director del Centro para el Desarrollo Urbano y Políticas de Suelo de la Universidad de Pekín y el Instituto Lincoln (PLC). Anteriormente, Zhi fue especialista principal en infraestructuras en el Banco Mundial, donde trabajó durante 18 años y obtuvo experiencia operativa en varios países en vías de desarrollo.
Zhi obtuvo el título de grado (BS) en Geografía Económica por la Universidad Dr. Sun Yat-Sen (China), el título de maestría (MS) en Planificación Municipal y Regional por la Universidad de Nanjing (China) y el título de doctorado (Ph.D.) en Planificación Urbana por la Universidad de Harvard.
LAND LINES: Hace poco el Instituto Lincoln comenzó un plan de investigación sobre la salud fiscal municipal en todo el mundo. Esta tarea surgió al detectar que algunas ciudades de los Estados Unidos y de muchos otros países, como China, enfrentan dificultades financieras. ¿Cuál es la naturaleza de los problemas fiscales municipales en China?
ZHI LIU: Es muy diferente de las dificultades económicas que enfrentan las ciudades de los Estados Unidos. Estos dos países se encuentran en etapas de urbanización muy distintas. Mientras que los EE.UU. tiene un alto nivel de urbanización (más del 80 por ciento de los ciudadanos vive en áreas urbanas), según el censo de 2010, China todavía está a medio camino del proceso de urbanización. Hoy en día, 750 millones de ciudadanos chinos viven en ciudades, lo que representa el 55 por ciento de la población total. Para el año 2050, se espera que la población urbana alcance 1,1 mil millones de habitantes, es decir, el 75 por ciento de la población total. En los últimos veinte años, con la excepción de unas pocas ciudades mineras, casi todos los municipios han experimentado un rápido crecimiento de la población y una expansión espacial, lo que ha generado una gran demanda de inversiones públicas en infraestructura urbana.
En China, las principales fuentes de financiamiento para inversiones en infraestructura urbana son los ingresos provenientes de las concesiones del suelo y los préstamos que los municipios solicitan a los bancos comerciales, por lo general usando el suelo como garantía. El suelo urbano es de propiedad del Estado, y el suelo rural es de propiedad conjunta de las aldeas. La Ley de Administración del Suelo establece que sólo el Estado tiene el poder para convertir suelo rural en suelo de uso urbano, lo que crea el marco propicio para que los gobiernos municipales tomen suelo rural con el fin de realizar un desarrollo urbano mediante el proceso de concesión del suelo. De hecho, los gobiernos municipales expropian el suelo rural, lo dotan de infraestructura y venden los derechos de uso del suelo a desarrolladores inmobiliarios. La compensación que reciben los agricultores por el suelo que se les expropia no es muy alta, ya que se calcula según el valor de producción agrícola del suelo en lugar del valor de mercado del suelo para uso urbano. Cuando la demanda de desarrollo inmobiliario es alta, los precios de licitación para la concesión del suelo son altos, y los gobiernos municipales comienzan a recaudar grandes sumas de dinero. En los últimos diez años, los ingresos derivados de las concesiones del suelo han representado más de un tercio del total de los ingresos fiscales municipales.
Además, los gobiernos municipales expanden aun más su capacidad financiera mediante la utilización de propiedades de suelo a modo de garantías con el fin de obtener préstamos de los bancos comerciales. La Ley de Presupuesto Chino, antes de una reciente modificación, no permitía que los gobiernos municipales solicitaran préstamos. Sin embargo, la mayoría de los gobiernos municipales superó las restricciones de la ley mediante la creación de sus propios vehículos financieros municipales, conocidos como sociedades anónimas de inversión en desarrollo urbano (sociedades anónimas de inversión en desarrollo urbano, UDIC, por sus siglas en inglés). Las UDIC solicitaban préstamos comerciales o emitían bonos privados para los gobiernos. Las deudas municipales pendientes de pago han crecido rápidamente en los últimos años, y en la actualidad han alcanzado al menos un tercio del PIB.
El mecanismo de financiamiento basado en el suelo ha ayudado a los gobiernos municipales de China a recaudar una suma significativa de fondos destinados a la inversión de capital. No obstante, este éxito también ha generado un incentivo para que los gobiernos municipales dependan demasiado de las concesiones del suelo y de las UDIC. Hoy en día, la economía de China crece mucho más lentamente que antes, por lo que este mecanismo está perdiendo fuerza en muchos municipios donde la conversión del suelo rural en suelo de uso urbano excede la demanda real. Algunas ciudades han obtenido más préstamos de los que podían devolver, y han quedado fuertemente endeudadas.
Según muchos estudios empíricos, incluidos algunos financiados por el Instituto Lincoln, el mecanismo de financiamiento basado en el suelo en China es una de las principales causas de otros problemas urbanos que enfrentamos en la actualidad, tales como precios exorbitantes de la vivienda, deudas municipales en aumento, excesiva expropiación del suelo, creciente tensión entre agricultores y gobiernos municipales en torno a la expropiación del suelo, y brechas cada vez mayores en la distribución de los ingresos y la riqueza entre las poblaciones urbanas y las rurales.
LL: Los medios de comunicación internacionales han estado realizando informes acerca de estos problemas. ¿De qué manera afrontará China estas cuestiones?
ZL: Existe un alto nivel de consenso acerca de las causas profundas de estos problemas. En noviembre de 2013, el gobierno central anunció una serie de reformas, algunas de las cuales están directamente relacionadas con políticas de urbanización y finanzas municipales. Por ejemplo, los alcances de las expropiaciones del suelo se limitarán a los fines públicos, por lo que las aldeas podrán desarrollar su suelo para uso urbano según la premisa de que se realice de acuerdo con lo planificado. Las reformas también requieren la aceleración de la legislación sobre el impuesto a la propiedad, la reforma del hukou (el sistema de inscripción residencial para familias, que ayuda a los agricultores a convertirse en residentes urbanos) y la toma de medidas por parte del gobierno para poner los servicios públicos urbanos básicos a disposición de todos los residentes permanentes de las ciudades, incluso a los que migran del suelo rural al urbano.
LL: ¿Cuáles son los efectos de la reforma del hukou en las finanzas municipales?
ZL: El gobierno chino está eliminando gradualmente el antiguo sistema del hukou, y los efectos de esta decisión sobre las finanzas municipales serán importantes. El hukou se diseñó con el fin de identificar a un ciudadano como residente de una cierta ciudad, aunque durante décadas el gobierno utilizó este sistema para controlar la migración de áreas rurales a urbanas. Una persona inscrita como hukou rural no podía cambiar su inscripción a hukou urbano sin la autorización del gobierno. Y sin la inscripción como hukou urbano, un trabajador rural migrante no tiene derecho a recibir los servicios públicos que proporcionan los gobiernos urbanos.
A partir de la reforma económica, la economía urbana en expansión ha absorbido una gran cantidad de trabajadores migrantes que pasan de áreas rurales a urbanas. Anteriormente mencioné que el índice de urbanización de China es del 55 por ciento y que la población urbana es de 750 millones de habitantes. Estas cifras incluyen a los 232 millones de trabajadores rurales migrantes que permanecen en ciudades durante más de la mitad del año. Si se los excluyera del cálculo, el nivel de urbanización sería sólo del 38 por ciento. Sin embargo, debido a su inscripción como hukou rural, los trabajadores migrantes no tienen acceso a muchos de los servicios de los que gozan los inscritos como hukou urbano, a pesar de que muchos han trabajado y vivido en ciudades durante varios años. Los gobiernos municipales determinan el alcance de muchos de los servicios públicos urbanos, tales como las escuelas públicas y las viviendas económicas, de acuerdo con la cantidad de inscritos como hukou urbanos que existen dentro de la jurisdicción municipal. La eliminación gradual del hukou aumentaría significativamente la carga fiscal de los gobiernos municipales para proporcionar servicios públicos. Ciertos académicos en China estiman que el costo de prestar la totalidad de los servicios públicos urbanos a cada trabajador rural migrante ascendería al menos a RMB 100.000 (unos US$16.000). El desembolso total para todos los trabajadores rurales migrantes actuales sería al menos de RMB 23 billones (cerca de US$3,8 billones).
LL: China está introduciendo el impuesto sobre la propiedad residencial. ¿En qué estado se encuentra esta iniciativa?
ZL: El gobierno está redactando la primera ley nacional del impuesto sobre la propiedad como parte de la reforma de finanzas públicas actualmente en marcha. China es uno de los pocos países que no poseen impuestos municipales sobre la propiedad. El actual sistema impositivo depende en gran manera de los impuestos sobre los negocios y las transacciones y muy poco de los impuestos sobre los ingresos y la riqueza de los hogares. En una China más urbanizada con una población que tenga mayor poder adquisitivo para ser propietaria de sus propios inmuebles residenciales, el impuesto sobre la propiedad sería una fuente más viable de recaudación municipal. Hoy en día, el 89 por ciento de los hogares urbanos tiene la propiedad de una o más unidades residenciales, y el valor de dichas propiedades tiene mucho que ver con los servicios públicos urbanos. El impuesto sobre la propiedad permitirá que las ciudades impongan este tributo sobre las propiedades residenciales cuyo valor se vería beneficiado por una mejora de los servicios públicos que se brindarían gracias a los ingresos derivados de dicho impuesto. También cubriría una parte de la brecha fiscal que se generaría como consecuencia de la disminución prevista en la recaudación proveniente de las concesiones del suelo. No obstante, el impuesto sobre la propiedad no será una fuente principal de ingresos municipales en el corto plazo, ya que al Congreso Popular Nacional le llevará uno o dos años más aprobar la nueva ley. Además, a las ciudades les llevará dos o tres años establecer la base de datos de propiedades y el sistema de valuación y administración de las mismas.
LL: Debe de ser difícil para las ciudades tener que enfrentar una reducción de los ingresos derivados de las concesiones del suelo sin una alternativa inmediata, especialmente cuando están experimentando una creciente deuda municipal, tal como se ha informado ampliamente. ¿Cómo saldrán de esta situación las ciudades chinas?
ZL: La situación es verdaderamente difícil. La economía de China está en retroceso. El sector inmobiliario ya no es tan pujante como en los últimos diez años, lo que ha dado como resultado una menor demanda de suelo y, como consecuencia, los gobiernos municipales están obteniendo una recaudación derivada de las concesiones de suelo menor. Ahora las ciudades están experimentando una brecha fiscal. Una posible forma de cerrar esta brecha sería que los gobiernos municipales pudieran obtener préstamos. Sin embargo, tal como mencioné anteriormente, muchas ciudades están endeudadas y tienen poca capacidad para seguir pidiendo préstamos. De hecho, la mayoría de las ciudades en China no tiene una capacidad adecuada de gestión de deudas. La ley de presupuesto recientemente modificada permite que los gobiernos provinciales emitan bonos dentro de los límites establecidos por el Concejo del Estado, pero también cierra la posibilidad a los gobiernos municipales de recurrir a otras formas de obtener préstamos. Actualmente, el gobierno central promueve activamente el financiamiento de infraestructura a través de asociaciones público-privadas (PPP, por sus siglas en inglés). Aunque es un buen avance, no será suficiente para cerrar la brecha de financiamiento para infraestructuras, ya que las PPP resultan útiles principalmente en los casos de proyectos de infraestructura que poseen un sólido flujo de ingresos. Existen muchos otros proyectos de infraestructura urbana que generan muy pocos ingresos o directamente ninguno. A la larga, creo que China debería establecer de forma activa un mercado de bonos del gobierno municipal para canalizar los fondos provenientes de inversores institucionales hacia la inversión de infraestructura municipal y permitir que los gobiernos municipales tengan acceso a préstamos comerciales según su solvencia crediticia. A este fin, los gobiernos municipales deben desarrollar su capacidad institucional en varios frentes, tales como la gestión municipal de deudas, la planificación de una mejora de capital, la planificación del financiamiento para varios años, y la gestión municipal de bienes de infraestructura.
LL: ¿El trabajo del PLC es relevante para la reforma actual?
ZL: El PLC fue establecido en forma conjunta por el Instituto Lincoln y la Universidad de Pekín en el año 2007. Cuando ingresé en 2013, el Centro ya había construido su reputación como una de las principales instituciones de investigación y capacitación de China en cuestiones de desarrollo urbano y políticas de suelo. El Centro apoya diferentes actividades, como investigación, capacitación, intercambio académico, diálogo sobre políticas, becas de investigación, proyectos de demostración y publicaciones. Nos enfocamos en cinco temas principales: tributación sobre la propiedad y finanzas municipales, políticas de suelo, viviendas urbanas, desarrollo y planificación urbana, y medio ambiente urbano y su conservación. En los últimos años, nuestros proyectos de investigación han tocado temas como las finanzas dependientes del suelo, las deudas municipales, los precios de la vivienda, la inversión y el financiamiento del capital para infraestructura, y otras cuestiones relevantes para la salud fiscal municipal. Además, hemos brindado capacitación a diferentes agencias gubernamentales de China sobre las experiencias internacionales relativas al análisis y gestión del impuesto a la propiedad. Podría decirse que nuestro trabajo es muy pertinente en lo que respecta a la reforma actual.
La implementación de las nuevas reformas integrales de las políticas está generando una importante demanda de conocimientos internacionales y asesoramiento sobre políticas en las áreas de interés del programa para China, particularmente lo que tiene que ver con los impuestos a la propiedad y las finanzas municipales. Nuestra idea es comenzar un proyecto piloto de demostración en una o dos ciudades chinas seleccionadas, a fin de generar la capacidad institucional que se requiere para desarrollar un nivel de salud fiscal municipal a largo plazo. Nuestro equipo ha comenzado un estudio para desarrollar una serie de indicadores con el fin de medir la salud fiscal municipal de las ciudades chinas. Es el momento oportuno para que iniciemos este plan en China.
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Responding to decades of poverty, poor housing, inadequate health care, rampant crime, deficient schools, poorly planned infrastructure, and inequitable access to services, citizens in about half of Brazil’s 60 major cities voted in October 2000 for mayors from left-wing parties noted for advocacy, honesty and transparency. These reform administrations are introducing new hopes and expectations, but they inherit long-standing mistrust of municipal bureaucrats and politicians, who traditionally have been lax and often corrupt. These new governments also confront the dismal fiscal prospects of low tax receipts, weak federal transfers, and urban land markets that produce segregated neighborhoods and profound inequalities.
The strongest left-wing party, the Workers’ Party (in Portuguese, the Partido dos Trabalhadores or PT), held on to the five large cities it had won in the 1996 election and added 12 more. These PT governments hope to universalize services, thus bypassing traditional top-down methods and giving residents an active role in their local governments. In the process these governments are reinventing local democracy, invigorating politics, and significantly altering the distribution of political and symbolic resources. The most remarkable case may be Porto Alegre, the capital of Brazil’s southernmost state, Rio Grande do Sul, where the PT won its fourth consecutive four-year term with 66 percent of the vote, an example that may have encouraged Brazilians in other cities to vote for democratic reforms as well.
Porto Alegre, like cities everywhere, reflects its national culture in its land use patterns, economic structure and distribution of political power. Brazil’s larger social system employs sophisticated mechanisms to assure that its cities continue to follow the same rules, norms and logic that organize the dominant society. Because Brazilian society is in many respects unjust and unequal, the city must constantly administer to the effects of these broader economic and political constraints.
At the same time, no city is a pure reflection, localized and reduced, of its national social structure. Any city can bring about and reproduce inequality and injustice itself, just as it can stimulate dynamic social structures and economic relations. To the extent that the city, and especially its government, determines events, then the effects can be positive as well as negative. It is not written in any segment of the Brazilian social code, for example, that only the streets of upper- and middle-class neighborhoods will be paved, or that water supply will reach only the more privileged corners of the city.
Participatory Budgeting
In Porto Alegre, a popular front headed by the PT has introduced “participatory budgeting,” a process by which thousands of residents can participate each year in public meetings to allocate about half the municipal budget, thus taking major responsibility for governing their own community. This reform symbolizes a broad range of municipal changes and poses an alternative to both authoritarian centralism and neoliberal pragmatism. Neighbors decide on practical local matters, such as the location of street improvements or a park, as well as difficult citywide issues. Through the process, the PT claims, people become conscious of other opportunities to challenge the poverty and inequality that make their lives so difficult.
Participatory budgeting in Porto Alegre begins with the government’s formal accounting for the previous year and its investment and expenditure plan for the current year. Elected delegates in each of 16 district assemblies meet throughout the year to determine the fiscal responsibilities of city departments. They produce two sets of rankings: one for twelve major in-district or neighborhood “themes,” such as street paving, school construction, parks, or water and sewer lines, and the other for “cross-cutting” efforts that affect the entire city, such as transit-line location, spending for beach clean-up, or programs for assisting the homeless. To encourage participation, rules set the number of delegates roughly proportional to the number of neighbors attending the election meeting.
Allocation of the investment budget among districts follows “weights” determined by popular debate: in 1999, weights were assigned to population, poverty, shortages (e.g., lack of pavement), and citywide priorities. Tension between city hall and citizens has led to expanded popular involvement, with participatory budgeting each year taking a larger share of the city’s total budget. Priorities have shifted in ways unanticipated by the mayors or their staffs.
Participants include members of the governing party, some professionals, technocrats and middle-class citizens, and disproportionate numbers of the working poor (but fewer of the very poor). This process brings into political action many who do not support the governing party, in contrast to the traditional patronage approach that uses city budgets as a way to pay off supporters. As one index of success, the number of participants in Porto Alegre grew rapidly, from about 1,000 in 1990 to 16,000 in 1998 and 40,000 in 1999.
The participatory process has been self-reinforcing. For example, when annoyed neighbors discovered that others got their streets paved or a new bus stop, they wondered why. The simple answer was that only the beneficiary had gone to the budget meetings. In subsequent years, attendance increased, votes included more interests, and more residents were happy with the results. City officials were relieved, too, as residents themselves confronted the zero-sum choices on some issues: a fixed budget, with tough choices among such important things as asphalt over dusty streets, more classrooms, or care for the homeless.
Participatory budgeting in Porto Alegre is succeeding in the midst of considerable hostility from a conservative city council and constant assault from right-wing local newspapers and television programs, all of them challenging participation and extolling unregulated markets. The municipal government depends for its support on the participants and their neighbors, on radio broadcasting, and on many who resisted two decades of military dictatorship, from 1964 to 1985. In electing four consecutive reform administrations, a majority of the population has managed to pressure a hostile city council to vote in favor of the mayor’s budget proposals, keeping the progressive agenda intact.
Changes in Material Conditions
In 1989, despite comparatively high life expectancy and literacy rates, conditions in Porto Alegre mirrored the inequality and income segregation of other Brazilian cities. A third of the population lived in poorly serviced slums on the urban periphery, isolated and distant from the wealthy city center. Against this background, PT innovations have improved conditions, though only moderately, for some of the poorest citizens. For example, between 1988 and 1997, water connections in Porto Alegre went from 75 percent to 98 percent of all residences. The number of schools has quadrupled since 1986. New public housing units, which sheltered only 1,700 new residents in 1986, housed an additional 27,000 in 1989. Municipal intervention also facilitated a compromise with private bus companies to provide better service to poor peripheral neighborhoods. The use of bus-only lanes has improved commuting times and newly painted buses are highly visible symbols of local power and the public interest.
Porto Alegre has used its participatory solidarity to allow the residents to make some unusual economic development decisions that formerly would have been dominated by centralized business and political interests. The city turned down a five-star hotel investment on the site of an abandoned power plant, preferring to use the well-situated promontory as a public park and convention hall that now serves as the new symbol of the city. And, faced with a proposal to clear slums to make room for a large supermarket, the city imposed stiff and costly household relocation requirements, which the supermarket is meeting. In another example, in spite of promises of new employment and the usual kinds of ideological pressures from the Ford Motor Company, the nearby municipality of Guíaba turned down a proposed new auto plant, arguing along political lines established in Porto Alegre that the required subsidies would be better applied against other city needs. (A state investigation in August 2000 found the former mayor, not “at fault” for losing the Ford investment.)
Nevertheless, daunting constraints in the broader Brazilian economic and political environment continue to limit gains in economic growth, demands for labor and quality jobs. Comparing Porto Alegre and Rio Grande do Sul with nearby capital cities and their states during the years 1985-1986 and 1995-2000, one finds few sharp contrasts. Generally, GDP stagnated, and per capita GDP declined. Unemployment rose and labor-force participation and formal employment both fell.
Given this limited extent of economic improvement, how can we account for the sense of optimism and achievement that pervades Porto Alegre? The city is clearly developing a successful experience with local government that reinforces participatory democracy. We believe the PT’s success lies in the way the participants are redefining local power, with increasing numbers of citizens becoming simultaneously subject and object, initiator and recipient, so they can both govern and benefit directly from their decisions. This reconfiguration is immediately discernible in the procedures, methods and behavior of local government.
After 12 years, Porto Alegre has changed not just the way of doing things, but the things themselves; not just the way of governing the city, but the city itself. Such a claim is clearly significant. Porto Alegre offers an authentic, alternative approach to city management-one that rejects not only the centralist, technocratic, authoritarian planning model of the military dictatorship, but also the competitive, pragmatic, neoliberal model of the Washington Consensus, to which the national government still adheres. This model imposes International Monetary Fund (IMF) orthodoxy and requires such “structural adjustment” imperatives as free trade, privatization, strict limits to public expenditures, and high rates of interest, thus worsening the conditions of the poor.
While most Brazilian cities continue to distribute facilities and allocate services with obvious bias and neglect of poor neighborhoods, the reconfiguration of power in Porto Alegre is beginning to reduce spatial inequalities through changes in service provision and land use patterns. We can hope that the effect will be felt in the formal structures of the city and eventually in other cities and in Brazilian society in general.
New Forms of Local Power
Political and symbolic resources normally are monopolized by those who control economic power, but radically democratic municipal administrations, as in Porto Alegre, can reverse power to block the favoring and reinforcing of privilege. They can interfere with the strict solidarity of economic and political power, reduce private appropriation of resources, and promote the city as a collective and socially dynamic body. In other words, a city’s administration could cease to honor the actions of dominant urban groups-real estate interests and others who use various forms of private appropriation of public resources for their private benefit. These actions may include allocation of infrastructure to favor elite neighborhoods, privatization of scenic and environmental resources, and the capture of land value increments resulting from public investments and regulatory interventions. Thus, a reconfigured, publicly oriented city administration permits access to local power for traditionally excluded groups. Such a change constitutes a quasi-revolution, with consequences that cannot yet be measured or evaluated adequately by activists or hopeful governments.
Are Porto Alegre’s experiences with municipal reform, participatory budgeting and democratic land use planning idiosyncratic, or do these innovations promise broader improvements in Brazilian politics as other citizens build expectations and improve the structure of their governments? The Interamerican Development Bank (IDB) is urging localities throughout Latin America to engage in participatory budgeting, following Porto Alegre’s example. Can reform-minded city administrations override the constraints of international markets and national policy? In recommending the formal and procedural aspects of the participatory budgeting technique, does the IDB overestimate the practical economic achievements and underestimate the symbolic and political dimensions of radical democracy?
The lesson of urban reform in Porto Alegre emerges not so directly in the economic market as in new experiences with power, new political actors, and new values and meanings for the conditions of its citizens. Even as citizens weigh their expectations against stagnating macroeconomic conditions, they can find hope in new visions of overcoming spatial and social inequalities in the access to services. These new forms of exercising political power and speaking out about land use and governance issues give the city’s residents a new capacity to make a difference in their own lives.
References
Rebecca N. Abers. 2000. Inventing Local Democracy. Grassroots Politics in Brazil. Boulder: Lynne Rienner.
Gianpaolo Baiocchi. 1999. “Transforming the City,” unpublished manuscript. University of Wisconsin (September).
Boaventura de Sousa Santos. 1998. “Participatory Budgeting in Porto Alegre.” Politics and Society 26, 4 (December): 461-510.
William W. Goldsmith is a professor in the Department of City and Regional Planning at Cornell University. Carlos Vainer is a professor in the Institute for Urban and Regional Planning and Research at the Federal University of Rio de Janeiro. They participated in a December 1999 seminar hosted by the City of Porto Alegre and cosponsored by the Lincoln Institute and the Planners Network, a North American association of urban planners, activists and scholars working for equality and social change.
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To what extent are problems of distressed urban areas attributable to the property tax, and how can changes in property taxation help remedy urban decline? Political leaders, policy analysts and public finance experts gathered to discuss this complex and controversial issue during a Lincoln Institute seminar in New Haven on March 15.
John DeStefano, Jr., now in his second term as Mayor of New Haven, opened the session with a strong indictment of the property tax as a cause of urban ills. Described by the New York Times as “a leading spokesman for a growing number of people who believe Connecticut’s reliance on the property tax is harming not just the state’s cities, but its entire economy,” Mayor DeStefano argued that high relative property taxes in Connecticut were a direct cause of the state’s decline in population and jobs. From 1990 to 1995 Connecticut lost over 12,000 residents, while New Haven and Hartford suffered the two steepest population declines of any U.S. cities during that period.
His concern was shared by representatives from the Capital Region Council of Governments, the Regional Growth Partnership of South Central Connecticut, and the Connecticut Conference of Municipalities, which distributed a report stating that overdependence on the property tax was “reducing quality of life in all of Connecticut’s cities and towns.”
How can this widespread assumption linking property taxes to urban ills be tested, and what changes in the sources of local revenue could encourage urban revitalization? It may be that shifting demographic and economic patterns, such as the large defense industry cutbacks that have reduced Connecticut’s supply of high-wage jobs, have more to do with employment and population loss than does the property tax. If so, changing the property tax will not address the underlying causes of urban decline. Property taxes in Connecticut are not as far from the national average as a percentage of personal income as they might appear in absolute dollars (see chart).
Will lowering property taxes enhance economic growth if it is accompanied by an increase in other forms of taxation? Meeting growing needs in urban areas with a declining economic base is a problem of dependence on locally based taxation, not a problem of property taxation alone. Shifting from one local tax to another will not necessarily assist the neediest cities that have the least amount of revenue to draw upon.
Alternative Revenue Sources
What revenue sources can offer alternatives to the property tax as it is currently structured? The property tax base in the U.S. initially included real property and personal property, tangibles and intangibles alike; the restriction to land and buildings was the result of nineteenth-century reform efforts. Seminar speaker C. Lowell Harriss urged that these two portions of the property tax base be considered separately. The first, a tax on land values, deserves even more intensive use than it is getting, he argued, whereas the second, a tax on man-made capital such as buildings, machinery and inventories, warrants even more condemnation than it receives.
Donald Reeb of the State University of New York at Albany examined the actual process of obtaining state and local support for such a shift. He described successful efforts to permit Amsterdam, New York, to change from a single-rate property tax to a graded tax with a higher rate on land than on building value.
Robert Schwab of the University of Maryland discussed his own study of Pittsburgh’s two-rate tax, with buildings taxed five times as heavily as land. This case has particular interest for the issue of causality–whether or not the tax itself deserves credit for improving the local economy. Schwab drew a subtle distinction between finding that the tax had caused an increase in building and investment and that the tax had not impeded development. Although he felt that his study could not support the first proposition, he endorsed the second and emphasized its importance. This led to discussion of the special nature of a tax on land, which avoids the excess burden caused by most other forms of taxation in terms of lost efficiency.
Ronald Fisher of Michigan State University challenged the perception that heavy property taxation alone was the main problem for Connecticut’s economy. He pointed out that the state presents a complex mix of high personal income, relatively modest governmental expenditures, low income taxes, and consequent reliance on sales and property taxes. Connecticut only introduced a state personal income tax in 1991, and that tax has been the object of intense political protest and repeal efforts. In discussing various revenue sources, including local income taxes, local sales taxes and user charges, Fisher also questioned whether the absence of effective regional government in Connecticut could be partially responsible for the disparities between distressed central cities and prosperous suburban areas.
Tax-base and Revenue Sharing
Further discussion probed options for tax-base and revenue sharing as ways to reduce the tax burden on urban residents while meeting city revenue needs. The Connecticut Property Tax Reform Commission has recommended simply increasing state aid. Another option would reduce unfunded mandates in areas such as welfare and education.
A third alternative uses state funds to allow property taxes to serve as a credit against income taxes for low-income homeowners–and a refund to those with no income tax liability. Termed a “circuit breaker,” it is designed to prevent property taxes from exceeding a fixed proportion of income. The credit sometimes extends to renters as well. Over half the states provide some form of circuit breaker, but most are limited to senior citizens.
Lee Samowitz, a Bridgeport state representative, presented a proposal for regional service districts financed by a portion of the commercial and industrial tax base. Direct tax-base sharing of this type has its longest history in the Minneapolis-St. Paul region, which for 25 years has pooled 40 percent of the growth in the industrial and commercial property tax.
Yet such programs face formidable political hurdles, in part because most areas have fragmented or weak regional governments. According to economists Howard Chernick and Andrew Reschovsky, “Despite its success in Minnesota, the prospects for the establishment of tax-base sharing plans in other metropolitan areas are poor. The political representatives of those communities that would be net ‘losers’ under a tax-base sharing plan, or who believe they will be net losers at some point in the near future, will oppose tax-base sharing.”
Political obstacles have impeded plans for tax-base sharing in recent years in a number of states. However, the discussion in New Haven made it clear that property tax reform will become increasingly important as an element in the search for regional solutions to urban problems.
Joan Youngman, senior fellow at the Lincoln Institute, is an attorney and expert on legal problems of valuation for property taxation. She develops and teaches courses on land taxation and regulation issues.
References
Chernick and Reschovsky. “Urban Fiscal Problems: Coordinating Actions Among Governments,” Government Finance Review, vol 11, no. 4 (August 1995) p. 17ff.
Connecticut Conference of Municipalities. Property Tax Relief and Reform, Public Policy Report #96-03. March 1996. 900 Chapel St., 9th floor, New Haven, CT 06510-2807. 203/498-3000.
Fisher, Ronald C. State and Local Public Finance. Chicago: Irwin, 1996.
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As a visiting fellow at the Lincoln Institute and a Loeb Fellow at Harvard University Graduate School of Design during the 2004–2005 academic year, Mario Navarro has undertaken a critical analysis of the innovative housing finance policy developed in Chile over the last 30 years. The objective of the study, summarized here, is to help housing policy designers in developing countries understand the Chilean model as an alternative to provide housing to people from low- and moderate-income sectors.
Until the beginning of the 1970s, housing programs in developing countries consisted of government-sponsored initiatives to design, build and sell houses using loans with subsidized interest rates. These policies were generally limited in scale, not affordable by or clearly focused on poor families, and often inefficient (Mayo 1999). Cognizant of these problems, international development organizations in the mid-1970s started to direct their loans and advice to developing countries based on the new “basic needs” strategy, which consisted of providing sites and services, slum upgrading and core housing (Kimm 1986).
At the same time and independently from these development organizations, Chile started several reforms in the financial sector and in social housing programs, among which was the creation of the first program in the world to subsidize the demand to buy housing (Gilbert 2004). This Chilean model was established ten years before the “enabling markets housing approach” promoted by international organizations such as the U.S. Agency for International Development (Kimm 1986), the Inter-American Development Bank (Rojas, Jacobs and Savedoff 1999) and the World Bank (World Bank 1993). Under this enabling policy governments generate incentives and act as a facilitator so the private sector will produce and finance the housing that the country needs.
The Chilean model has influenced housing policy in many countries of Latin American, and even those of other continents (Gilbert 2004; Gonzáles Arrieta 1997). Nevertheless, it has not been widely recognized as the first program in which the government plays the role of enabling the market. Gilbert (2002), an important scholar of the Chilean model and its influence on other countries, mentions that Chile “fits into” the enabling model, but my study shows that, more than only fitting in, the Chilean housing model was the precursor of the policy. The main characteristics of this program (one-time cash payments of a fixed amount) correspond “unquestionably to the type of subsidy [for housing] that is less problematic than others” (Angel 2000).
The Chilean government, through the Ministry of Housing and Planning (in Spanish, Ministerio de Vivienda y Urbanismo, MINVU), was the key actor in the success of the Chilean model. During the first 27 years of implementing this policy (until 2001), MINVU not only funded and managed the subsidy programs, but it also was the largest real estate firm and the second largest mortgage bank in the country, in terms of the number of houses built and the number of mortgage loans issued.
Three Periods of Housing Policy
What have been the instruments and the amounts of public and private resources that were allocated to the construction and improvement of social housing in the Chile? My study is divided into six parts; the first three review distinct periods of housing policy over the past 30 years, and the next three parts describe the most relevant events in the evolution of this policy.
The first period, from 1974 to 1984, established the foundations of the enabling markets housing policy. During those 11 years, profound reforms were made in the banking system. The programs to subsidize housing were created and then significantly adjusted over time. However, few resources were devoted to housing programs, and the private sector participated only in providing housing for the upper-middle class. The public resources did not reach the poorest groups, so the housing deficit continued to growth.
The second period extended over 17 years, from 1985 to 2001, during which time the policy was consolidated with significant state intervention. The earthquake that shook the central zone of Chile in March 1985 marked the historic peak of the housing deficit, reaching more than one million units. This event precipitated increased attention to the design of housing and subsidy programs, as well as an increase in the level of resources allocated to these programs. These two factors were decisive in attracting the private sector to the social housing market. The continuity of housing policies implemented by democratic governments that started in 1990 was a strategic effort to consolidate the trust and knowledge required by the private sector to increase its participation in the market. The government continued its role in the construction and funding of housing for broad sectors of the population, and the focus of the resources improved with respect to the previous period. Although the commitment was still inadequate, the great accomplishment of this period was the reduction of the housing deficit to half of what it had been in the mid-1980s.
The third period, from 2002 to 2004, corresponds to the implementation of the enabling markets housing policy. Although Chile’s housing policy received international recognition before 2001, only 25 percent of its resources were allocated to families below the poverty line. At that rate of performance, it would have taken 24 years to close the housing deficit (Focus 2001). MINVU was spending more than half of its resources on direct housing construction programs and was still working as a bank, providing mortgage loans, although more than 70 percent of payments were in arrears (División Técnica 2001).
Current Housing Policy
To improve the focus of its resource allocation, MINVU in 2002 started the most important transformation of its housing policy since 1974. At the same time, MINVU stopped giving mortgage loans and gave up the direct construction of houses. In 2004, 96 percent of resources were targeted to subsidy programs and only 4 percent to building programs. The most important housing programs for urban families under this new housing policy are described here.
For the poorest residents, MINVU created a subsidy program called Fondo Solidario de Vivienda (Funding for Cooperative Housing) with an up-front subsidy of US$8,400 per household. Applicants need US$300 of savings and have to present a specific housing proposal. The subsidy covers the cost of land, infrastructure and a 350-square-foot unit containing a bathroom, kitchen, multipurpose space and bedroom. This is considered to be the first stage of a house to be built progressively over time. The municipal building permit is pre-approved assuming the unit’s expansion to a minimum of 550 square feet.
Families must apply in organized groups of at least 10 households and with the support of a managing organization, which can be a municipality, a nongovernmental organization or a consulting firm registered with MINVU. The ministry no longer decides where and what to construct, since the family groups present their projects and MINVU selects the best ones from a social, design and urban development point of view. The managing organization receives the funds to develop the project, implement a social action plan, and assist the families with technical support to expand their units.
Families do not receive another subsidy for the expansion, but since they do not have to pay a mortgage they can save to finance the materials and labor required. The new program is flexible and also accepts projects that involve the purchase of existing houses or construction on existing open space within a lot to increase housing density.
The selection mechanism benefits people who buy used houses over those who build new houses. The goal was to open a new market for the very low-income sector by making it possible for them to purchase the houses that had been constructed by the government over the previous 30 years. This policy is also viewed as a solution to the traditional problems associated with moving families to new housing projects on the periphery of cities, far from social and employment networks and more expensive for commuting to work. This program is focused on people living below the poverty line (approximately 632,000 households in Chile, equivalent to 19 percent of the population). Nearly 30,000 such subsidies have been given each year since 2002.
The second subsidy program was designed for low-income people above the poverty line who were the main consumers of the former housing projects developed by MINVU until 2001. The subsidies can be used to buy new or existing housing or to construct a house on one’s own land. The subsidy is US$4,500 for houses that cost US$9,000 or less and it decreases linearly to US$2,700 for houses up a price limit of US$18,000. Nearly 40,000 units have been granted annually under this program.
Because of credit enhancements offered by MINVU, six private banks signed agreements to deliver mortgage loans for housing valued under US$18,000. This policy was able to reduce the rent requirements and allow informal workers to qualify for mortgage loans. To reduce delinquency rates, the loans needed to be insured against fire and unemployment or the death of the principal. Three credit enhancements are included in MINVU’s agreements with the banks.
Some constituencies were afraid that the subsidies would go only to the upper limit of the price allowed and that the market would provide neither housing nor credit for houses of less than US$15,000. The results showed that the progressiveness of the subsidies was sufficient to promote the market at all of the price levels targeted by the subsidy.
The third type of subsidy is for houses between US$18,000 and US$30,000, to promote mixed-income units in private housing projects. Only 6,500 of these subsidies have been given each year. The subsidy offers up-front capital of US$2,700, but the credit enhancements were eliminated because many private banks were already originating mortgage loans in this price range.
The last three parts of the study analyze (1) key issues to generate an enabling markets housing policy, including transaction costs, access to bank financing, savings for housing, and support to families so they can take advantage of the subsidies; (2) the impact of the housing programs on family income and the distribution of national income; and (3) lessons on housing finance learned from the Chile’s experience over the last 30 years.
Conclusion
My study analyzes the Chilean housing policy since 1974, to better understand how it became possible to incorporate the participation of the private sector and improve the focus in allocating resources to the poorest sector. The study explores both good and bad decisions that were made over the past 30 years, and particularly in the past three years, and it identifies the roles of different social and economic actors in the process. The early results are encouraging. Using the same budget for subsidies in each of the last four years, MINVU increased by 57 percent the number of families from the poorest three income deciles who have benefited from government housing subsidies.
Despite the great breakthrough in social housing in Chile, many tasks remain. A report by MINVU estimates a housing deficit of 543,000 units in 2000 and suggests that 96,000 new units of housing are needed each year just to accommodate new family demand (Ministerio de Vivienda y Urbanismo de Chile 2004).
The effects in terms of land use are also remarkable. Until 2001 all the housing units built for low-income families in the Greater Santiago area were developed by MINVU in new infill projects on the periphery of the city. The Funding for Cooperative Housing program established in 2003 encouraged acquisition of existing houses and increased density of housing within already urbanized areas. As a result, the percentage of these types of housing began to shift dramatically, from zero in 2001 to 23 percent in 2003 and up to 63 percent in 2004, with a corresponding decrease in the percentage of new infill units being developed on the periphery.
It took Chile more than 28 years to fully implement the enabling markets housing policy. I hope this study can help other countries to formulate their housing policies so that all citizens, without regard to their socioeconomic condition, can have access to opportunities to own a decent home.
References
Angel, S. 2000. Housing policy matters: A global analysis. Oxford and New York: Oxford University Press.
División Técnica de Estudio y Fomento Habitacional. 2001. Informe de gestión: Diciembre de 2000. Santiago, Chile: Ministerio de Vivienda y Urbanismo.
Gilbert, A. 2002. Power, ideology and the Washington consensus: The development and spread of the Chilean housing policy. Housing Studies 17(2): 305–324.
———. 2004. Helping the poor through housing subsidies: Lessons from Chile, Colombia and South Africa. Habitat International 28(1): 13.
Gonzáles Arrieta, G. 1997. Acceso a la vivienda y subsidios directos a la demanda: Análisis y lecciones de las experiencias latinoamericanas. Serie Financiamiento del Desarrollo (63).
Kimm, P. 1986. Evolving shelter policies for developing countries. Second International Shelter Conference, Vienna, Austria.
Mayo, S. 1999. Subsidies in housing. Washington, DC: Inter-American Development Bank.
Ministerio de Vivienda y Urbanismo de Chile. 2004. El déficit habitacional en Chile: Medición de los requerimientos de vivienda y su distribución espacial. Santiago, Chile: Política Habitacional y Planificación (321).
Rojas, E., Jacobs, M., and Savedoff, W. 1999. Operational guidelines for housing: Urban development and housing policy. Washington, DC: Inter-American Development Bank.
World Bank. 1993. Housing: Enabling markets to work. Washington, DC: World Bank.
Mario Navarro was director of housing policy in Chile’s Ministry of Housing and Planning (MINVU) from 2000 to 2004, when he was named Loeb Fellow at Harvard and visiting fellow at the Lincoln Institute.
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Daniel McMillen has a joint appointment in the Department of Economics and the Institute of Government and Public Affairs at the University of Illinois. He is also a visiting fellow in the Department of Valuation and Taxation at the Lincoln Institute of Land Policy. Before moving to Urbana-Champaign, he was a member of the economics departments at the University of Illinois at Chicago, University of Oregon, Santa Clara University, and Tulane University. McMillen received his Ph.D. in economics from Northwestern University in 1987.
Since 2005, McMillen has worked on a number of Lincoln Institute projects, including two David C. Lincoln Fellowships with Rachel Weber, a member of the Urban Planning and Policy Department at the University of Illinois at Chicago. He has also collaborated with Richard F. Dye of the University of Illinois on a series of Lincoln-sponsored projects on land valuation and assessment limitation measures.
McMillen has been co-editor of Regional Science and Urban Economics since 2007. He also serves on the editorial boards of other leading journals in urban economics, real estate, and regional science, and as a consultant for the Federal Reserve Bank of Chicago. He directed the Center for Urban Real Estate at the University of Illinois at Chicago from 1999 to 2005, and has served on the board of the American Real Estate and Urban Economics Association.
Land Lines: How did you become associated with the Lincoln Institute of Land Policy?
Daniel McMillen: I first came to the Lincoln Institute in 1989 for a conference on “Growth Management and Land Use Controls.” It was an honor to be invited there as a relatively new assistant professor and to have the chance to meet many leading urban and public finance economists. I returned for another conference in 1996. I was impressed by the quality of the research being conducted by and for the Lincoln Institute on land use, land and property taxation, and the regulation of land markets. When I had a sabbatical in 2005–2006, the Lincoln Institute seemed like an ideal place to work. I spent much of that year in Cambridge, and have been involved regularly ever since.
Land Lines: What was the first project you conducted for the Lincoln Institute?
Daniel McMillen: I began working with Richard F. Dye on a study of teardowns and land values in the Chicago metropolitan area. A teardown is a property that is purchased solely to replace the existing structure with a new one. Teardowns have been remarkably controversial because they drastically alter the character of long-established neighborhoods. In 2006 the National Trust for Historic Preservation declared Chicago to be the “epicenter” of teardown activity, so the city offered an ideal setting for such a study.
We collected data on sales and demolition permits for homes in Chicago and several suburbs. An assessment file including the structural characteristics of each home allowed us to test a key prediction of theoretical models of demolitions—that is, when a home is purchased as a teardown, it is valued only for the land on which it rests. Our results supported this theory by showing that structural characteristics did not influence the sale prices of teardown properties.
This study has important practical implications because it suggests that teardowns can be used to estimate land values in areas where many homes are being demolished and replaced by new structures. One of the impediments to a land tax is the difficulty of estimating land values in built-up areas where there are few sales of vacant land. Teardowns may help make land taxation feasible in large urban areas that are undergoing redevelopment.
Land Lines: What other research topics have you investigated?
Dan McMillen: I have worked on a series of projects with Rachel Weber analyzing property assessments in Chicago. In a paper published in the National Tax Journal, titled Thin Markets and Property Tax Inequities: A Multinomial Logit Approach, we developed a new approach for determining whether property assessments are regressive in the sense that assessment ratios tend to be lower for higher-priced properties. We use a statistical (logit) model to estimate the probability that a property will have an assessment ratio in the upper or lower end of the distribution rather than in the middle. Although we do find evidence of regressivity, we also find that assessments tend to be much more accurate in neighborhoods with a large number of sales. Thin markets—areas with few sales—have a much higher probability of both unusually high and unusually low assessment ratios.
In subsequent work to be published in the Public Finance Review, titled Ask and Ye Shall Receive? Predicting the Successful Appeal of Property Tax Assessments, we develop an empirical model of the appeals process for property assessments. We find that thin markets have many more appeals and a higher proportion of successful appeals than areas with many sales. Taxpayers who appeal their assessments tend to live in moderate-income neighborhoods in newer, larger homes with assessments that increased significantly since the previous reassessment year. In contrast, successful applicants tend to live in smaller, older homes and in neighborhoods that have experienced relatively slower rates of property appreciation.
Land Lines: What conferences have you organized for the Lincoln Institute?
Daniel McMillen: For several years, I have helped organize the conference “Recent Advances in Urban Economics and Public Finance,” at which many of the leading researchers in urban economics and public finance present new work. The conference provides the opportunity for authors to summarize their papers and receive useful feedback from an enthusiastic, knowledgeable audience.
The conference includes both established and emerging scholars. It was very important to me to meet recognized scholars when I was an assistant professor at the University of Oregon, and I want to return the favor by using these conferences to help junior scholars meet more established researchers.
This year Daphne Kenyon, another Lincoln Institute visiting fellow, and I formalized this mentoring goal by introducing a junior scholars program that matched young assistant professors with the editors of key urban economics and public finance journals, including Regional Science and Urban Economics, Public Finance Review, the Journal of Regional Science, Real Estate Economics, and the National Tax Journal. After a session with the full panel of editors, each junior scholar met individually with one of the editors, who provided comments on a working paper the scholar had prepared. The junior scholars came from a variety of universities and organizations, including the University of Michigan, the University of Southern California, the University of Oklahoma, Georgia State University, the University of Georgia, Winthrop University, Washington University, and the Federal Reserve Board.
Land Lines: How has your association with the Lincoln Institute influenced your research?
Daniel McMillen: I have published many papers that deal directly with issues of land use, land and property taxation, and land policies. My association with the Lincoln Institute has encouraged me to think more about the policy implications of my research and to expand its potential audience beyond academic economists.
For example, I wrote a paper on the costs and benefits of teardowns for Land Lines (July 2006) as a direct result of a presentation for the Lincoln Lecture Series. A surprising number of people in the audience were convinced that teardowns should be heavily regulated because they could never generate any benefits. However, teardowns may also offer new tax revenues, an improved housing stock, and perhaps even reduced urban sprawl. Economists become so used to thinking in terms of costs and benefits that they tend to take it for granted that others use the same framework to analyze issues. Although I think a strong case can be made for regulating teardowns, this kind of experience helps me realize how vital an economist’s perspective can be in shaping policies that lead to good outcomes.
The Lincoln Institute has also encouraged me to think about the implications of my research for assessment practices. When I presented my work on teardowns in an Institute-sponsored session at the International Association of Assessing Officers (IAAO) conference in 2005, the participants were very interested in using teardowns to improve land assessments. They wanted to know what data would be required and what statistical procedures to use. This conference and subsequent contact with IAAO members provided inspiration and background for my work on assessment regressivity and assessment appeals.
My Lincoln Institute affiliation has also led to contacts with legislators and other policy makers. Richard Dye, David Merriman, and I produced a study for the Illinois Department of Revenue that analyzed the effects of Cook County’s cap on the growth rate of residential property assessments. This work motivated a 2007 conference on assessment limits held at the Institute where academics, local government officials, and state legislators heard presentations about the experience with assessment limits in Colorado, Idaho, Illinois, and Minnesota.
One lesson from the conference was that assessment limits have important distributional effects that transfer taxes from fast-growing areas to those with low rates of appreciation, or from residences to commercial or industrial properties. This conclusion surprised many people who thought that assessment limits simply lowered property taxes for everyone. To share this work with a broader audience, Richard Dye and I wrote a Land Lines article (July 2007), titled Surprise! An Unintended Consequence of Assessment Limitations, in which we presented the algebra and explanations behind such policies.
Land Lines: What are your current projects for the Lincoln Institute?
Daniel McMillen: I am returning to my work on teardowns. I am working with Arthur O’Sullivan, professor of economics at Lewis & Clark College, to develop the implications of an options model of teardown investments. The basic implication is that the sales price of a property can be decomposed into the value of the land and the value of the structure, with the weights to each component depending on the probability that the structure will be demolished. Whereas land accounts for the entire value of a property when the structure will be demolished immediately, structural characteristics have more influence on the sales price when the owner is likely to live in the home for some time. We are now testing these implications using updated data on property sales in the Chicago area.
I am also extending my work on assessment practices by developing new statistical procedures to analyze the distribution of assessment ratios. My preliminary results suggest that the variance of assessment ratios is much higher at very low sales prices and that assessments tend to be more accurate for relatively high-priced properties. I am working to develop a set of computer programs that will make the analysis of assessment ratio distributions readily accessible to assessors and other practitioners.
We plan to continue our junior scholars program as a companion to the Urban Economics and Public Finance conference. These conferences play an important role in mentoring young scholars and in helping to introduce the Lincoln Institute to academic researchers, which my own experience shows can be a formative intellectual experience.
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La infraestructura (que comprende energía, telecomunicaciones, transporte, abastecimiento de agua potable y alcantarillado) cumple un papel muy importante en el desarrollo del suelo urbano y ejerce una influencia en la productividad, tanto de las ciudades como del campo. Los datos acerca de la cantidad de obras de infraestructura a nivel nacional (aunque no a nivel metropolitano) se encuentran disponibles en relación con muchos países en vías de desarrollo y de altos ingresos. Dichos datos respaldan varios de los resultados que se resumen en el presente artículo.
La cantidad de obras de infraestructura per cápita en los diferentes países se encuentra estrechamente relacionada con los niveles de ingresos per cápita: en aquellos países en donde los ingresos se duplican, sucede casi lo mismo con las obras de infraestructura. Sin embargo, las obras de infraestructura de un país no se encuentran esencialmente relacionadas con su nivel de urbanización una vez que se han tomado en cuenta los ingresos de dicho país. Y esto resulta sorprendente, ya que las ciudades poseen grandes cantidades de obras de infraestructura. No obstante, las ciudades también presentan una gran densidad de población que utiliza la infraestructura de manera intensiva, por lo que los niveles de obras de infraestructura urbana per cápita son similares a los niveles nacionales.
La composición de las obras de infraestructura también varía sistemáticamente según los ingresos per cápita. Las carreteras representan la mayor proporción de obras de infraestructura en los países con menor cantidad de ingresos, seguidas de los sistemas de agua potable en segundo lugar y los sistemas de energía eléctrica en tercer lugar. A medida que los ingresos de un país se incrementan, la cantidad de obras de infraestructura relacionadas con los sistemas de energía eléctrica aumentan con más rapidez que los niveles de ingresos. La infraestructura correspondiente a los sistemas de agua potable y alcantarillado aumenta a una intensidad menor y, en el caso de las carreteras, el cambio se da en proporción a los ingresos. Como resultado, en los países con altos ingresos, los sistemas de energía eléctrica conforman el mayor componente de las obras de infraestructura, seguidos de las carreteras, mientras que los sistemas de agua potable, alcantarillado y telefonía representan sólo una pequeña proporción de la infraestructura.
Teniendo en cuenta las tasas de crecimiento económico recientes, y utilizando las relaciones existentes entre la infraestructura y los ingresos per cápita, los países en vías de desarrollo probablemente deben invertir alrededor del 5 por ciento de su PIB en infraestructura (3 por ciento en expansión y 2 por ciento en mantenimiento), que en la actualidad se aproxima a los US$750 mil millones anuales, para poder mantener la relación existente entre la infraestructura y el PIB. En los países con altos ingresos, el gasto total sería menor, es decir, un 1,7 por ciento del PIB (dividido equitativamente entre obras de expansión y de mantenimiento), que en la actualidad se aproxima a US$700 mil millones anuales. Aquellos países que crecen con más rapidez que el promedio deben invertir una proporción mayor de su PIB, con el fin de que las obras de infraestructura vayan a la par del crecimiento económico.
En algunos países, una alternativa a las nuevas inversiones consiste en mejorar la eficiencia de la producción de servicios a partir de la infraestructura existente. Por ejemplo, la pérdida promedio de energía eléctrica en los diferentes países llega a alcanzar hasta el 25 por ciento; por otro lado, el agua potable que no se factura y las filtraciones de agua pueden llegar a exceder el 30 por ciento. La reducción de estas pérdidas de gran magnitud puede evitar la necesidad de capacidades adicionales. No deja de ser sorprendente el hecho de que el rendimiento de los diferentes sectores dentro de un mismo país varíe en tan gran medida, pues el rendimiento eficiente que puede tener un país en un determinado sector de infraestructura no se condice con su rendimiento en otros sectores.
¿De dónde provendrán estos fondos de inversión, en particular para los países en vías de desarrollo? La asistencia internacional y el financiamiento brindado por los bancos de desarrollo para obras de infraestructura en los países en vías de desarrollo actualmente llegan a un total de aproximadamente US$40 mil millones anuales. Dicha cifra se ha triplicado (o más) desde el año 1990, en dólares en curso legal. La inversión privada en infraestructura en los países en vías de desarrollo alcanzó recientemente los US$160 mil millones anuales y ha crecido ocho veces más desde el año 1990, también en dólares de curso legal. La asistencia internacional está dirigida principalmente a los sistemas de energía, transporte, agua potable y alcantarillado, mientras que casi no se han destinado fondos a las telecomunicaciones.
Por el contrario, más de la mitad del financiamiento de origen privado se invierte en telecomunicaciones (en particular, telefonía móvil), seguidas por el sector energético. Las telecomunicaciones y la energía atraen más inversiones privadas en los países en vías de desarrollo debido a que los ingresos que obtienen por los aranceles cubren una gran parte de los costos operativos, mientras que los ingresos por aranceles y tarifas de usuarios cubren una menor parte de los costos de transporte, agua potable y alcantarillado. En la década de 1990, las inversiones privadas en infraestructura se concentraron en América Latina y en Asia Oriental; sin embargo, a partir del año 2000, se distribuyeron de forma más uniforme por diferentes regiones del mundo.
A pesar del crecimiento experimentado en cuanto al financiamiento internacional, existen grandes áreas metropolitanas en crecimiento en países en vías de desarrollo que aún deben recaudar importantes sumas de dinero para poder financiar las inversiones en infraestructura. Entre los métodos de recaudación podemos mencionar los siguientes: el aumento de los aranceles que se cobran a los usuarios, el aumento de los impuestos (en particular, los impuestos inmobiliarios) sobre aquellas propiedades cuyo valor se incrementa debido a las inversiones en infraestructura y el establecimiento de mercados municipales de bonos, tales como el que se está desarrollando en África del Sur.
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Imagine for a moment that you are a political leader—a prime minister, president, or governor—and you awake to the news that natural disaster has struck. Citizens died, buildings collapsed, infrastructure is hobbled, and local leaders desperately need additional resources and support.
You respond immediately, sending personnel and equipment to the disaster zone and pledging additional assistance to local leaders. Your country, like many around the world, has institutionalized a scalable, tiered response system with regional, state, and national levels of government engaging as disaster-related demands exceed local capacities to respond. Yet within days, even hours—before all the casualties are treated and citizens are accounted for, and before the streets have been cleared of rubble and basic services have been restored—other leaders and the media are demanding answers to questions you haven’t had time to consider: How much money will be pledged to the rebuilding? What standards will guide it? Will all landowners be permitted to rebuild? Who will lead the process? Is a new institution or governance structure needed to cut through bureaucratic red tape and expedite the rebuilding?
This article summarizes ongoing research into the roles of various government levels in successful disaster recovery and rebuilding (table 1). It represents the synthesis of two decades of recovery research and planning practice following some of the largest disasters of our time in the United States, Japan, China, Taiwan, Indonesia, India, New Zealand, Australia, Chile, and elsewhere. Its purpose is to find common lessons in these disparate environments and help facilitate recovery for communities struck by disasters yet to come.
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Table 1: Recovery Management Experiences Around the World
Australia
Victoria Bushfire Recovery and Reconstruction Authority
Queensland Reconstruction Authority
Chile
Ministry of Housing and Urban Development (MINVU- Ministerio de Vivienda y Urbanismo)
China
General Headquarters for Earthquake Relief
India
Gujarat State Disaster Management Authority (GSDMA)
Abhiyan
Project Management Unit
Indonesia
Rehabilitation and Reconstruction Agency—BRR
Coordination Team for Rehabilitation and Reconstruction—TTN
Japan
National Reconstruction Agency
New Zealand
Canterbury Earthquake Recovery Authority
Taiwan
921 Post-Earthquake Recovery Commission
Morakot Post-Disaster Reconstruction Council
United States
Lower Manhattan Development Corporation
Louisiana Recovery Authority
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Recovery Management Around the World
Governments tasked with post-disaster reconstruction face an extraordinary set of management challenges. The first is the compression of activities in time, focused in space, as cities built over the course of decades if not centuries are destroyed or damaged suddenly and must be rebuilt in a fraction of the time it took to construct them. From this tension develops a second challenge: a keen tension between speed and deliberation, as the various recovery actors in stricken communities move with urgency while aiming to make thoughtful and deliberate decisions, to ensure optimal long-term recovery. From both these phenomena a third challenge arises: the need for immediate access to a deep wealth of money and information—the two currencies of the post-disaster recovery environment.
To meet these demands, governments in every country after every large disaster create new relief agencies or significantly rearrange existing organizations. The most common reason for these post-disaster governance transformations is lack of capacity. Governments still need to attend to their normal daily affairs while they coordinate the reconstruction or reinvention of impacted communities, so they appoint an entity that can focus daily attention on rebuilding while coordinating the recovery-related activities of multiple government agencies. Commonly designed to serve a variety of purposes and governmental settings, these recovery agencies provide a range of substantive functions as they rebuild infrastructure, housing, and economic activity. They differ depending on the type and scale of coordination they provide; the scope of their authority, especially regarding the flow of money and information; and the level of government they serve—at either the national, state, or intergovernmental level.
National governments handle very large disasters at the top political tier, mobilizing financial resources from national reserves or international aid and providing capacity support to lower levels of government in the disaster-stricken locality. When large disasters transcend state or provincial boundaries, national governments also assume active roles in developing recovery policies, and they create recovery organizations to assist them. Examples include Japan’s National Reconstruction Agency, established after the 2011 earthquake and tsunami; New Zealand’s Canterbury Earthquake Recovery Authority, created after the 2010 and 2011 earthquake sequence in Christchurch; and China’s General Headquarters for Earthquake Relief following the 2008 disaster in Wenchuan. Each of these international bodies hewed to the national administrative leadership, derived authority from the top rung of government, and articulated policies approved by the reigning administration.
Similarly, state-level recovery agencies are usually created in direct response to disasters that affect a region or other subnational jurisdiction. The authorities and legalities of these entities are more limited by their authorizing body’s secondary, subnational position in government. Examples include the Gujarat State’s Disaster Management Authority (GSDMA), created after the 2001 earthquake in western India; Louisiana’s Recovery Authority, founded after Hurricane Katrina in 2005; Victoria State’s Bushfire Reconstruction and Recovery Authority (VBRRA), established after the 2009 Australian bushfires; and Queensland State’s Reconstruction Authority, founded after the summer 2010–2011 floods in Australia.
A third class of organizations are designed to operate between levels of government, such as the Lower Manhattan Development Corporation, created as a state and city partnership for recovery planning and funding following the September 11, 2001, terrorist attacks in New York City. Another example, the Rehabilitation and Reconstruction Agency (BRR) created in Aceh, Indonesia, following the 2004 tsunami, consisted of three independent agencies whose membership came from a wide range of local and national stakeholders. Likewise, the Indonesian government’s Coordination Team for Rehabilitation and Reconstruction (TTN), following the 2006 earthquake in Yogyakarta and Central Java, was designed to provide a bridge between national agencies and local agencies, and it also monitored and investigated local implementation issues.
In some cases, governments choose to modify or adapt existing institutions and procedures to help manage recovery. For example, Chile established a national interministerial task force after the 2010 earthquake and tsunami, but the existing Ministry of Housing and Urban Development took on expanded roles and responsibilities and managed the national planning and implementation efforts.
The Mastery of Money, Information, Collaboration, and Time
Considering these factors, common to all post-disaster recovery settings, our research demonstrates that the key to governing large-scale crises effectively is the mastery of money, information, collaboration, and time. For this article, we offer here some best practice examples and lessons learned from our various country-organization studies.
1. Managing Money: Sourcing and distributing recovery funding efficiently, effectively, and equitably.
When large amounts of public funds are involved in a disaster cleanup, the true power over the recovery resides with the level of government that controls the flow of money and how it is acquired, allocated, disbursed, and audited. Sometimes, the recovery organization assumes all or some of these powers, and sometimes all funding authority continues to reside where it did before the disaster, in the same legislative and administrative branches. Important functions in the post-disaster environment include setting policies and priorities for allocating large sums of recovery funding and establishing accounting systems that allow for timely disbursal of critical financing while also providing transparency and minimizing corruption.
Some organizations, such as India’s state-level GSDMA, are established specifically to collect all the recovery funds in one place and then allocate and disburse them. Some, such as one of the three legs of Indonesia’s intergovernmental BRR, are created to independently audit and monitor the expenditures of recovery implementation organizations. In contrast, the state-level Louisiana Recovery Authority recommended funding priorities to the state and provided oversight as needed, but it had no direct control over recovery funds. Japan’s National Reconstruction Agency received national funding and allocates that money to the relevant national ministries and local governments.
2. Increasing Information Flows: Effectively gathering, integrating, and disseminating information to enhance decision making and actions by all recovery actors.
A critical demand is to accelerate and broaden the flows of information among recovery actors about the dynamics of reconstruction actions and emergent opportunities. This challenge includes the planning and public engagement processes that provide information to citizens and institutions involved in the recovery, facilitate communication and innovations among recovery actors, and convey citizen concerns to government agencies and NGOs in a timely manner. It also includes providing information between both governmental and nongovernmental organizations and establishing forums to facilitate coordination.
In Victoria, Australia, after the 2009 bushfires, national and state leaders worked with affected communities to form more than 30 local recovery committees, which were then charged with developing a community recovery plan that identified local priorities and projects. These committees were used by state and national governments as focal points for local funding distribution and by local communities to raise additional funds and establish local policy guidance for rebuilding. In Yogyakarta, Java, after the 2006 earthquake, TTN kept a variety of local and national agencies mutually informed of each other’s activities—which, in turn, helped to provide early alerts to officials regarding potential problems.
A critical function appropriately provided by a government-supported agency is the acquisition, synthesis, and distribution of basic information on damage, reconstruction activities, population, social and economic issues, and various recovery indicators. Such agencies issue regular progress reports and monitor recovery indicators, as both Japan’s National Reconstruction Agency and New Zealand’s Canterbury Earthquake Recovery Authority have done, using a variety of communication mechanisms, including website postings, press releases, newsletters, and forums. Frequent information from credible sources can help to ensure that all actors understand the current recovery environment, and it can also help reduce the spread of rumors and misinformation.
3. Supporting Collaboration: Building sustainable capacity and capability for long-term recovery through genuine collaboration and coordination, both horizontally among local groups and vertically among different levels of government.
Vertically organized, hierarchical agencies—with clear organizational charts and streamlined channels of communication—are usually not well suited to manage disaster recovery, because the lack of “connecting flow” across vertical hierarchies limits collaboration as well as the flow of new and updated information among organizations. U.S. national agencies involved in recovery, for example, are more adept at administering individual programs than they are at solving complex problems that cut across governmental institutional boundaries.
By contrast, horizontally organized agencies can promote interagency coordination and information sharing, allowing individual groups to adapt to new contexts and information while remaining responsible to their parent organization. If multiple states or local jurisdictions are involved, cooperation among multiple jurisdictions is essential. Technical assistance and capacity building for the key recovery actors is also important for building local capabilities to sustain long-term recovery.
After Hurricane Katrina in 2005, Governor Kathleen Blanco appointed the members of the Louisiana Recovery Authority, so it was technically an extension of the state-level administration. But the legislature eventually formalized it. As an intentionally bipartisan body, it operated independently as it interacted with both U.S. national officials and local governments, made policy recommendations, and provided oversight of state agency recovery activities. Even though its power was limited to making policy recommendations, it was able to exert considerable influence at multiple levels in a very politically contentious atmosphere. It also collaborated with U.S. national agencies to set standards for long-term community recovery planning and helped match technical assistance and provide other planning resources at regional, local, and neighborhood scales.
Because they carried the authority of state leaders, India’s GSMDA and Queensland Australia’s reconstruction authority were able to successfully coordinate the activities of other state agencies. Similarly, Chile’s MINVU and Taiwan’s national recovery agencies have had the centralized authority to coordinate activities of other national agencies. Abhiyan, an NGO officially endorsed by the Gujarat government in India but without any defined governmental authority, also played a crucial role in coordinating the work of hundreds of NGOs and in establishing a network of local subcenters to provide information and technical support.
The hierarchical recovery process after the 2008 Wenchuan Earthquake in China succeeded in quickly reconstructing buildings, but it left little room for local innovation, as it lacked genuine local capacity building and involvement in decision making. Because local conditions were not always considered, economic recovery appears to be uneven.
Likewise, in many tsunami-affected communities in the Tohoku region of Japan, recovery has stalled because the hierarchical system established under the national government and the National Recovery Agency leaves insufficient room for local innovation. Furthermore, within the complex and powerful Japanese ministry system, the National Reconstruction Agency lacks power to compel actions by other ministries.
Increasingly, research shows that if residents are partners in reconstruction planning, they are tolerant of delays, and they are more satisfied with the results. Still, even the best examples of decentralized processes involve an agency at the top establishing the framework and rules. This trend strongly suggests that governments should resist the urge to manage the details of reconstruction and act less as managers and more as coordinators and facilitators of the process.
4. Balancing Time Constraints: Effectively meeting the immediate and pressing local needs of recovery while also successfully capitalizing on opportunities for longterm betterment.
Governments face a balancing act as they confront the tensions between speed and deliberation, and between restoration and betterment. The most fundamental way to address these challenges is to increase information flows, as described above. But recovery agencies have found several other specific ways to attain both speed and improvement.
To hasten reconstruction, there are often opportunities to streamline normal bureaucratic processes of decision making, especially regarding construction permits, without compromising quality. Because such processes often involve multiple agencies, a recovery agency can be helpful to the extent that it can facilitate or compel line agencies to cooperate more effectively.
New Zealand’s parliament conferred upon the Canterbury Earthquake Recovery Authority and its minister a wide range of unilateral powers that would enable the timely and coordinated recovery of greater Christchurch. Parliament continued the emergency authorities granted under previous legislation and extended the expiration date of those authorities where appropriate; permitted the minister to acquire land compulsorily; and allowed the suspension of any part or all of the national land use, local government, and transport management, plans or policies developed under various acts. It directed CERA to prepare a draft recovery strategy within nine months of its authorization. Similarly, it issued the Christchurch city council a nine-month deadline to draft a recovery plan for the city’s damaged central business district.
Most recovery agencies include disaster risk reduction in their reconstruction policies. A common recovery slogan is “build back better.” The slogan of the Louisiana Recovery Authority was “Safer, Stronger, Smarter.” The easiest form of post-disaster betterment is to adopt disaster-resistant building standards. The incorporation of new structural standards need not slow down the rebuilding process, but land use improvements such as relocating neighborhoods or entire communities can require considerable time for planning and land acquisition. These projects involve difficult tradeoffs between speed, design quality, and public involvement. New Zealand is undertaking a major buyout of neighborhoods that sustained heavy damage in the 2010–2011 earthquakes and remain vulnerable to damage from future tremors. Japan is encouraging relocation of coastal communities from tsunami hazard areas, and some of these will likely take up to ten years to complete.
One way to manage these goals simultaneously is to support participatory planning processes to create long-term betterment while also trying to meet immediate needs. In many cases, professional planners worked with neighborhoods—in Japan, Chile, New Orleans, and Bhuj, India, for example—but each project also involved difficult compromises in order to meet time constraints. Victoria and Queensland’s creation of local recovery planning committees, however, are great examples of state and national support systems that helped build local capacity to carry forward the rebuilding processes over time.
Next Steps in our Research
Governments know that their task is to manage information and money flows among many actors in a compressed time. Up to this point, we have identified many examples of how to accomplish this. But, even better, we would like to be able to create menus of organizational and process choices, based on combinations of disaster magnitude and scope and economic, political, environmental, and governmental contexts.
We also have several remaining questions: Why do many of the same institutional problems continue to appear from one disaster to the next, and is there a way to avoid repeating some of them? What are the effective outcomes—negative and positive—of these institutional arrangements that may inform future leaders facing similar reconstruction challenges? What specific kinds of technical assistance and capacity building should international donors and national governments focus on providing for local governmental and non-governmental organizations, so they can do their jobs better during the recovery process? In large-scale disasters, how do the tiered goals of a recovery (i.e. rebuilding households, neighborhoods, cities, regions, nations) relate to each other, in terms of consistency, efficiency, and effectiveness? And what happens when these disaster-related organizations cease to exist? Is the local capacity and capability in place for long-term community sustainability? By studying varied national and organizational experiences, we can better understand how the time compression phenomenon of post-disaster recovery affects other theoretical constructs guiding public policy and city management; planning, land development and growth management; and fiscal and capital management.
About the Authors
Co-authors of Clear As Mud: Planning for the Rebuilding of New Orleans (2010, APA Planners Press), Laurie A. Johnson and Robert B. Olshansky are currently collaborating on a Lincoln Institute book and policy focus report on governing post-disaster recovery. For the past two decades, they have been researching and practicing post-disaster recovery planning following urban disasters around the world. Johnson is an urban planner based in San Francisco and specializing in disaster recovery and catastrophe risk management. Olshansky is professor of urban and regional planning at the University of Illinois at Urbana-Champaign. Contact: laurie@lauriejohnsonconsulting.com or robo@illinois.edu
References
Alesch, Daniel J., Lucy A. Arendt, and James N. Holly. 2009. Managing for Long-term Community Recovery in the Aftermath of Disaster. Fairfax, VA: Public Entity Risk Institute.
Chandrasekhar, Divya and Robert B. Olshansky. 2007. Managing Development After Catastrophic Disaster: A Study of Organizations That Coordinated Post-Disaster Recovery in Aceh and Louisiana. Milwaukee, Wisconsin.
Olshansky, Robert B., Lewis D. Hopkins, and Laurie A. Johnson. 2012. Disaster and recovery: Processes compressed in time. Natural Hazards Reviews. 13(3):173–178.
Olshansky, Robert B., Laurie A. Johnson, and Kenneth C. Topping. 2006. Rebuilding communities following disaster: Lessons from Kobe and Los Angeles. Built Environment. 32(4): 354–374.
Smith, G., and Dennis Wenger. 2007. Sustainable disaster recovery: Operationalizing an existing agenda. In Handbook of disaster research (Handbooks of Sociology and Social Research). ed. Havidan Rodriguez, 234–257. New York, NY: Springer.
