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Sale of Building Rights

Overview and Evaluation of Municipal Experiences

Fernanda Furtado, Vera F. Rezende, Teresa C. Oliveira, and Pedro Jorgensen Jr.

February 2010, English

This paper presents the findings of a study on the sale of building rights (Outorga Onerosa do Direito de Construir—OODC) as an instrument of municipal urban planning in Brazilian cities. The study was carried out between December 2005 and June 2006 in twelve municipalities which are compared with respect to the legal form of the instrument, its design and objectives, date of first application, land utilization indices, area where OODC is applicable, formula to calculate the charge due, revenues collected, monitoring and use of revenues, effects on land price and real estate property tax, and how effective the instrument has been in capturing incremental land values. The main finding is the great diversity that exists in the application of the instrument by cities. In other words, the cases studied do not provide a single model for application of the OODC but help to improve our understanding of the role and the potential of the OODC as a land value capture instrument.