Public land is an invaluable resource in many world cities. The reality, however, is that the land is often utilised sub-optimally and is caught in a cycle of low investment and low return. The problems often stem from fragmented ownership and co-ordination, with this land being owned by local, regional, or national governments, or by quasi-governmental or para-statal organisations.
While cities may own high volumes of public land, owing to their historic functions, very few cities have developed a succinct strategy for leveraging this attractive asset as a means of encouraging investment.
Given the current economic climate, characterised by tight public finances, public land may represent a hugely underutilised resource in terms of attracting private finance to cities.
Public land can be effectively utilised in cities in a variety of ways.
Development undertaken in Barcelona, for example, is a clear demonstration of how public land can be used as a means to plan and develop new functions and districts and to establish longer term and higher value goals to certain land parcels. Barcelona’s hosting of the Olympics in 1992 marked a definitive step-change in urban planning in the city, which manifested itself in Barcelona City Council’s approval of the planned transformation of the old derelict industrial area of Poblenou into a centre for innovative, knowledge based businesses. The City Council introduced new regulations to change the use of industrial land in the district. In return for allowing private investors to exploit the land, companies are required to share the preparatory costs of the urban transformation, through a 30% land transfer to the city, as well as payment of a development levy on the land. Transfers and levies are donated to the 22@BCN company and this means of value capture is used to improve infrastructure in the district as a means of leveraging further private investment.
The development of the Ile de France region furthermore demonstrates how cities are able to utilise public land to attract private investment, while ensuring that their own predetermined outcomes are achieved, in this case largely social and environmental goals. While the SDRIF MasterPlan lays out the vision for the Ile de France Region and the regional council acquires land and brings it under its own control, the Public Foncier Ile-de-France (EPF) acquires brownfield land, clears it and ensures that it has the requisite planning approvals to attract private investment. The land is then parcelled up and sold to private investors. Crucially, the EPF ensures that all developers meet their strict criteria with regards to social quality, environmental quality and architectural quality.
In addition to these examples of effective public land utilisation, cities can also use public land as a means to lower costs and boost returns to private co-investors in land, or projects, which are otherwise un-economic; as an equity contribution to a longer term joint venture with a private partner; or as part of a land swap arrangement that helps to assemble one or more parcels of land for development.
Public land in cities can be a valuable asset for urban investment, but it could also be a deterrent to investment if it is not used optimally, or if it is allowed to undermine market led investment. Taking steps to marshal public land under the supervision of one public body and to use the land use planning process to help create public and private value on such land is the key step to achieving higher investment and better internal and external rates of return.
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