Democratizing the wealth of cities: self-financing urban development

Abstract

In conventional urban developments, land and property owners benefit from the uplift in land values that arises from the costly public investments by different levels of government in roads, water, sewerage, transport, education, hospitals and other services, as well as from private investments in production, trade, office, retail, entertainment, sporting and residential facilities. This paper describes the many benefits that come from cooperative land banks that make the development of new urban sites with infrastructure and services self-financing (reducing the need for public investment). They also lower the costs of housing and commercial investments by removing the cost of land. This is achieved by separating the ownership of land (now owned by the cooperative) from the ownership of buildings, and by making the rights of ownership conditional upon use (i.e. use it or lose it). Owners of dwellings get a “dynamic lease” that reflects the value of their investment and in addition obtain shares in the cooperative that capture the value of all sites and community assets. Cooperative land banks can also contribute to financing urban renewal initiatives, although, as the paper describes, this may need supportive legislation.