Demetrio Muñoz Gielen

As many countries pursue private financing for urban public infrastructure, the tools for public value capture (PVC) gain prominence. This paper analyses Polish PVC tools in general, and spotlights a specific type: developer obligations (DOs). The authors conclude that the tools are ineffective for a series of reasons: negligence in the elaboration of pragmatic rationales (to mitigate the negative impacts of urban development), a lack of feasible (affordable) coercive land policy tools, and legislation (which puts Poland in sharp contrast to other countries) that prohibits municipalities from requiring DOs in exchange for approval of a land-use plan or planning permit, as well as the general ban on securing such obligations in a planning agreement (except for specific situations introduced by recent laws that have not yet been applied). As a consequence, new urban development in Poland neither includes sufficient urban public infrastructure, nor does it provide for social/affordable housing.

Public bodies often pursue alternative funding of public infrastructure by using developer obligations. These are contributions made in exchange of land-use regulation decisions. Non-negotiable obligations support on detailed legislation, but negotiable obligations much less and often have a local character. In Spain, negotiable obligations were introduced in the 1980s. As in other countries, in Spain, they increased initially as a response of low effectiveness of non-negotiable obligations, but they were not always transparent and with time became regulated. Differently than in other countries, Spain introduced in the 1990s a peculiar land readjustment regulation that stimulated competition and hence negotiated contributions.

The economic crisis that started in 2009 has negatively impacted in the Netherlands the available financial resources for urban development. Dutch municipalities struggle since then with falling local financial sources, especially since active public land policy, traditionally an important additional financial source, became not so profitable anymore. One supposed effect is the limited degree to which municipalities can nowadays finance public infrastructure that serves wider areas, thus more than one specific development site (i.e. ‘large’ public infrastructure). Until now, however, there are no data available that support this claim. In this paper, we explore this and the role that developer obligations can play as an alternative, compensating financial source. Developer obligations are in many countries a growing popular public value capturing instrument, but in the Netherlands, a relative new phenomenon. On the basis of surveys, interviews and policy analysis, we conclude that at least a quarter of Dutch municipalities use developer obligations to obtain financial sources for large infrastructure. This seems, however, so far not to compensate for the diminishing of other municipal financial sources. The paper ends with some speculation about the future evolvement of developer obligations in the Netherlands.

Land Readjustment (LR) is often presented as an alternative ‘third way’ among public and private approaches to governance in urban development. Unfortunately, not much literature analyzes the effectiveness of LR, which depends on its ability to capture land value increases to finance public infrastructure. LR can capture land value increases with taxes and contributions to be levied after the readjustment, and/or with developer obligations. This paper focuses on how non-negotiable developer obligations function within the Spanish LR, and whether they succeed in delivering public infrastructure. The findings also feed into the debates about the effectiveness of public and private governance approaches and the limits of public value capture instruments.