LEVERAGING LAND: LAND-BASED FINANCE FOR LOCAL GOVERNMENTS A TRAINER S GUIDE

Transcription

1 LAND-BASED FINANCE TRAINER S GUIDE LEVERAGING LAND: LAND-BASED FINANCE FOR LOCAL GOVERNMENTS A TRAINER S GUIDE SECURING LAND AND PROPERTY RIGHTS FOR ALL

2 LAND-BASED FINANCE TRAINER S GUIDE Leveraging Land: Land-based Finance for Loca Governments. A Trainer s Guide Copyright United Nations Human Settements Programme (UN-Habitat), 2016 An eectronic version of this pubication is avaiabe for downoad from the UN-Habitat website at and the GLTN website at HS Number: HS/043/16E ISBN Number: (Voume) DISCLAIMER The designations empoyed and the presentation of the materia in this pubication do not impy the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the ega status of any country, territory, city or area, or of its authorities, or concerning deimitation of its frontiers or boundaries, or regarding its economic system or degree of deveopment. The anaysis, concusions and recommendations of this pubication do not necessariy refect the views of the United Nations Human Settements Programme, the Governing Counci of the United Nations Human Settements Programme, or its Member States. References to names of firms and commercia products and processes does not impy their endorsement by the United Nations, and a faiure to mention a particuar firm, commercia product or process is not a sign of disapprova. Excerpts from the text may be reproduced without authorisation, on condition that the source is indicated. United Nations Human Settements Programme (UN-Habitat) PO Box 30030, GPO Nairobi 00100, Kenya E-mai: infohabitat@unhabitat.org Web: ACKNOWLEDGEMENTS Principa author: Lawrence Waters Coordinators: Jean du Pessis, Soomon Haie, Liz Paterson (UN-Habitat) Contributors: Mary Dawn Barnard, Daniee Doty, Jean du Pessis, Soomon Haie, Daniee Haam, Joe Hooper, Gueat Kebede, Brett Lee, Rebecca Ochong, Liz Paterson, Remy Sietchiping, Andrew Waentine Expert Consutation Participants: Rachee Aterman, Khaed Amin, Stephen Berrisford, Sarah Boisard, Cemence Chiduwa, Jordi Duatis Puigdoers, Matthew Gasser, Arnau Gutiérrez Camps, Soomon Kebede Mamo, Roy Key, Charotte Lafitte, Jorge Martínez Chapa, Shishir Mathur, Caros Moraes-Schechinger, Marce Pandin, Richard Rybeck, Siraj Sait, Enrique Siva, Enid Sack, Angea Stair, Kumar Subramaniam, Eric Tudzi, Lawrence Waters, Remy Sietchiping, Soomon Haie, Marco Kamiya, Liz Paterson, Annika Lenz, Joaquin Pardo Díaz, Israe Barroso Tamariz, Caroina García Orner, Vaksvik Skarstad Editor: Victoria Quinan Design and ayout: Lucy Cherogony Sponsors: The Netherands Government, Norwegian Government, Swedish Internationa Deveopment Cooperation Agency (Sida) Printed at: UNON, Pubishing Services Section, Nairobi, ISO 14001:2004-Certified.

3 LAND-BASED FINANCE TRAINER S GUIDE LEVERAGING LAND: LAND-BASED FINANCE FOR LOCAL GOVERNMENTS A TRAINER S GUIDE This training package is intended as a fexibe and frequenty updated resource. It is distributed free of charge via Kindy use it in eectronic format, printing ony those pages or sections you need to hand out in hard copy during training. If you know of updated information on any of the cited cases, have a new case you woud ike to contribute, or if you have any other comments or suggestions for improvement, pease contact us by emai at gtn@unhabitat.org. SECURING LAND AND PROPERTY RIGHTS FOR ALL i

4 TABLE OFCONTENTS TABLE OF CASES ABBREVIATIONS SECTION I: TRAINING OVERVIEW 1 Why and-based finance training 1 Benefits of and-based financing 2 Training Objectives 3 Target audience 3 Course objectives 4 Expected outcomes of the training 4 Course content 5 Organization of the training 6 Learning approach 6 Training Programme Design 7 Pre-training preparation 7 Introductions to the instruments and discussion ground rues 8 Instrument-specific training 9 Action pan deveopment 9 Evauation 11 How to use this trainer s guide 11 Tips for the faciitator: How to run successfu training 12 SECTION II: STRUCTURE OF THE TRAINING SESSIONS 13 INTRODUCTORY SESSIONS 14 Day 1, Session 1: Introductions; overview of five instruments 14 Session objectives 14 Session pan 14 Basic reading 14 Session notes 14 iv vii Day 1, Session 2: Ground rues; ice-breaker 14 Session objectives 14 Session pan 14 Basic reading 15 Session notes 15 MODULE SESSIONS 16 Day 1, Session 3: Instrument exporation 16 Session objectives 16 Session pan 16 Basic readings 17 Session notes 17 Identifying key tasks and functions 17 Day 1, Session 4: Instrument appication 20 Session objectives 20 Session pan 20 Basic reading 20 Session notes 20 Days 2 and 3 21 Deveoping the Action Pan 21 Day 4, Sessions 1 and 2: Compare instruments, prioritize and deveop revised action pan 21 Session objectives 21 Session pan 21 Basic reading 21 Session notes 21 Day 4, Sessions 3 and 4: Presentation of action pans; Cosing 23 Session objectives 23 Basic reading 23 Session notes 23 ii

5 TABLE OFCONTENTS SECTION III: LAND-BASED FINANCING MODULES 26 Modue 1: Recurring taxes on and (Doube Modue) 26 Session objectives 26 Basic reading 26 Session notes 26 Cases 27 Key tasks and guiding questions 29 Modue 2: Betterment charges and specia assessments 32 Session objectives 32 Basic reading 32 Session notes 32 Cases 32 Key tasks and guiding questions 33 Modue 3: Deveoper exactions 35 Session objectives 35 Basic reading 35 Session notes 35 Cases 36 Key tasks and guiding questions 36 Modue 4: Land vaue increment taxes 38 Session objectives 38 Basic reading 38 Session notes 38 Cases 39 Key tasks and guiding questions 39 Modue 5: Sae of deveopment rights 41 Session objectives 41 Basic reading 41 Session notes 41 Cases 41 Key tasks and guiding questions 41 Modue 6: Land eases and and saes 45 Session objectives 45 Basic reading 45 Session notes 45 Cases 46 Key tasks and guiding questions 47 Modue 7: Transfer taxes 48 Session objectives 48 Basic reading 48 Session notes 48 Cases 49 Key tasks and guiding questions 49 ANNEX 1: LEARNING BY DOING: FUTURE ITERATIONS OF THE LBF TRAINING PACKAGE 55 Egypt 55 Phiippines 56 Other 57 ANNEX 2: GUIDELINES FOR DEVELOPING LBF ACTION PLANS The distinction between strategy and action pan 60 Seecting how-to strategies 61 Action panning 63 Action Pan Tempate 66 REFERENCES 67 iii

6 TABLE OF CASES A the iustrative cases referred to are provided in the Land-Based Financing Training Package, the Reader. These cases can be suppemented with others, which may be deveoped to suit the context of the particuar training programme being offered. Region Country Modue Case Number 1 4 Bogotá, Coombia 4 12 Cuenca, Ecuador 2 8 Latin America 2 7 Medein, Coombia 3 9 São Pauo, Brazi 5 13 North America Vancouver, British Coumbia, Canada 3 10 Hong Kong, China East Asia Singapore 7 19 Taiwan (ROC) 4 11 Ahmadabad, Gujarat, India 6 18 South Asia Punjab, Pakistan 1 3 Europe Midde East and North Africa Africa Kandahar, Afghanistan Abania Egypt Tanzania Mumbai, India Hesinki, Finand Turkey Sierra Leone iv

7 ABBREVIATIONS AFN = Afghan afghani (currency) AUDA = Ahmedabad Urban Deveopment Authority (India) BCA = Moody s Baseine Credit Assessment BID = Business Improvement District CAC = Community amenity contribution (Vancouver, Canada) CDG = City District Government (Punjab, India) CEM = Contribución Especia de Mejoras (Specia Assessment Ecuador) CEPAC = Certificate of additiona construction potentia (Brazi) CLT = Community Land Trust COOTAD = Organic Code for Territoria Organization, Autonomy and Decentraization (Ecuador) COP = Coombian peso DACD = Administrative Department for the District Cadastre (Bogotá) DANE = Nationa Administrative Department of Statistics (Coombia) DP = Deveopment pan (Ahmedabad, India) EPM = Pubic utiity company (Medein, Coombia) FAR = Foor area ratio FSI = Foor space index, or the ratio to tota buiding foor area to and area GAPV = Government-announced present vaue (Taiwan) GDP = Gross domestic product GLTN = Goba Land Too Network GLV = Gross and vaue (Hong Kong) HK$ = Hong Kong doars IGAC = Nationa Geographic Institute Agustin (Coombia) IPRO = Immovabe Properties Registration Office (Abania) LBF = Land-based finance / Land-based financing LGO = Loca Government Ordinance (Punjab, India) LPR = Land pooing and readjustment LPT = Land and property tax LVIT = Land vaue increment tax (Taiwan) MOI = Ministry of the Interior (Taiwan) NAV = Net assessabe vaue (Hong Kong) NLVI = Natura and vaue increment (Taiwan) NUCA = New Urban Communities Authority (Egypt) OECD = Organization for Economic Cooperation and Deveopment OIC = Cadastra Rea Estate Observatory (Coombia) PILaR = Participatory and Incusive Land Readjustment POT = Land-use pan (Coombia) PP = Microsoft PowerPoint PKR = Pakistan rupee PRC = Peope s Repubic of China SAR = Specia administrative region (PRC) SGD = Singapore doar TDR = Transferabe (or tradabe) deveopment rights TMA = Tehsi Municipa Administration (Punjab, India) TZS = Tanzanian shiing UIPT = Urban immovabe property tax (Punjab, India) UO = Urban operation, or city sector (Brazi) USD = United States doar USAID = United States Agency for Internationa Deveopment VAT = Vaue added tax ZHF = Physicay homogenous zone (Coombia) ZHG = Geo-economicay homogenous zone (Coombia) v

8 SECTION I: TRAINING OVERVIEW vi

9 SECTION I: TRAINING OVERVIEW SECTION I: TRAINING OVERVIEW This guide is intended for trainers and faciitators in the GLTN and UN-Habitat Land-based Finance (LBF) Training course. LBF is a coective name given to a range of instruments by which oca governments expand their revenue base and generate funds that wi hep them reaize their service deivery, infrastructure deveopment and maintenance goas. The broader contexts within which this too is being deveoped are oca governance and sustainabe urbanization. The LBF too is premised on the fact that urban and is a key factor of production and an important source of financing for urban deveopment, incuding infrastructure, socia housing and basic services. Why and-based finance training? Introductions Overview Ground rues Ice Breakers Introductory sessions Land-based Finance Training Too Overview Background, Objectives, Outcomes, Learning approach, Design Day 1 Day 2 Day 3 Day 4 Modue 1 Modue 2 Modue 3 Modue 4 Modue 5 Modue 6 Reader (Avaiabe separatey) Recurring and tax Betterment charges Deveoper exactions Land vaue increment tax Sae of deveopment rights Land saes and eases Transfer taxes Choose 5 modues during pre-training Trainer modues Recurring and tax Betterment charges Deveoper exactions Land vaue increment tax Sae of deveopment rights Land saes and eases Transfer taxes Action Pan Guidines Trainer s Guide content One of the significant chaenges facing urban authorities in deveoping countries is the avaiabiity of the financia resources necessary to support and sustain urban deveopment. Many urban authorities are seriousy under-resourced and hence are unabe to meet the ever-growing demand for basic services and new infrastructure as we as the maintenance of existing infrastructure and services. The extent to which urban oca government can deiver effective services to citizens, incuding and services that improve access to serviced urban and and ensure tenure security, is dependent on resources avaiabe to them. Land-based financing aims to enhance the avaiabiity of resources for oca deveopment. It seeks to provide urban decision makers, managers and other community eaders at both the oca and nationa eves with a broader understanding of the range of and-based financing instruments that are avaiabe and in use around the word. The LBF too is in the form of a training package that has two parts. The first part is the Reader, in which 1

10 SECTION I: TRAINING OVERVIEW a range of instruments are presented, described and demonstrated through cases and exampes. The instruments incuded are the annua tax on immovabe property, pubic and eases and saes, deveoper exactions, cassica and vaue sharing, betterment charges and specia assessments, the sae of deveopment rights, and transfer taxes. The second part of the LBF package is this Trainer s Guide, which provides methods whereby knowedge of both poicy and practice regarding these instruments can be communicated. The emphasis here is on the practica dimensions of depoying and making the most out of and-based financing instruments. The training is designed to both broaden the understanding of participants regarding potentia and-based revenue instruments and to hep them think criticay about what is required to impement or domesticate each instrument in their home environment. The training is deivered in a series of sessions covering a subset of the instruments incuded in the tookit. It is possibe to adjust the ength of the training by picking and choosing those instruments considered suitabe to meet oca needs. Each session seeks to provide a basic understanding of the instrument covered aong with an awareness of where it has been appied and what the key impementation requirements are. The training package is in a user-friendy format and anchored in rea word exampes (case studies). Benefits of and-based financing Land-based financing is a fexibe set of instruments that can be adapted to a variety of institutiona and cutura contexts. LBF aims to enhance the avaiabiity of resources for oca deveopment. Improved oca finances and the abiity to improve oca infrastructure and service provision can have far-reaching socia and economic benefits. Additionay, LBF tends to have fewer negative impacts on private investment than other types of revenue toos and can even have positive spatia and socia impacts. This combination of potentia financia, economic, spatia and socia benefits is the reason LBF has become topica internationay in recent years. The instruments provided through this training package are meant to assist nationa and oca government officias, as we as other opinion eaders in deveoping urban areas, by enabing them to expore tried and proven options for generating additiona financia resources. It is often difficut for oca governments to enforce and aws and poicies without financia resources. They aso find it chaenging to increase the avaiabiity of serviced urban and and to prevent the proiferation of sums. Land-based financing is therefore one of the toos needed to achieve secure access to and and reaize the goas of sustainabe urban deveopment. One important pattern among highy urbanized countries is that they tend to rey more heaviy on and-based taxes. A review of 64 OECD and non-oecd countries shows a strong positive correation between the urban popuation percentage and and-based taxes as a percentage of GDP. This pattern suggests that as urbanization intensifies in a country, and especiay if income eves increase, and becomes increasingy important in financing sustainabe urban deveopment. It is essentia therefore for oca eaders in deveoping countries to both understand this reationship and to deveop the ega frameworks, administrative capacities and, above a, the poitica wi necessary to effectivey impement appropriate and-based financing instruments. Impementing or strengthening and-based finance presents chaenges on three fronts: ega, administrative and poitica. Overcoming these chaenges requires 2

11 SECTION I: TRAINING OVERVIEW strong eadership and commitment at the most senior eve. With a strong commitment at the top, remarkabe progress can be made in a reativey short time. Without committed eadership, impementation wi inevitaby fater and any gains achieved are ikey to be short ived. For this reason, it is critica that the support of senior poitica eaders for strengthening and-based finance be obtained prior to or as part of the training. These materias are designed to be used by practitioners, experts in the fied of and-based financing in deveoping countries and those engaged in deveoping the capacities of urban professionas (e.g. higher education). Aso, civi society and inter-governmenta deveopment organizations (e.g. United Cities and Loca Governments (UCLG), Word Bank and regiona deveopment banks) with the competence to provide technica assistance to urban oca governments wi find the training package an important resource that wi add vaue to the support they provide. Training Objectives Target audience The intended target audience for the training is and officias, administrators and professionas from deveoping countries working at the oca and nationa eve of governments. This training is intended for functionaries from institutions who are invoved in or can benefit from capacity deveopment in and-based financing. The focus wi be individuas needing to improve both their understanding of and skis in the effective impementation of the most common and-based financing instruments. The suggested time aocations in this guide assume about 25 participants from about five countries (or jurisdictions within the host country). The training aso provides for the formuation of practica, achievabe action pans by the participants. In order to faciitate and encourage impementation of the action pans deveoped, it is strongy suggested that there be at east three participants from each country (or jurisdiction) represented. It is aso recommended that the participants in the training be wiing to do preparatory sef-study, have a cear mandate and support from their empoyers or principas to appy what they have earnt in their work, and are committed to passing this on to others. The criteria and process of nomination and seection of participants shoud be structured with this in mind. In seecting the participants from a given country (or jurisdiction), care shoud be taken to assure that representatives from key stakehoder groups are incuded. Representatives from agencies and institutions that either have key information, that wi pay a key roe in designing and impementing any and-based finance changes, or that are ikey to be essentia partners in a coaition of stakehoders shoud certainy be considered. Such agencies might incude: The Ministry of Finance, especiay if it now pays a roe in coecting, managing or disbursing oca government revenues Any ministry concerned with and administration or and management, and their oca government counterparts Any ministry with oversight responsibiities for oca governments Urban panning agencies Vice-mayors, deputy mayors or department heads with responsibiity for oca government finances Other agencies that wi pay a roe in and administration, urban panning, infrastructure investment panning or the administration of urban finances 3

12 SECTION I: TRAINING OVERVIEW Course objectives The objective of this training package is to provide urban decision makers, managers and other community eaders at both the oca and nationa eve with a broader understanding of the range of and-based financing instruments that are avaiabe and in use around the word. Both theory and appications are presented with the intent to expand the horizons of training participants. Each session seeks to provide an understanding of the instrument covered aong with an awareness of where it has been appied and what the key impementation requirements are. Consistent with the GLTN capacity deveopment strategy and good earning practice approach, 1 this training aims to deveop the capacity of oca eaders and officias by enhancing their understanding of and abiity to impement and-based financing instruments. By the cose of the training event, participants wi have a sound understanding of the roes and tasks required to impement or improve each instrument in their oca environment. They wi know where 1 For more information see The GLTN Capacity Deveopment Strategy (UN-Habitat and GLTN 2014), which can be downoaded at gtn.net/index.php/resources/pubications/recent-pubications/334-thegtn-capacity-deveopment-strategy. Photo: Land based finance training event, Cairo, October 2015 to turn to access resources to further enhance their understanding. They wi aso have deveoped an action pan that prioritizes those tasks, estabishes miestones and preiminary timeines, makes specific assignments and provides for reguar foow through with other participants foowing the training. Expected outcome of the training The utimate expected outcome from this training is that participants wi each have: Improved understanding of and skis in the appication of and-based financing instruments 4

13 SECTION I: TRAINING OVERVIEW An action pan for improving and-based financing in their home environment A persona commitment to the successfu impementation of that action pan A set of coeagues and peers who share that understanding and commitment and with whom they can work cosey in the course of appication of the LBF instruments Course content This trainer s guide is suppemented and accompanied by Leveraging Land: Land-based Finance for Loca Governments - A Reader. The Reader incudes An executive summary with an overview of seven LBF instruments An introductory chapter outining - The rationae for using and-based financing for urban infrastructure and services - A discussion of the overarching requirements in order to effectivey impement and-based finance instruments - The criteria that shoud be used to evauate and-based financing options - Definitions and an approach to cassifying andbased finance instruments - A summary of the minima requirements to impement each instrument Separate chapters providing a description of each instrument with exampes and a review of the iterature regarding that instrument. The instruments covered in the Reader are: - Recurring taxes on and - Betterment charges and specia assessments - Deveoper exactions - Land vaue increment taxes - Sae of deveopment rights - Land eases and sae of pubic ands - Transfer taxes In addition, the Reader incudes two annexes: A. Increasing and vaue through and readjustment B. Municipa borrowing The specific content to be incuded in the training wi draw on the Reader, and the needs and preferences of the training participants. Potentia participants wi be provided a copy of the Reader and wi be poed in advance regarding their preferred choice of instruments to be covered. Fina seection wi be made by training organizers, and participants shoud be notified before finaizing their commitment to attend the training. This approach aows participants to review the Reader (especiay the executive summary) with their coeagues, provide input on the instruments they woud find most hepfu and then prepare for the training through sef-study of the reevant Reader chapters. The time required for the training is fexibe. The structure discussed in this guide assumes four fu days, with four 90-minute sessions each day. With this structure, it is possibe to incude five of the seven instruments in the training. If it is necessary to shorten the training to three days, the number of instruments incuded can be reduced to three. If it is possibe to extend the training to a fifth day, the two other instruments coud be added. 5

14 SECTION I: TRAINING OVERVIEW ORGANIZATION OF THE TRAINING Learning approach UN-Habitat s commitment to training for capacity deveopment to enrich organizations matches cosey Zuber-Skerritt s Action Leadership principes (Zuber-Skerritt, 2011). Action Leadership, or the act of infuencing others towards the achievement of Good practice training cyce DEMAND Re-assess Re-design common goas, is dependent on hoistic earning and professiona deveopment (UN-Habitat, 2012). The overa objective is not simpy to disseminate knowedge. The rea intent is to faciitate effective action by participants to improve urban practices. Integra to this orientation is to conceptuaize training as part of a good practice cyce, as shown in the foowing figure (source: GLTN AND UN-Habitat, 2014, p. 14): Assessment Design Event Foow up Monitoring & Evauation RESULT Effective training Transfer of Learning The approach taken in this training is based on action earning and reated methodoogies as part of a good practice approach to maximize earning and capacity deveopment. 2 The presumption is that groups of four or five participants, carefuy seected and prepared to ensure optima capacity deveopment impact, wi come from the same country or city. The faciitation process draws on individua and group ife experiences combined with existing institutiona and speciaist knowedge to produce fresh ideas and innovative approaches to urban probems. This earning approach fosters a cimate in which participants from a common environment can share knowedge and experiences as they coaborate in the creation of new approaches and action pans for impementing those approaches. Capacity deveopment in GLTN is based on severa guiding principes. The foowing are most reevant for this training: Continuous joint action earning: The intent is that participants wi work together in a coaborative environment to generate earning. The joint earning wi invove a recognition of - The key tasks required to effectivey 2 See Learning for Land Too Deveopment and Impementation. A Good Practice Guide (UN-Habitat and GLTN, forthcoming, 2016) 6

15 SECTION I: TRAINING OVERVIEW impement an LBF instrument - The skis necessary to carry out those tasks - Where in the participant s home administrative environment those skis can be found or most readiy deveoped - How the requisite skis can be administrativey organized to efficienty and effectivey carry out the required tasks, and - What poitica, ega and administrative changes wi be required to bring about successfu impementation Appreciation of cuture, context and existing capacity: Whie understanding how LBF instruments have been used around the word is vita, it is not sufficient. Successfu oca impementations require adaption to oca conditions. The design and faciitation approach of the training wi incorporate the needs, experience and expertise of participants and their institutions in order to enhance the reevance and positive impact of the process. Appropriate attention to GLTN cross-cutting issues: Participants shoud be encouraged to pay particuar attention to the impact of LBF instruments on women, youth, cimate change and human rights. Demand-driven capacity deveopment: Capacity deveopment is most effective when it responds to the stakehoder s recognized needs. Where possibe, specific LBF training interventions wi therefore be based on capacity assessments conducted in conjunction with the institution/s invoved. Seection of participants wi be done - With institutiona needs in mind - On the basis of mandates from their empoyers or principas, and - With an understanding that the acquired knowedge and skis wi be fed back into the knowedge and practice of the institution/s In addition, from the initia expression of interest in this training through the formuation of action pans, participants wi be activey invoved in seecting the instruments incuded in the training and those that wi be pursued afterwards. Action and foow-up pans wi be formuated and impementation monitored. Since much of the earning during the training wi take pace in sma interactive working groups, it is essentia that these groups organize quicky and work effectivey. To ensure that this happens, each group shoud incude assigned participant roes. These roes shoud be rotated each session over the four days of training so that each participant has the opportunity to fi each roe. Consequenty, it matters itte how the roes are initiay assigned. The roes and responsibiities for each roe are as foows: Faciitator: Animates and motivates the group; keeps the group on task; makes sure everyone is heard; asks for consensus; provides hepfu and supportive feedback Recorder: Keeps notes of the group s work, either on ease paper or notebook paper Reporter: Shares the group s work and ideas with the arger group Timekeeper: Makes sure the group competes the task within the time provided Observer: Pays specia attention to how the group is working together (i.e. Is everyone participating? Is anyone dominating the group?); after the activity, shares her/his observations with the group Training Programme Design Pre-training preparation Land-based finance training initiatives based on this guide shoud be preceded by a capacity assessment, conducted in coaboration with the affected 7

16 SECTION I: TRAINING OVERVIEW institutions, wherever possibe. The information good practice earning approach. These are important gained from such an assessment wi be a vauabe ingredients for the deveopment of genuine capacity resource in the identification of suitabe participants in the appication of LBF instruments towards the and in shaping the design of the specific training. The goas of more secure access to and, provision of process can aso contribute to obtaining the support services and sustainabe urban deveopment. of the empoyers or principas of the participants, and In preparation for the actua training sessions, the to the integration of the training into a onger-term, Approximate times required for pre-training preparation Panning Schedue (In weeks) Announcement Expression of Interest Reader Distribution Country Too Identification Trainer Compiation of Toos Notification of Seected Toos Finaize Participants Trave Logisticts Reader wi be distributed to a potentia participants. They wi be encouraged to peruse the Reader in as much detai as possibe and then identify five of the seven instruments on which they woud ike the four-day training to focus, with motivations and reasons for their seection. The training sponsor(s) wi anayse the responses, seect the ist of five instruments and adapt the training design as may be appropriate. Participants wi then be tasked to study at east the reevant sections of the Reader in detai and assembe and bring with them reevant information regarding their own context and experience. This information wi be used during the training. Introductions, overview and discussion ground rues The four-day training wi begin with introductions and an overview of the five instruments to be covered. The intent of the overview at this stage is to provide participants and any potentia visitors with a broad poicy overview of the instruments. Foowing the initia session, the second session wi introduce participants to the ground rues for the sessions. This wi incude an ice-breaker activity to famiiarize participants with other participants and 8

17 SECTION I: TRAINING OVERVIEW the training methods that wi be empoyed. The instrument-specific training modues wi begin with the third session. This four-day training incudes a substantia amount of technica materia which of necessity wi be covered quicky. In addition to technica notes, participants shoud be encouraged to keep a journa with their thoughts on potentia impementation options, concerns and more genera thoughts on the training as it progresses. Such a journa wi be very hepfu in formuating the action pans. Instrument-specific training The three-hour training modue for each instrument is based on three activities: two case study discussions and an appication session. The training design assumes that mutipe countries wi be represented among participants, with mutipe participants from each country. If the training is conducted within a singe country, it is assumed that mutipe oca government units wi be represented, again with severa participants from each urban entity. A cases are a incuded in the Reader and wi be seected by the faciitator to best meet the needs and interests of participants. The discussion of each case wi be preceded by a brief introduction and an overview of the instrument. The approximate time aocation is as foows: Discussion of Cases: Two cases from the Reader (previousy seected by the faciitator and read in advance by participants) wi be discussed in sma groups (approximatey 30 minutes). The groups wi focus on identifying key tasks and functions to impement the instrument. They can aso discuss the potentia impacts of the instrument and compare the cases. The groups wi then come together and report and the arge group wi produce a consoidated ist of tasks and wi identify the administrative structure used in the case exampe (to the extent possibe) (approximatey 45 minutes). Appication: The session immediatey foowing the case discussions focuses on appication. The objective is to appy the earning from the earier session in the participant s home context. Participants are asked to work in sma groups again to appy what they have earned about the key tasks and functions and effective administrative practices to their own context. The sma groups wi report back to the arger group, but no effort wi be made to synthesize group efforts into a singe approach since each country context is ikey to be quite different. The sma group discussion wi take approximatey 45 minutes, whie the reporting phase of the session wi take the remaining 45 minutes. Foowing this structure for each of the five instruments wi require 2½ days. To cover three instruments wi take 1½ days (with the introductory and action panning sessions taking 1½ days). Action pan deveopment The morning of the fourth day wi be devoted to the deveopment of action pans. For each country, participants wi work together to Compare what they have earned regarding each of the five instruments Prioritize the potentia appication of the instruments for their own context based on ease of impementation, ikey poitica support, ega and other impediments, etc. Deveop an overa pan of action with specific sequencing, timeines and assignments 9

18 SECTION I: TRAINING OVERVIEW Training Schedue Overview Pre-training Announcement of training & ca for expressions of interest Liaison with reevant institutions, incuding capacity assessment Reader distributed to institutions and potentia participants Where possibe, obtain commitment by institutions to support foow-up after training, incuding through a funding stream Identification of individua participants (via appication / nomination / seection) Participants and/or their sponsoring institutions identify five instruments of greatest reevance or interest Sponsors compie preferences, finaize instruments and adapt training design as appropriate Institutions notified of seected instruments Institutions and sponsors finaize participants Trave and other ogistics finaized Day Session Topic 1 Introductions; Overview of five instruments Ground rues; 2 1 Ice-breaker 3 Modue 1, Case 1 Modue 1, Case 2 4 Modue 1, Appication 1 Modue 2, Case 1 Modue 2, Case 2 2 Modue 2, Appication 2 Modue 3, Case 1 3 Modue 3, Case 2 4 Modue 3, Appication 1 Modue 4, Case 1 Modue 4, Case 2 2 Modue 4, Appication 3 Modue 5, Case 1 3 Modue 5, Case 2 4 Modue 5, Appication 1 Compare instruments, prioritize and deveop revised action pan Presentation of action pans; Cosing 4 Post-training Training evauation Impementation of participant action pans Ongoing support for LBF instrument impementation where possibe 10

19 SECTION I: TRAINING OVERVIEW Agree on a foow-through strategy incuding deciding on dates for foow up meetings to update and revise the action pan During the afternoon of the fina day, each group wi present their action pan to the arge group. Opportunity wi be given for both participant and faciitator suggestions and comments. The training wi concude with a cosing session under the direction of the faciitator and oca sponsors. The foowing tabe provides an overview of the four-day training programme. Each session is expected to be about 90 minutes in ength. Evauation Evauation of the training wi focus on a survey of participants. A copy of the evauation survey instrument is avaiabe separatey. How to use this Guide This Guide provides an overview of the structure and content of the training. Faciitators shoud review the session descriptions and the reated sections of the Reader as they prepare for the training sessions. An attempt has been made to identify the necessary materias that wi be used in each session, aong with suggested schedues. However, circumstances and conditions wi vary from training to training, and faciitators shoud fee free to adapt these materias as conditions warrant. Faciitators shoud have periodic assessments of progress and adapt the programme as necessary to promote effectiveness and impact. Whie such on-site modifications are inevitabe, it is strongy recommended that users of this guide bear in mind the utimate objective of the training: to hep participants understand what is required to impement each LBF instrument and to formuate an action pan targeted on a successfu impementation or improvement strategy. The training shoud focus on buiding understanding, capacity and commitment in participants and not on demonstrating what the faciitator knows about the subject. As noted, the structure of the training is based on two 90-minute sessions for each modue. Faciitators shoud be somewhat fexibe with the use of this time. It is far more important that the participants achieve the objective of concrete understanding and deveopment of an impementation strategy than it is to adhere to a strict time schedue. Nonetheess, faciitators shoud aso be responsibe for keeping the training moving, assuring that the group has reguar opportunities for breaks and that the participants receive the training they expect. If it appears desirabe to adjust the schedue and omit one or more instruments, this shoud ony be done with the consent of participants. Learning by doing: essons from two piot LBF training workshops As part of its deveopment, the LBF training package was used to conduct two piot training workshops in Cairo, Egypt and in Mania, the Phiippines, in October, 2015 and December, 2015 respectivey. Lessons earned from this pioting are reported in Annex 1. 11

20 SECTION I: TRAINING OVERVIEW Tips for the faciitator: How to run successfu training Running a series of training sessions with a diverse range of participants has many chaenges but aso rewards. There are a few eements to keep in mind that wi enhance your roe and contro as a faciitator and wi ensure that participants get the maximum resuts from the training. Some of these are: Introduce yoursef to participants and ask each participant to say something about themseves, incuding their name, where they are from and their expectations. Emphasize the importance of making the most of a the knowedge and experience in the room, which means everyone shoud be given the chance to contribute and be istened to when contributing. Have participants identify the ground rues for the session right at the start. Ask participants to comment and agree so a are cear and then refer back to that agreement if necessary through the course of the training. Some of the rues might incude keeping to time, istening and respecting each other, even when opinions differ, encouraging fu participation by a, etc. Respect everyone and withhod judgment. Aways remember to appreciate, praise and thank participants. Encouragement is critica to motivation and engagement. Keep we-mannered eye contact with participants and be an active istener. Ask open, critica questions and encourage participants to do the same. Faciitate fairy, give a participants an equa opportunity to speak, chair sessions, report back from sma groups, do an energizer. However, whie practicing incusiveness, do not insist that someone speaks and embarrass them. No means no. If one person is speaking more than others, and some are being sienced, suggest that others be given an opportunity to speak before returning to the one who has aready spoken. Then give them the foor. Ensure there is sufficient time aocated to discussion, questions and comments. Do not rush a discussion when it is obvious most participants need to tak further, but aso keep track of time. Your job is to ensure a the sessions in the training are competed and that peope fee that they have been active participants. Be aware of exampes, phrases that might offend. Do not patronize. And do not under any circumstances use sexist, racist or other discriminatory anguage or exampes. Keep your speaking time short. The faciitator is there to faciitate earning and interactions and not to occupy the workshop time. Keep your presentations brief remember KISS (keep it short and simpe). Faciitators do not know everything about the subject they are faciitating. The emphasis is on coaborative earning. Use the group to answer questions. If you do know something, say so. You can take an educated guess, ask someone ese in the room if they know and/or you can offer to find the answer and report back to the workshop ater. Use energizers when you fee the group is tired, or change the pace or method of the session. It woud even hep just get peope to stand up, turn around and sit down again! Intervene immediatey if you see a probem deveoping if an argument is brewing, if someone is taking in an offensive manner etc. It is important to diffuse the situation before it gets worse. You can use the house rues for this. Be poite but firm. Practice what you preach. Appy a the ground rue to yoursef. Arrive eary for your sessions. This aows you to dea with unanticipated probems (power not on, projector missing, etc.) Sometimes participants might ike to tak with you or raise an issue before others arrive be there for them. This input coud improve the sessions or assist that participant. Be we prepared in advance and ensure that you have timed and tested the methods and toos you are going to use. However, aso be prepared to adapt your approach when necessary. Coordinate cosey with a oca counterpart who is famiiar with the cuture of participants if you are not. Consut this person on issues of time, breaks and the best ways to encourage participation. Prepare a the handout materia, presentations, etc. we in advance of the workshop. Remind any invited speakers of their participation the day before their session. Come prepared with an aternative in case they are ate or cannot utimatey make it. 12

21 SECTION II: STRUCTURE OF THE TRAINING SESSIONS 13

22 SECTION II: STRUCTURE OF THE TRAINING SESSIONS INTRODUCTORY SESSIONS Day 1, Session 1: Introductions; overview of five instruments Session objectives To provide time for UN-Habitat and/or oca hosts to introduce themseves and wecome faciitators, support staff and participants (opening ceremony if desired) To introduce a participants To provide an overview of the and-based financing instruments that wi be incuded in the training for participants and any visitors that may be present Session pan Time Session Activity Materias Faciitator 15 minutes UN-Habitat and/or oca PP sides with training UN-Habitat and hosts host wecome objectives and agenda 30 minutes Participant introductions UN-Habitat and hosts 45 minutes Overview of and-based financing instruments PP sides Primary faciitator Basic reading Land-based Financing Instruments for Loca Governments: A Reader, Executive Summary and Introduction to Land-Based Urban Finance Session notes Provide each participant about a minute to give their name, organization, home city and what they hope to take away from the training or what they are most excited about regarding the training The instrument overview shoud review the instruments to be incuded during the training. The content of the review shoud draw heaviy on the Reader. The intent is to review the rationae for each instrument and its basic operation. This review wi be usefu for the participants in that it assures that a have a common foundation to discuss the instruments. It wi aso be usefu for any visitors or host staff who are unabe to attend the fu training but woud benefit from an overview of the content. It may be usefu to have participants identify their utimate goas for LBF in their jurisdiction. Day 1, Session 2: Ground rues; ice-breaker Session objectives Hep participants get to know each other and be comfortabe exchanging ideas with other participants Introduce the format that the training wi foow Deveop the ground rues for the training Session pan Time Session Activity Materias Faciitator 30 minutes First ice-breaker Fip chart and markers 15 minutes Group discussion to estabish ground rues for participation and ogistics 10 minutes Introduce group earning approach 15 minutes Second icebreaker: sma group 15 minutes Second ice breaker: group reporting and consoidation 5 minutes Answer questions and summarize expectations and process Fip chart and markers PP sides Fip chart and markers PP sides Primary faciitator Primary faciitator Primary faciitator Primary faciitator Primary faciitator Primary faciitator 14

23 SECTION II: STRUCTURE OF THE TRAINING SESSIONS Basic reading Not appicabe Session notes First ice-breaker The objective of the first ice-breaker activity is to hep participants get to know each other and be more comfortabe taking to each other. Ground rues Begin with a brief discussion on why ground rues are important. Encourage participants to come up with the ist and record it on a arge ease or whiteboard. If need be, set off the brainstorm by adding the first proposed rue ( One rue that I aways ike is. Turning your ce phones on vibrate, etc.). Whie the ground rues shoud be deveoped with the participation of the entire group, the fina set of rues shoud incude: Stick to the time aocation uness there is agreement to extend the time Listen to and respect each other, even when opinions differ Step up/step back: If you are someone who is Ice-Breaker #1: The Reporters Instructions to participants: You wi need a piece of paper and pen. Pease stand up and find someone in the room who you do not know and discuss these questions for 10 minutes. Switch turns sharing hafway through: 1. What is the most inspiring part of your present job OR What did you do for fun ast weekend (fee free to change this question to any sort of simiar question) 2. Is your city currenty generating revenue from and? If so, what has been the impact? 3. What are some of the chaenges that you foresee impementing (more) LBF instruments in your setting? Give participants 10 minutes to tak. Ask for vounteers to share what they said in their pairs. Write answers on fipchart. Keep the questions separate (perhaps on different sheets of paper) As appropriate, ask the group the foowing: Does anything catch your attention? Are there any instruments that your group saw great potentia for in their setting that are not refected on this ist? Thank everyone for their contributions. usuay quiet, make an effort to tak more. If you are someone who usuay taks more than average, hod back so others have a chance Over time, a participants shoud have the opportunity to pay a the assigned roes within a group Second ice-breaker The objective of the second ice-breaker is to famiiarize participants with the type of tasks they wi be asked to carry out during the training. The activity shoud be initiated in sma groups. Describe the roes (see page 6) that must be carried out within each sma group. Stress that a roes are important and each group member wi have the opportunity to fi each roe over the course of the training. Aso stress that the majority of the earning during the training wi take pace as group members share knowedge, experiences and ideas as they coaborate with each other. Each sma group wi then report to the fu group and the efforts of each group consoidated into a set of master concepts. Groups shoud be encouraged to comment on and add to what other groups report. Foowing the sma group reporting, discuss with the fu group the process just competed to answer any questions and be sure that a participants are cear on how the process wi work. 15

24 SECTION II: STRUCTURE OF THE TRAINING SESSIONS Ice-Breaker #2: The Entrepreneur Your group is considering starting a restaurant in your home city. You have met today to identify and prioritize the tasks that must be carried out in order to start this business venture. Do not share this ist with the group, but the identified tasks shoud incude some version of the foowing: 1. Prepare a business pan 2. Do the market research Who are the competitors Identify the target audience Prepare a budget projection Find a ocation 3. Prepare a ist of things you wi need to buy 4. Generate enough start-up capita 5. Purchase required fixtures and equipment 6. Deveop and test your menu 7. Create a marketing pan Advertising Community events 8. Hire and train essentia hep 9. Obtain necessary business icences If possibe, hep participants begin thinking about crosscutting issues in the arge group discussion: What demographic wi the restaurant serve (income bracket, women, men, youth, etc.?) How wi the ocation impact who it serves? Did they discuss the business s environmenta impacts? Photo : Land-based finance training event, Mania, December 2015 Concude by summarizing the key expectations and processes that wi be empoyed throughout the training. Note that for each of the instruments covered, a simiar process wi be empoyed. The training for each instrument wi invove the presentation of cases. For each case, sma groups wi identify the key tasks and functions necessary for impementing the instrument as demonstrated or suggested by the case. The groups wi aso identify to the extent possibe the administrative structures used to organize the functions in the case exampe. The work of the sma groups wi be consoidated into a common understanding of key tasks, functions and administration. Groups wi then appy this earning to their own context by adapting the tasks, functions and administrative requirements to their own environment through a preiminary action pan. On the ast day of the training, the various preiminary action pans wi be reviewed, evauated, prioritized and consoidated into the fina action pan by the groups. MODULE SESSIONS Day 1, Session 3: Instrument exporation Session objectives The specific objectives associated with each instrument are isted in the description of the modues which foow. The overarching objective for these sessions is to have participants recognize and identify The key tasks and functions associated with the instrument under discussion and 16

25 SECTION II: STRUCTURE OF THE TRAINING SESSIONS The administrative structure used in the country case study Session pan Time Session Activity Materias Faciitator 15 minutes Introduction to the instrument and cases PP sides Primary faciitator 30 minutes Sma group discussion of cases 45 minutes Large group discussion of cases Basic readings List of questions (side or handout) Fip chart and markers Reevant section from the Reader Session notes Cases Faciitators Primary faciitator A cases are incuded in the Reader. Written copies of the case shoud aso be avaiabe during the training. A brief ora introduction to the case shoud aso be provided. Participants shoud be divided into sma groups based on their home country (or jurisdiction) The sma groups wi discuss the case and attempt to identify key tasks and functions The fu group wi reassembe and each sma group wi report. The arge group shoud strive to combine and consoidate the sma group output into - A fina ist of tasks and functions and - The administrative structure and organization of the tasks used in the case exampe The arge group discussion shoud aso consider how we the functions were performed, what the impacts were on vunerabe popuations, what might have been done to improve their execution and what coud be done to improve future performance The faciitator shoud ensure that a key tasks and functions are identified and there is a description of the types of administrative units charged with carrying out the functions Identifying key tasks and functions Functions are activities or actions associated with a person or office. For exampe, one function of a city s finance department may be to manage the city s budget. Functions are carried out by accompishing a set of tasks. For exampe, managing the city s budget invoves preparing a preiminary budget for review and approva, monitoring impementation of the adopted budget, reporting on revenues and expenditures, participating in externa audits, and so forth. It may be hepfu to think of tasks as specific work assignments that can be competed. Functions on the other hand are on-going and are ikey to require the repetition of some tasks. The distinction between a function and a task depends to some extent on the observer s perspective. What appears to be a task from one point of view wi often be assigned to one or more individuas who wi see the accompishment of that task as their function. For exampe, from the perspective of the mayor of a city, generating a tax bi may be viewed as a task. The officias charged with actuay producing the tax bis wi ikey see this activity as a function of their office, which is divided into mutipe tasks. In the context of this LBF training, the objective is to hep participants understand the steps necessary to actuay impement any of the LBF instruments and to consider how those steps shoud be administrativey organized. In the framework used here, these steps are considered to be tasks. In many instances, it makes administrative sense to group tasks together and assign them to a particuar agency or office as a function of that agency. 17

26 SECTION II: STRUCTURE OF THE TRAINING SESSIONS Whie each LBF instrument requires that specific tasks and functions be carried out in order to successfuy impement the instrument, there are some tasks that are generic and common to virtuay a the instruments. Whie it may appear unnecessariy repetitious to continuay identify these tasks for each instrument, in this case, repetition is a virtue. It serves to underscore the importance of these tasks for the success of any reform or change effort. Uness adequate provision is made for these tasks and functions, efforts to bring about change is ikey to ead ony to frustration and imited progress, or even adverse outcomes. Cross-cutting key tasks and functions Poitica wi: Changes in poicies and practices affecting and are neary aways contentious and poiticay difficut. This is particuary true if the change requires and hoders or deveopers to pay fees or forego private profits for pubic purposes. Such changes virtuay aways require a champion at a senior eve in government. Even if there is broad pubic support for a poicy change, change is unikey uness senior officias support the change. One essentia task therefore is to identify who the champion wi be. The essentia functions of that champion are to voice support for change in the highest councis of government, to buid and sustain the poitica wi for change, and to ead the effort to expain both what the changes wi be and why they are necessary. Leadership for change: Senior government officias are busy peope and they usuay have mutipe responsibiities. For these reasons, it is unikey that the champion wi aso have the time or perhaps the expertise to actuay provide the day-to-day eadership necessary to bring about change. An essentia task therefore is, with the advice and consent of the champion, to assembe the change eadership team. This can be a reativey sma team, but it shoud incude eaders who are committed to bringing about change. They shoud be peope who can communicate with and speak for key stakehoders. The team shoud aso consist of eaders who have the vision and expertise required to design the needed changes. The essentia function this team wi carry out is the design of the impementation action pan, the assemby and organization of the required resources (both human and other), and the supervision of the changes as they are roed out. This is the team that wi confront the interna poitica and ogistica chaenges that wi inevitaby emerge. Pubic engagement: Again, changes that affect and, access to and, and-based weath or and-based income are contentious. Long-term success requires broad-based pubic understanding and support. It is essentia that the pubic be informed and consuted throughout the change process. This invoves more than the occasiona pubic announcement or news report. The essentia task is to design a meaningfu pubic engagement process to inform the pubic on the need for and nature of the changes, and to buid pubic support for change. How this shoud be done wi depend on the eve of trust the pubic has for government. It wi aso depend on technoogy and ogistics. But the ongoing essentia function is to buid pubic trust through open, honest and attentive communication with a of the pubic. Attention to core vaues: The purpose for enhancing oca government revenues is to promote human fourishing within urban areas. It is not sufficient to adopt poicies simpy because they increase revenue. Revenue poicies shoud be consistent with core vaues and resuting expenditures shoud promote the attainment of fourishing as envisioned in those vaues. The essentia task is to articuate the vaues that shoud guide poicy and practice. The essentia function is to administer LBF 18

27 SECTION II: STRUCTURE OF THE TRAINING SESSIONS instruments in a manner consistent with those vaues. GLTN recommends and poicies and practices that are pro-poor, equitabe, sustainabe, affordabe, scaabe and gender-sensitive, a in the pursuit of good governance and subsidiarity, and whie recognizing a continuum of and rights. The foowing tabe summarizes some of the key tasks reated to a LBF instruments and presents reevant guiding questions. What were the tasks that had to be carried out in order to put the financing instrument in pace? Are a of these tasks essentia? What were the tasks that had to be carried out in order to sustainaby administer the financing instrument going forward? Are a of these tasks essentia? What skis did the peope administering the Key tasks and guiding questions financing instrument need to have? Were these a ocated in the same agency? What was the impact of the instrument from the perspective of the oca government, househods and businesses? In addition to these overarching questions, each modue identifies for the faciitator a set of key tasks Heping sma groups identify tasks and functions Initiay groups may strugge to understand their assignment to identify key tasks and functions. To assist them in this process, it may prove hepfu to have ready a set of questions that wi ead them to recognize important tasks and functions. These questions can be put into a PowerPoint side or a handout for participants to refer to as guidance. For exampe, What worked we in these cases? What did you find intriguing or interesting about the cases? What did you see as probematic in these cases? What coud have been improved in their impementation? How coud this be done? What was ikey unique to the situation described in the case? Obtain poitica support from senior eadership (government eaders). What eve of support wi be needed to impement or improve this instrument? Which key eaders wi provide support for this instrument? What eve of government (nationa, regiona, oca) wi need to give support for the impementation of this instrument? Assembe the Leadership Team for Change Which individuas have the necessary expertise to design and impement this instrument? Which individuas can provide day-to-day eadership for impementing this change? Which individuas can interact effectivey with stakehoders? Which individuas have access to the necessary poitica eadership? Identify necessary technica assistance What type of technica assistance wi be needed and over what period? Where can the assistance be obtained? Determine the impact on important groups. Wi use of the instrument have an adverse impact on women? On the poor? On the edery? What wi be the impact on affordabe housing? Wi an increase in and vaues ead to a decrease in affordabe housing? How can the government eaders incentivize the creation of affordabe housing? 19

28 SECTION II: STRUCTURE OF THE TRAINING SESSIONS and reated guiding questions for the cases. No attempt shoud be made to fuy discuss a of the guiding questions. there are too many. Rather, the faciitator shoud seectivey draw on the questions to be sure that the tasks are identified by the participants. Day 1, Session 4: Instrument appication Session objectives Identify the necessary key functions and best supporting administrative structure in each participant s home context Basic reading Appropriate section from the Reader Session notes Participants are asked to appy what they have earned about the key tasks and functions, and the necessary supporting administrative structures to their own context. Each sma group wi identify The key required tasks and functions to impement or improve the instrument in their own context The current status of each of those functions (e.g. Session pan Time Session Activity Materias Faciitator 5 minutes Session PP sides Primary introduction faciitator and isting of key questions 40 minutes Sma group List of Faciitators discussions questions (side or handout) 45 minutes Large group Fip chart and Primary discussion markers faciitator exists and works we; exists but does not work we) The ski sets and actions required to carry out each function efficienty and effectivey The supporting administrative structures and assignments that wi best carry out the required functions Any changes in the administrative structure and assignments that wi be necessary to carry out the functions Any ega changes that wi be required in order to impement the structure and functions Note that the intent of this session is not to deveop an action pan at this stage. The intent is not even to reach a decision on the reevance of the instrument for any given country or city. Rather, it is to faciitate a carefu and thoughtfu anaysis comparing the current state of affairs with the conditions necessary to effectivey impement the instrument. From that perspective, participants shoud attempt to answer the foowing questions during the session: If our jurisdiction wanted to impement this instrument (or improve its current use), - What tasks and functions woud need to be carried out? - How many of those tasks and functions are we currenty doing and how we? - What ski sets and other resources woud we need to improve, expand or acquire? What woud be the best administrative organization to support effective accompishment of the required tasks? How does our current administrative organization differ from this design? What ega and administrative changes woud be required, and what additiona skis and resources woud be needed, for us to impement this instrument? This set of questions shoud be provided via handout or on the screen for participants to refer to. 20

29 SECTION II: STRUCTURE OF THE TRAINING SESSIONS The session shoud begin by isting these questions. Here again, the questions incuded with each case may prove usefu since many of those questions are forward ooking and are focused on impementation in their phrasing. Sma groups organized by country (or jurisdiction) shoud discuss and agree on answers to the above questions. Participants shoud be encouraged to be as detaied and specific as they can at this stage. Their efforts and work product from this session wi be extremey important on the morning of the ast day of training. Foowing the sma group discussions, the fu group shoud reassembe and each sma group shoud report on their efforts. The fu group shoud fee free to ask questions and hep each sma group eaborate on their assessment as fuy as possibe. Days 2 and 3 The training on days 2 and 3 wi foow a pattern simiar to sessions 3 and 4 on the first day. Each day wi consist of four sessions, divided between two of the modues. The first session devoted to each modue wi consider the cases, expore the LBF instrument and identify the key tasks and functions associated with that instrument. The second session devoted to each modue wi focus on deveoping an appication strategy for the LBF instrument in the participant s home environment. The foowing figure summarizes the organization of the training for a four days. Deveoping the Action Pan Day 4, Sessions 1 and 2: Compare instruments, prioritize and deveop revised action pan Session objectives To encourage participants to criticay evauate the Training day Daiy Session Introductory materia 1st Modue Exporation Appiication 2nd Modue 3rd Modue Exporation Appication Exporation Appication 4th Modue 5th Modue Exporation Appication Exporation Appication Deveop action pans Present action pans; Cosing practica potentia of each instrument for their own environment To seect the most reevant instrument(s) for impementation To assist participants in the deveopment of an overa action pan with specific sequencing of tasks, preiminary timeines and specific individua assignments To deveop a strategy and pan for continued foow up and further action earning to adapt and carry out the action pan Basic reading The Annex on deveoping an action pan (given as Annex 2 beow) Session notes These two sessions are intended to be informa. The 21

30 SECTION II: STRUCTURE OF THE TRAINING SESSIONS Session pan Time Session Materias Faciitator Activity 15 minutes Review the PP sides Primary requirements faciitator of a good action pan 75 minutes Sma group work Break 90 minutes Sma group work groups from each country (or jurisdiction) wi work to together as they compare notes and journa entries aong with their persona knowedge and experiences from their home context. After carefuy considering each of the instruments discussed, participants wi recognize that some instruments are more reevant or more readiy impemented than others in their own context. They shoud aso reaize that it is unikey that the impementation strategy from another country can be foowed in their own setting without modification and adaptation. These two sessions are designed to encourage and assist participants as they Criticay compare the instruments discussed in terms of their practica potentia for the participant s home setting Recognize which tasks and functions are most critica in adapting and impementing the most reevant instrument(s) Recognize the administrative requirements for successfu impementation, incuding both the human and other resources necessary Recognize the poitica, ega and other environmenta factors that wi affect impementation Devise a prioritized ist of actions required in order to impement or improve the most reevant instrument(s) Deveop an action pan for accompishment of the desired changes The product of these two sessions shoud be an action pan agreed to by a members of the same country (or jurisdiction). These pans shoud be SMART: Specific: Pan objectives need to be cear and detaied. The pan shoud aso Accuratey embody the essentia tasks and functions needed to effectivey impement the instruments seected Specify the human and other resources required to carry out the pan Carefuy assess the administrative, ega and poitica reaities of how resources are now organized and how that organization needs to change to reaize the objectives Make specific assignments regarding who is responsibe for carrying out each step of the pan Measurabe: Intended resuts shoud be measurabe. The outcomes sought shoud produce tangibe and identifiabe resuts. Agreement: The group shoud be in agreement and there shoud be a reasonabe ikeihood that key actors in the home environment wi be supportive. Reaistic: The group needs to beieve that the panned changes are possibe. Success wi depend on the resources the group has access to and is prepared to commit to the effort. It wi aso depend on the confidence the group has in themseves. Time-specific: Miestones and timeines for achieving each stage shoud be set. Because not a aspects of impementation are under the contro of training participants, the timeines wi ikey have timeframes rather than specific deadines (e.g. within six months, 22

31 SECTION II: STRUCTURE OF THE TRAINING SESSIONS we wi ). What shoud be much more specific is the schedue for foow up meetings of the group and Session pan to the entire group and receive feedback on their pan. The sma groups shoud fee comfortabe asking for other key actors that wi be brought into the process. Heping, supportive reationships are essentia for maintaining momentum, for continued action earning and for buiding coaitions. The action pan shoud specify when the group wi meet again and how communication between meetings wi be fostered. Day 4, Sessions 3 and 4: Presentation of action pans; Cosing Session objectives To foster cross-team coaboration, earning and feedback Time Session Activity 5 minutes Discuss ground rues for presentations 60 minutes Presentation of 3 action pans Break [TBD] minutes Presentation of remaining action pans 10 minutes Wrap up and cosing comments Materias Faciitator Primary faciitator Primary faciitator input from the arger group on any points they are strugging with. The feedback from the arger group shoud be of two types: Encouragement and support. Being a change agent is chaenging and threatening, so a certain amount of cheereading is encouraged. The arger group shoud not fee pressured into supporting a pan they see as ineffective or unreaistic. But honest expressions of support and reinforcement shoud be wecomed. Such expressions from the faciitator are aso encouraged. To bring appropriate cosure to the training Cosing comments and ceremony UN-Habitat and hosts Specific suggestions on how the pan might be strengthened. Basic reading These wi most productivey come in the form of questions such as Have you considered? or Not appicabe What wi you do if? They may aso take the form In my city, we Session notes addressed that issue by These two sessions are intended to provide each sma group with an opportunity to present their action pan 23

32 SECTION II: STRUCTURE OF THE TRAINING SESSIONS It shoud be recognized by a that after spending many hours thinking about and refining an action pan, the team is heaviy invested in their product, however effective or ineffective it is ikey to be. Suggested improvements shoud diffuse any potentia defensiveness on the part of the team by heping them broaden their perspectives rather than by posing direct criticism of the product. If time permits, teams shoud be encouraged to update their pans based on the feedback received. Aow at east 20 minutes for the presentation and discussion of each pan. The time shoud be divided fairy equay between presentation and discussion. It is possibe that higher-eve functionaries wi want to attend this ast session. In that case, it shoud be seen more as a reporting and pitching session than a feedback and discussion session. 24

33 SECTION III: LAND-BASED FINANCING MODULES 25

34 SECTION III:LAND-BASED FINANCING MODULES The faciitator wi work with the two to five modues seected prior to the training to further deveop the curricuum. Athough an overview of each topic is provided here, more detaied information can be found in the Reader. MODULE 1: RECURRING TAXES ON LAND (DOUBLE MODULE) Specia note: Given the amount and compexity of the materia in this modue (and the reated chapter in the Reader), if this modue is seected for incusion in the training, it shoud be counted as two instrument modues (i.e. it requires two session bocks). The materia can be divided either by focusing on poicy issues in the first three-hour bock and then administrative issues in the second bock. Or the materia can be grouped based on the revenue equation, covering base definition, rate setting and cadastre management in one bock, and vauation, biing, coection and pubic outreach in the second. Other options for dividing the materia may be feasibe, but the point is that there is too much materia and too many issues around the annua tax to be manageabe in one three-hour bock. Session objectives To famiiarize participants with the key issues and principes that shoud be considered in designing, reforming or administering poicies that govern the annua tax on immovabe property To hep participants understand and articuate the key tasks that must be performed in order to design or reform an annua tax on immovabe property that is ikey to be fair, efficient and productive To famiiarize participants with the importance of administrative practices as they impact the revenue productivity of the annua tax on immovabe property To hep participants understand and articuate the key tasks that must be performed in order to design or reform the administration of an annua tax on immovabe property Much of the materia contained in this session is presented in richer detai in the UN-Habitat pubication Land and Property Tax: A Poicy Guide (UN-Habitat and GLTN, 2011). Basic reading Leveraging Land: Land-based Finance for Loca Government A Reader, Recurring taxes on and and buidings chapter Session notes The recurring tax on property is most commony an annua tax evied on and, improvements such as buidings or both. The purpose of the tax is three-fod: To estabish an on-going revenue stream for oca needs To provide a mechanism for charging residents and businesses for services that are not subject to user charges To provide communities with one mechanism for sharing in the increased private and vaues that resut from pubic decisions and city growth over time Four overarching principes shoud be kept in mind regarding recurring taxes on property. 1. The property tax system shoud refect and be sensitive to the oca institutions and traditions reated to and and property rights 2. Impementing the property tax requires a fisca 26

35 SECTION III:LAND-BASED FINANCING MODULES cadastre and the and tax system must refect the reaities of the current forma and informa and right registration systems 3. Since different design options exist depending on the extent and maturity of rea estate markets, it is critica that carefu attention is paid to market conditions in different ocations and for different types of property 4. The administrative capacity of government entities must be carefuy considered in designing the property tax and the administrative processes for its impementation The key components of the enabing property tax aw incude Define what is taxabe Define what is meant by taxabe vaue Identify who is responsibe for paying the tax Determine the process for setting the property tax rate(s) Assign the required administrative functions to appropriate agencies Assign the tax revenue The revenue coected from the annua property tax is a function of five eements. Two are poicy determinations: The vaue of property tax base as egay defined (Base) The property tax rate as set by aw and poicy (Rate) And three are administrative factors: The proportion of a and that shoud egay appear on the tax ros that actuay is incuded in the fisca cadastre (Coverage) The proportion of taxabe vaue that is identified by the vauation process (Vauation) The proportion of the tax evied that is actuay coected (Coection) Good poicies guiding how the tax base is defined incude: Defining the base shoud foow the fundamenta principe of good tax poicy: broaden the tax base and ower the rates Defining the incidence the tax shoud be coected from property owners if they can be readiy identified. Otherwise the tax shoud be coected from the occupants Exemptions shoud be kept to a minimum, shoud be thoughtfuy justified, and shoud be reviewed reguary to assure that their pubic purpose is sti vaid Vauation of property can be based on capita market vaue, annua renta vaue, physica property characteristics or a hybrid approach, based on the maturity of rea estate markets, and the administrative capacity of impementing tax agencies Good poicies governing rate setting incude: The number of property casses shoud be kept to a minimum Uness there is a compeing reason, there shoud ony be one tax rate for a property casses The range of acceptabe rates can be set at the centra eve, but oca officias shoud have the authority to determine the fina rate within the approved range It is often the case that revenue from a recurring tax on property can be significanty increased if the administration of the tax is improved. Quaity administration incudes: 27

36 SECTION III:LAND-BASED FINANCING MODULES Improving coverage or the proportion of egay taxabe property incuded on the tax ros Improving the accuracy and timeiness of property vauation Improving biing and coection procedures, incuding taxpayer services for processing taxpayer inquiries and appeas Strong administration of the recurring tax on property requires trained personne and an adequate budget to fund a aspects of the administration. The required expertise need not, and most ikey does not, reside in a singe agency. It is often most effective to share the responsibiity for administration between agency with speciaized personne Centra governments pay an important roe in providing training, administrative support in compex situations and in oversight to assure efficiency, effectiveness and fairness The ikey impact of an effective recurring property tax shoud be viewed from severa perspectives, incuding: The economic incidence of the tax The revenue potentia from the tax The incentives created for private investment within the oca jurisdiction The socia impacts of the tax The spatia and panning impications of the tax Cases Specia note: The materias for this doube modue incude six cases. Ony two shoud be seected for each training session. This modue can be spit into poicy and administrative parts. It is recommended that the Abania and Singapore cases be used for the poicy session bock and that two of the others (Punjab, Bogotá, Kandahar or Sierra Leone) be used for the administrative session bock. Case #1: Reforming the current and and property tax in Abania This is a prospective case in that Abania has yet to fuy impement a reform. They have started the process but as of this writing are very eary in the process. The case focuses on the poicy issues that must be addressed. Case #2: Progressive property taxes in Singapore The Singapore case represents an exampe of an annua tax based on renta vaue and with an expicit attempt to be very progressive in structure. The case raises poicy questions regarding progressiveness in property tax. Case #3: Property tax reform in Punjab, Pakistan Here again the case focuses on the current probems and what shoud be done to improve the administration of the tax. Since the reforms have not been fuy impemented, the effectiveness of the reform remains to be seen. Case #4: Administrative reforms in Bogotá, Coombia The Bogotá case presents an exampe where administrative reforms were successfu in increasing revenue. Case #5: Creating a property tax register in Kandahar, Afghanistan The Kandahar case presents an exampe of a city emerging from confict and buiding a functioning annua tax from itte, if any, foundation. Case #6: Property tax reform in Sierra Leone Sierra Leone is another case of post-confict cities 28

37 SECTION III:LAND-BASED FINANCING MODULES initiating property tax reform on a very imited budget. This is a good case to iustrate the importance of poitica eadership and commitment to the success of the reform effort. Key tasks Generate stakehoder support from the pubic and other stakehoders. What groups wi be most impacted by an annua tax on and and property? What groups might oppose an annua tax on and and property? What groups might benefit from an annua tax on and and property? How can information be distributed to a stakehoders? Adopt, revise or update the enabing aw, which shoud Define what is taxabe Define the standard that wi be used to determine taxabe vaue Identify who is responsibe for paying the tax Determine the process for setting the and and property tax rate(s) Assign the required administrative functions to appropriate agencies Define which government entities wi receive the tax revenue Who wi take the ead in drafting needed ega changes? Wi drafting the needed changes require externa technica assistance? Poicy tasks bock on administration. The poicy sessions can use In addition to the key tasks and guiding questions that the Abania and Singapore cases; the administration appy to a instruments, the foowing are reevant for sessions can use two of the other cases. If the recurring taxes on and and property. trainer decides to spit the modue differenty, some customization of case sets and questions wi be Key tasks and guiding questions needed. Specia note: These questions assume the modue wi be spit into a session bock on poicy and a session Poicy case guiding questions Guiding questions How are the poicy issues around the annua property tax in Abania and Singapore simiar? In both cases, raising revenue was not the ony poicy objective In both cases, pursuing socia objectives through the annua tax on and is difficut and very imprecise How are the poicy issues around the annua property tax in Abania and Singapore different? Abania is trying to rethink the foundations of their approach to and taxes; Singapore is trying to pursue income redistribution through a graduated tax system Abania seeks to set vaues based on current capita market conditions; Singapore is basing taxabe vaue on annua renta vaue What do the simiarities and differences in the two cases suggest about the essentia tasks in setting the poicies for the recurring tax on and? Loca history is extremey important Buid on existing poicies and administrative capacities The abiity to adopt meaningfu and tax poicies is not independent of other governance capacities, such as the judicia system, the mai deivery system and functioning and markets Ony add poicies that increase administrative compexity when the system is working reasonaby we and the capacity exists to effectivey impement the new poicies 29

38 SECTION III:LAND-BASED FINANCING MODULES Administrative tasks Key tasks Generate stakehoder support from the pubic and other stakehoders What groups wi be most impacted by an annua tax on and and property? What groups might oppose improved administration of the annua tax on and and property? What groups might benefit from improved administration of the annua tax on and and property? How can information be distributed to a stakehoders? Adopt, revise or update the enabing aw Does the current aw adequatey define the vauation standard? Does the current aw empower the appropriate agencies to identify and record current and use and occupancy? Does the current aw assign administrative responsibiities for the annua tax to appropriate agencies? Does the current aw adequatey define the appeas process avaiabe to taxpayers? Does the current aw provide adequate enforcement provisions if the tax is not paid in a timey manner? Reguary update and and property vaues The taxabe vaue of properties shoud be updated at east every three to five years What agency, at which eve of government, wi be responsibe for vauing new properties and updating existing and and property vaues? What objective data wi be used to estimate current vaues and how wi this data be obtained? What expertise and training shoud the personne conducting the vauations have? What agency wi provide training and oversight for the staff conducting vauations? Speciaized and uses require speciaized expertise in order to obtain a defensibe vauation. Where wi this expertise reside within government agencies? Systematicay review and use to identify changes in use or density Which agencies wi have primary responsibiity for reviewing, verifying and updating the fisca cadastre? How wi coordination with other agencies and other eves of government be institutionaized? What authority and enforcement powers do cadastre management staff have? Reiaby generate and deiver tax notices to andhoders Which agency has the responsibiity to generate individua tax notices based on current vauation and cadastra information? How wi the tax notices be reiaby deivered within the designated time frame? 30

39 SECTION III:LAND-BASED FINANCING MODULES Respond appropriatey to inquiries and appeas from taxpayers Mistakes wi happen in estimating vaues and in cacuating tax obigations. Even if there are no errors, taxpayers wi have questions Which agency has the responsibiity to receive taxpayer inquiries and respond to them prompty? Which agency wi receive taxpayer appeas and foow through using the approved appeas process? Wi it be necessary to pursue judicia reform, in addition to effective administrative courts, in order to assure that taxpayer appeas are heard and resoved prompty? Consistenty coect the tax Which agency or entity wi receive the tax payments and remit them to the appropriate authority? Vigorousy pursue tax avoiders Which agency has the responsibiity to enforce the tax aws and pursue tax avoiders? What administrative toos are avaiabe to assist in the coection of the tax? (e.g. nationa taxpayer identification number, pubicizing the names of deinquent taxpayers, etc.) What ega remedies are avaiabe and usabe in the event that the tax is not paid in a reasonabe period of time? Aocate and spend the tax revenue in ways that are pubicy visibe and meaningfu Pubic support and compiance depend on the pubic s perception that the taxes they pay are being spent on services they vaue How wi the pubic be informed about how the taxes coected are aocated and spent? What infuence does the pubic have over how their tax payments are spent? Administrative case guiding questions Guiding questions How are the issues around administration of the annua property tax in (Punjab, Bogotá, Kandahar and/or Sierra Leone) 1 simiar? In a cases, raising revenue was heaviy dependent on improved administration In a cases, property registration and improving the fisca cadastre was a critica step How are the administrative issues around the annua property tax in Punjab, Bogotá, Kandahar and Sierra Leone different? The eve and type of technoogy used in the cases is different and is adapted to the capacities of the oca administration The tax rate structures empoyed differ with some using market vaue as the base, whie others use property attributes, ocation and and use The maturity of rea estate markets differs substantiay between the three settings What do the simiarities and differences in the three cases suggest about the essentia tasks in administering the recurring tax on and? Adapt to oca conditions, based on how property rights are viewed and recorded, the maturity of rea estate markets and the administrative capacity of the reevant agencies (both the number of peope and the eve of expertise) Significant reform often requires outside assistance to jumpstart the process, but sustained success requires oca investment in capacity and ongoing effort Sustained poitica eadership and commitment is essentia for sustained success 31

40 SECTION III:LAND-BASED FINANCING MODULES MODULE 2: BETTERMENT CHARGES AND SPECIAL ASSESSMENTS Session objectives To recognize that betterment charges and specia assessments are an important source of infrastructure funding in many parts of the word To be abe to articuate the key tasks that must be performed in order to effectivey administer either betterment charges or specia assessments To recognize the reative advantages and disadvantages of betterment charges versus specia assessments as an instrument for funding infrastructure improvements Basic reading Leveraging Land: Land-based Finance for Loca Government - A Reader, Betterment charges chapter Session notes The key points regarding betterment charges and specia assessments can be summarized as foows: Betterment evies for cost-recovery are generay one-time charges assessed in connection with a and-reated event invoving specific infrastructure improvements. To empoy the instrument, cities must identify the specific improvements to be made, the and area that wi benefit from the improvements, and the eve of benefit in terms of increased and vaue that wi be received by each and parce. The cost of the improvements is then assigned to each and parce based on the share of benefits received. Securing andowner cooperation and agreement in advance greaty enhances the ikeihood of poitica support for betterment charges. Specia assessments are aso charges assessed in connection with specific infrastructure or service improvements. Specia assessments differ from betterment charges in that they are generay not one-time charges, but are assessed annuay over a fixed period. Specia assessments provide a mechanism for coecting betterment charges over a period of years and can make the burden on taxpayers much easier to bear. Specia assessments generay require the prior approva of a majority of property owners (either by number, in property vaue or both). The assessments can be made either as a set fee based on property attributes or as an increment in the annua property tax rate. Betterment charges can be effective at encouraging private investment, but their socia costs shoud be weighed carefuy. Betterment charges and specia assessments are important instruments for panners and oca managers. Cases Case number 7: Betterment evies (Contribución de vaorización) in Medeín, Coombia Case number 7 is an exampe of a city that has used betterment charges very successfuy in the past. In this particuar city, they have been ess reevant in the past decade because of pubic resistance to some projects and the avaiabiity of poiticay more acceptabe aternatives (transfers from the eectric utiity). Case 8: Specia Assessments in Cuenca, Ecuador Case number 8 is an exampe of the use of specia assessments to coect the betterment charges over a period of time by adding the annua charge to the andowner s annua property tax bi. 32

41 SECTION III:LAND-BASED FINANCING MODULES Key tasks and guiding questions In addition to the key tasks and guiding questions that appy to a instruments, the foowing are reevant for betterment charges and specia assessment districts. Case 7 tasks and guiding questions Key tasks Generate stakehoder support from deveopers and the pubic. Which groups wi be most impacted by betterment evies? Which groups might oppose betterment evies? Which groups might benefit from the betterment evies? Obtain the ega authority to coect betterment evies. Which eve(s) of government wi need the authority to impement the betterment charges? What changes, if any, need to be made in enabing nationa (or provincia) aws? What changes, if any, need to be made in oca ordinances and reguations? Identify what and benefits from each pubic improvement project. What guideines are needed in order to identify which and is benefited? Assess the reative benefit to each and parce. What guideines are needed in order to quantify the amount of benefit received by each and hoder? Assign a cost/fee to each and parce. The fee shoud be proportiona to the benefit received. Are the properties most impacted by the deveopment assessed a greater amount? The tota fees shoud not exceed the cost of the project. What is the tota cost of the project? What is the tota benefit to the properties? Determine the process for coecting fees. Shoud the fee be coected as a one-time fee? Shoud the fee be coected over a period of years? Wi the fee be coected separatey or with other fees? What enforcement aternatives wi be avaiabe for non-payment? Determine the impact on important groups. Wi the deveopment and betterment charges have an adverse impact on women and youth? What wi be the impact on affordabe housing? Wi an increase in and vaues ead to a decrease in affordabe housing? 33

42 SECTION III:LAND-BASED FINANCING MODULES Case 8 tasks and guiding questions Key tasks Generate stakehoder support from deveopers, property owners and oca residents. Create a district Pro Forma (pan for the budget and services of the district) Distribute information to the pubic. What deveopers wi be impacted by the district? What residents wi be impacted by the district? What property owners wi be impacted by the district? What oca services (poice, etc.) wi need to be invoved with the district? Obtain the ega authority to create a business improvement or specia assessment district. Do oca aws aow for the creation of specia districts? Are there any oca, state or nationa aws prohibiting the formation of specia districts? What is the best government eve for introduction of new aws supporting the ega creation of a district? How ong wi the district exist? Can it be renewed? What is the process for renewa? Determine the specific area of the district. What is an appropriate size for a district? How arge an area can be managed? What area shares common goas and needs? Can residents or property owners opt out of the district? Determine what services or infrastructure the district wi provide. What services or infrastructure wi be provided by the district? How wi the services be seected? By whom? Determine the fee for members of the district. Wi it be based on property categories? Wi there be separate fees for services and infrastructure? Determine the process for coecting fees. Wi the fees be coected as part of the property tax? Separatey? Who wi coect the district fees? How wi the fees be divided between the district management and the government? What enforcement aternatives wi be avaiabe for non-payment? Determine the impact on important groups. Wi the deveopment and betterment charges have an adverse impact on women? On the poor? On the edery? What wi be the impact on affordabe housing? How wi any impact of increased and vaues on the suppy of affordabe housing be mitigated? 34

43 SECTION III:LAND-BASED FINANCING MODULES MODULE 3: DEVELOPER EXACTIONS Session objectives To recognize that deveoper exactions have been an important source of infrastructure funding in many parts of the word To be abe to articuate the key tasks that must be performed in order to effectivey administer deveoper exactions To recognize the reative advantages and disadvantages of formuas and negotiation in arriving at the amount of the exaction Basic reading Leveraging Land: Land-based Finance for Loca Government A Reader, Deveoper exactions chapter Session notes The key points regarding deveoper exactions may be summarized as foows: These are one-time charges assessed as part of the approva process for additiona deveopment or the issuance of buiding permissions. The tax base for deveoper exactions can be either the estimated market vaue or the size of the deveopment. Exactions are generay intended to mitigate the impact of such new deveopment on existing city infrastructure, or to provide new infrastructure that is required in order to meet the needs of the citizens that wi inhabit or use the new deveopment. Deveoper exactions generay take one of three forms, each of which is described more fuy beow: 1. Required on-site improvements such as roads, pubic pavements, water distribution and wastewater coection ines, and pubic spaces that must be constructed within the boundaries of the deveopment project and then transferred to the oca government. 2. Payments required to offset the impact of the new project on off-site city infrastructure and services. Such payments may be in either and or money and are intended to provide the oca government with the resources needed to expand pubic infrastructure and services to accommodate increased service demands induced by the new deveopment. These payments are generay assessed in an amount estimated to recover the actua costs of the expanded infrastructure or services. 3. Payments required as the deveopment s contribution to socia improvements within the city but not tied directy to the deveopment project. Such requirements are a form of vaue sharing. 3 An exampe of such improvements is payments in and or money earmarked for socia housing. Fees can aso be assessed to recover the cost of reviews and safety inspections by the city during the panning and construction of the deveopment. Again, these are neary aways the direct costs the city incurs to provide the oversight and inspection service. In most instances, the exactions are set at a eve that has a documented reationship to the actua costs incurred or are ikey to be incurred by the city. - If the expicit intent of the exaction is cost recovery, then it may prove necessary to document what the costs are. This may require engineering studies to estabish both the overa cost of new infrastructure and the share of those costs that shoud be borne by the proposed deveopment. - If the exaction eve or purpose is not directy tied to actua infrastructure costs, it wi probaby sti have to be earmarked for a specific socia purpose and justified in terms of the cost of fufiing that purpose. 3 Land vaue sharing is discussed more fuy in the chapter on and vaue increment taxation. 35

44 SECTION III:LAND-BASED FINANCING MODULES Cases Case 9: Deveoper exactions (Obigaciones urbanísticas) in Medeín, Coombia This case is an exampe of a city that has successfuy used exactions by formua to make significant improvements in their infrastructure. Case 10: Community amenity contributions in Vancouver, British Coumbia, Canada This case is an exampe of a city that has successfuy used exactions by negotiation to fund urban improvements. Vancouver aso uses exactions by formua as described in the background section of the case. Key tasks and guiding questions In addition to the key tasks and guiding questions that appy to a instruments, the foowing are reevant for deveoper exactions. Case 9 Tasks and guiding questions Key tasks Generate stakehoder support from deveopers and the pubic. What groups wi be most impacted by the deveoper exactions? What groups might oppose the exactions? What groups might benefit from the exactions? How can information be distributed to a stakehoders? Obtain ega authority to coect deveoper exactions. What aws are in pace or need to be created to aow for zoning and and-use restrictions? What aws are in pace or need to be created to aow for transfer of and-use obigations? Which agency wi be responsibe for administering the exaction programme? What eve of government wi need the authority to impement the deveoper exactions? Deveop a and-use pan or create goas for urban spaces where the deveoper exactions wi be impemented. Understand the current capacity of infrastructure and housing and how much more density each area can support. Identify idea density eve for different areas and different and uses. Prioritize projects and needs of the city that the deveopment exactions wi be used for (parks, infrastructure, etc.). What shoud the coected fees be used towards first? Second? Create a formua, or other cacuation method, for identifying the amount of the exaction for a deveopment Consider whether the transfer can be cash or in kind (and, buiding space). What scenarios can support cash or in-kind transfers? Consider what zones shoud be identified and if exaction amounts wi differ for each zone or property category. Are certain zones exempt? Identify the method for coecting the exactions When shoud the fees be coected (before deveopment, during, after?) How wi the fees be coected? Who wi be responsibe for coecting the fees? How and when wi in-kind exactions be coected? How wi information regarding transfers and payments be kept transparent and accountabe? Determine the process for using the exacted and or cash to provide amenities and services for the city The deveopments need to be equitabe and transparent. Wi there be restrictions on what projects cash transfers can be used for? Geographic restrictions? Who wi be in charge of managing the services and projects funded by the exactions? 36

45 SECTION III:LAND-BASED FINANCING MODULES Additiona tasks and guiding questions for case 10 Key tasks Generate stakehoder support from deveopers and the pubic. What groups wi be most impacted by the deveoper exactions? What groups might oppose the exactions? What groups might benefit from the exactions? How can information be distributed to a stakehoders? Obtain the ega authority to coect deveoper exactions. What eve of government wi need the authority to negotiate the deveoper exactions? What ega changes wi be required to enabe deveoper exactions? Can the exactions be mandatory? Do they need to be vountary? Identify any exempt properties/areas. Know the current capacity eves of services and amenities. Know growth projections from rezoning and their impact on current capacity of services and amenities. How much more density can current infrastructure support? Know the vision and goas of the community and how growth and deveopment wi affect peope. What do residents need in their communities? Prioritize amenities and services that wi be funded from revenues. What infrastructure wi need to be updated first after deveopment? Determine the negotiation process for setting deveoper exaction amounts. Determine standard and/or non-standard fees. When shoud a standard fee appy? When shoud fees be negotiated? Set coection targets needed to fund amenities and services. Which agency wi represent the city in conducting negotiations? Ensure transparency and documentation of the negotiation process. How do we make the process easy to understand and make sure everyone understands the benefits? Identify a process for coecting fees. Wi the coections be accepted as cash or in kind? When shoud they be coected? How shoud they be coected? Determine any reporting requirements for coections. Ensure transparency and documentation of the coection process. Identify a process for aocating funds to amenities and services. Set guideines for fund distributions wi the funds be used to support amenities within a defined area? Wi they be set aside for specific uses? Prioritize projects what amenities are at capacity and need to be updated first? Ensure pubic invovement who needs to know? Who needs to be abe to give input? Ensure transparency and documentation of the aocation process. 37

46 SECTION III:LAND-BASED FINANCING MODULES MODULE 4: LAND VALUE INCREMENT TAXES Session objectives To famiiarize participants with options for and vaue sharing beyond cost recovery for infrastructure investments. To hep participants understand and articuate the key tasks that must be performed in order to impement an effective and vaue increment tax Basic reading Leveraging Land: Land-based Finance for Loca Government - A Reader, Land vaue increment taxes chapter Session notes Vaue sharing or vaue capture taxes are intended to aow the community to capture part of the increased vaue that often resuts when pubic infrastructure is improved or permission is granted to change and use. They differ from deveoper exactions or betterment charges in that they go beyond recovering the cost of specific infrastructure or service improvements. They differ from annua taxes on immovabe property in that they are very often one-time assessments and generay appy ony to the increment in vaue resuting from the pubic investment or the change in and use. Vaue sharing is often motivated by the argument that a and vaue increases that are not a direct resut of private investment on the and are a resut of socia processes. Exampes of such processes incude approva by a pubic body to change and use or increase deveopment density, or simpy changing demographics and market demand. The caim is that since such incrementa vaue is sociay created, it shoud be avaiabe to fund pubic purposes. Land vaue increment taxes generay have a rocky history. See the Reader for a more compete discussion of severa efforts that have proved to be ess than successfu around the word. 38

47 SECTION III:LAND-BASED FINANCING MODULES Cases Case 11: Land vaue sharing in Taiwan Case 12: Land vaue increment taxation in Bogotá, Coombia The cases presented here incude one success story (Taiwan) and one instance where the outcome is sti uncertain (Bogotá). Key tasks and guiding questions Tasks Key tasks Generate stakehoder support from the pubic and other stakehoders. What groups wi be most impacted by and vaue sharing? What groups might oppose and vaue sharing? What groups might benefit from and vaue sharing? How can information be distributed to a stakehoders? Adopt, revise or update the enabing aw Does the current aw adequatey define and vaue sharing and the instruments that can be used by governments to impement it? Does the current aw empower oca governments to share in the unearned increment in and vaues? Does and vaue sharing require oca governments to act by ordinance or reguation to impement and vaue sharing within their jurisdiction? Does the aw aow and and buidings to be taxed at different rates? Does the aw mandate coection of the and vaue sharing tax in one payment or does it aow for coection over time? Identify which agency wi be responsibe for administering the and vaue increment tax Wi impementation of the tax be tied to and-use panning and project approva, property registration changes, or changes in market conditions (vauation)? Identify which agency is responsibe for cacuating the unearned increment in and vaue This wi normay be carried out by the vauation agency Define what is meant by unearned increment, or its equivaent, and how it wi be cacuated Wi the base ( before vaue) for cacuating the unearned increment be the origina acquisition cost, current vaue (before any deveopment approvas) or some other concept? Wi the new vaue ( after vaue) be estimated as of some future date or tied to more immediate market data? What adjustments wi be aowed for and-reated expenses, infation, etc.? 39

48 SECTION III:LAND-BASED FINANCING MODULES Set the fina and vaue increment tax rate Which government body must give fina approva to the and vaue sharing tax rate? Wi there be ony one rate or different rates depending on and use and how ong the and has been owned? Determine when the and vaue increment tax is to be cacuated and when it is payabe Wi cacuation of the tax be tied to and-use panning and project approva, property registration changes or changes in market conditions (vauation)? Wi it be payabe in one instament or over time? Identify the agency responsibe for receiving and responding to taxpayer inquiries Taxpayers wi have questions and concerns. Which agency wi receive and respond? Identify the agency responsibe for monitoring and detecting tax avoiders Land vaue sharing taxes, especiay if payment is required in a singe instament, may encourage andhoders to seek ways to avoid the tax. Which agency or agencies wi be responsibe for deveoping and impementing monitoring procedures to detect avoiders and fraud? Identify the agency responsibe for coecting the and vaue increment tax Assign the tax revenue to the appropriate eve of government Wi the same government that receives the tax retain a of the revenue? If not, what proportion wi be retained by the coecting agency? Guiding questions Guiding questions How are the issues around and increment taxation in Taiwan and Bogotá simiar? In both cases, nationa aws (or the constitution) identify the unearned increment in and vaue as a pubic asset and assert that it shoud be avaiabe to fund pubic purposes. In both cases, the burden is paced on oca governments to administer the and vaue increment tax How are the and vaue sharing issues in Taiwan and Bogotá different? In Coombia, cities are required to coect a and vaue increment tax of 30 to 50 per cent of the unearned increment In Taiwan, because of inaccurate vauation, the effective tax rate is coser to 10 per cent Bogotá attempts to coect their tax as a singe instament when a project is approved, which requires that the after vaue be estimated before the project is competed In Taiwan, the tax is coected when the and tite is transferred from one party to another. In Coombia, the tax appies ony to new deveopment or changes in and use In Taiwan, the tax appies to a privatey owned and What do the simiarities and differences in the two cases suggest about the essentia tasks in impementing a and vaue increment tax? Cacuating the amount of the unearned increment requires good property records and some expertise The higher the effective tax rate, the greater the amount of pubic resistance, especiay if the tax is coected in one instament 40

49 SECTION III:LAND-BASED FINANCING MODULES MODULE 5: SALE OF DEVELOPMENT RIGHTS Session objectives To recognize that the sae of deveopment rights is an important source of infrastructure funding in some parts of the word To be abe to articuate the key tasks that must be performed in order to effectivey administer a system for seing deveopment rights Basic reading Leveraging Land: Land-based Finance for Loca Government - A Reader, Sae of deveopment rights chapter Session notes Key principes reating to the sae of deveopment rights Appying this instrument means that cities - Separate and ownership from the right to further deveop that and - Se the right to further deveopment within a given area The requirements for empoying the sae of deveopment rights incude: - The combination of cuture, aw and administrative strength must be such that deveopment rights are excudabe. - There must be sufficient market demand for additiona deveopment in the ocation where the rights wi be assigned. - The aw must incude provisions that aow cities to create and se additiona deveopment rights. - The city must have an up-to-date comprehensive pan for growth and infrastructure management. - The city must have an adequate administrative infrastructure. The sae of deveopment rights can be structured in a variety of ways ranging from simpe density standards to compex auctions. The best approach in a given environment wi depend on the capacity and resources of the issuing municipaity. The sae of deveopment rights can be used to manage and imit growth as we as to encourage it. The sae of deveopment rights through open auctions may prevent ow and moderate-income househods from acquiring those rights and thereby imits their abiity to invest in their and. Cases Case 13: Seing deveopment rights in São Pauo, Brazi This case presents probaby the best-known exampe of seing deveopment rights through an open auction. São Pauo aso ses rights without an auction. Case 14: Mumbai deveopment rights This case represents a straightforward exampe of seing additiona deveopment rights in the form of a density increase. In some instances, Mumbai encouraged the transfer of the increased density to another ocation as a means of reguating growth. Key tasks and guiding questions In addition to the key tasks and guiding questions appropriate for a instruments, the foowing are reevant for the sae of deveopment rights. 41

50 SECTION III:LAND-BASED FINANCING MODULES Case 13 Key tasks and guiding questions Key tasks Generate stakehoder support from deveopers and the pubic. What groups wi be most impacted by the sae of deveopment rights? What groups might oppose the sae of additiona deveopment rights? What groups might benefit from the sae of additiona deveopment rights? How can information be distributed to a stakehoders? Obtain the ega and reguatory authority to offer the deveopment certificates. Do current aws aow for the creation and sae of deveopment certificates? What ega or reguatory changes are needed to aow for the sae of additiona deveopment rights? What is the current eve of deveopment aowed? What is the process for increasing this? What eve of government wi need the authority to issue deveopment rights through auctions? Know the current capacity eves of services and amenities. Know the growth projections from rezoning and their impact on current capacity of services and amenities. How much more density can current infrastructure support? Know the vision and goas of the community and how growth wi affect peope. What do residents need in their communities? Prioritize amenities and services that wi need to be upgraded or provided as deveopment increases. What infrastructure wi need to be updated first as part of or after deveopment? Determine the deveopment certificate pricing process Wi the certificates a be offered at a standard price, with differing eves of deveopment? Or, wi the prices vary, with standard deveopment eves? Determine which areas of the community are more vauabe for deveopment. How wi auctions refect these differences in vaue? Set coection targets for the amenities and services that wi be funded by the revenues from certificate issues. What revenue amounts are needed from auctions to fund the most important infrastructure projects? Ensure transparency and documentation of the pricing and auction processes. How wi information regarding the coection and use of these funds be communicated to the stakehoders? (continued next page) 42 1

51 SECTION III:LAND-BASED FINANCING MODULES Case 13 Key tasks and guiding questions (Continued) Determine the process for issuing/auctioning the certificates. Wi the auctions be pubic or private? What institution wi manage the sae process? How wi the institution that manages the sae coordinate their actions with the city? Ensure transparency and documentation of the pricing and auction processes. How wi stakehoders and potentia buyers be made aware of the auctions? Identify a process for coecting fees What agency or eve of government wi coect the funds from the sae of the deveopment rights? What wi be the reporting requirements for coections? Ensure transparency and documentation of the coection process. Determine how the certificate rights wi be recognized and distributed to the buyers. What is the process for redeeming the certificates (deveopment rights)? Are there any restrictions for the use of the deveopment rights? What process wi be used to monitor and record saes of deveopment rights after their initia sae? How wi fraud in the use of certificates be detected and prevented? 0 43

52 SECTION III:LAND-BASED FINANCING MODULES Case 14 tasks and guiding questions Key tasks Generate stakehoder support from deveopers and the pubic. What groups wi be most impacted by the sae of deveopment rights? What groups might oppose the sae of additiona deveopment rights? What groups might benefit from the sae of additiona deveopment rights? How can information be distributed to a stakehoders? Obtain the ega and reguatory authority to offer the deveopment certificates. Do current aws aow for the creation and sae of deveopment certificates? What ega or reguatory changes are needed to aow for the sae of additiona deveopment rights? What is the current eve of deveopment aowed? What is the process for increasing this? What eve of government wi need the authority to issue deveopment rights through auctions? Set the Foor Space Index, or simiar concept, for different categories of property and and (residentia, commercia, downtown) in each area of the city. What space/structures count towards FSI (i.e. parking ots, obbies, etc.)? Who wi be responsibe for verifying FSI during construction? After? How wi the approved FSI be recorded? Determine rues regarding the transfer of deveopment rights from one parce to another. Determine if an overa cap on FSI for parces is needed. What wi it be? Determine if specific projects and uses aow a FSI to transfer to different parces (e.g. Mumbai s rues for hospitas, affordabe housing) Determine the process for issuing additiona deveopment rights Wi there be a set amount of additiona deveopment avaiabe or wi every parce be abe to purchase additiona amounts? What wi be the process for determining when new deveopment rights wi be issued? Wi the additiona rights be auctioned or sod at a predetermined fixed price? How wi the revenues from the sae of deveopment rights be coected? Determine the process for deveopers to use or redeem deveopment rights Wi additiona rights be redeemed at the time buiding permits and icences are purchased? Can the buiding rights be transferred between projects or between areas in the city? Are there any restrictions on the use of deveopment rights? How wi fraud in the use of additiona deveopment rights be detected and prevented? 44

53 SECTION III:LAND-BASED FINANCING MODULES MODULE 6: LAND LEASES AND LAND SALES Session objectives To recognize that easing pubic ands is an important source of funding in some parts of the word To be abe to articuate the key tasks that must be performed in order to effectivey administer a system for easing pubic ands To recognize that easing pubic and does not precude appying other LBF instruments to the same and To recognize that seing pubic ands has been an important source of one-time funding in some parts of the word To be abe to articuate the key tasks that must be performed in order to effectivey administer a system for seing pubic ands Basic reading Leveraging Land: Land-based Finance for Loca Government - A Reader, Land eases and sae of pubic ands chapter Session notes It may be desirabe to adapt this session to the needs of participants. If participants come from contexts in which the government owns a and in trust for the peope, the cases and materias on pubic and saes may not be reevant. On the other hand, some countries that have historicay owned a and are moving to a freehod system and in such a case, the entire modue may be usefu. Key principes The minimum requirements for the sae of pubic and differ somewhat from the requirements for a easing programme. The requirements can be summarized as foows: The government must have and that it has determined shoud be deveoped privatey. This is an important judgment with very ong-term consequences. Caution in reaching such a judgment is required. There must be an appropriate ega framework that authorizes governments to se pubic ands and sets out the procedures that shoud be foowed. There must be a market for the and. The and shoud be sod through a transparent process, such as an auction, in order to ensure that fu market vaue is obtained. If it is desirabe for poicy reasons to discount the and beow fu market vaue, the discounting shoud be transparent and fair. Care shoud be taken that a proceeds from the sae are appropriatey accounted for. This is a straightforward technique to generate one-time revenue for high-priority, ong-term projects, but it shoud be used with great caution and ony with fu transparency and pubic consutation. Leasing pubic ands has different requirements, particuary with regard to ongoing administration. In order to ease pubicy-owned and, There must be an appropriate ega framework that - Authorizes governments to ease pubic ands for private use and deveopment - Sets out basic terms and conditions which must be incuded in any ease agreement - Identifies the agency or agencies responsibe for managing the easing system - Specifies how the revenue generate wi be assigned and managed The government entity must have avaiabe and 45

54 SECTION III:LAND-BASED FINANCING MODULES and it must have the administrative capacity to administer and reguate a easehod system To deveop a easehod system from the ground up, a government must - Identify pubic and appropriate for easing and unocking vaue - Deveop a speciaized institution to manage a easehod system - Earmark revenues for specific purposes, and - Deveop a compensation poicy for current tenants of pubic and Governments without a strong administrative abiity to manage such a system have not been successfu in generating meaningfu revenue. Additionay, the more contro the government reinquishes in easehod agreements typicay resuts in the prospect of more revenue. The most successfu systems, in terms of revenue generation, are those that are modeed cosey after freehod systems. The experiences of Hong Kong and Finand are attractive because of their success in generating and-based revenues. As participants consider the potentia for impementing one or more of the poicies iustrated in these cases, they shoud be encouraged to recognize the prerequisites and requirements for successfu impementation. These incude: Lega framework - It is essentia that the ega framework be updated to adequatey support and empower the changes contempated. A we-run, centraized easing administration function is essentia to successfu ease revenue. The property registration function must be efficient, effective and timey to assure that proper vauations can be carried out. It is essentia to have current information on ownership, occupancy, and use and property attributes. Land and property vauations must be updated reguary. This is essentia in order to propery price eases, and to avoid poitica backash and inequity in tax burdens. Cases Case 15: Land eases in Hong Kong Case 16: Land eases in Finand Case 17: Land saes in Egypt Case 18: Land saes in Ahmadabad, Gujarat, India Specia note: The discussion shoud focus on ony two of these cases which have been preseected to read. Cases 15 and 16 are about and eases, whereas cases 17 and 18 are about and saes. If training participants come from countries where pubic and cannot be sod, cases 15 and 16 shoud be seected. Aternativey, if participants wi be focusing on both easing and saes, a case study from each set shoud be seected. 46

55 INSTRUMENT 1: SECTION III:LAND-BASED FINANCING MODULES Key tasks and guiding questions Leasing tasks Key tasks Generate stakehoder support from the pubic and other stakehoders. What groups wi be most impacted by pubic and easing? What groups might oppose the better administration of and eases? What groups might benefit from better administration of and eases? How can information be distributed to a stakehoders? Obtain the ega and reguatory authority to effectivey administer pubic and eases. Is and aready pubicy owned? What agency is egay responsibe for managing pubic ands? Wi the same agency aso administer and eases? What terms and conditions shoud appy to eases? Shoud they be the same for a and or vary by type of and use? Identify the agency or office that wi administer the and easing process What wi be the reationship between centra government agencies responsibe for and administration and oca governments responsibe for oca panning and service deivery? Identify and avaiabe to be eased What agency wi determine which and shoud be eased and when? How wi the pubic be abe to infuence the decision on which and shoud be eased and when? Once and is identified for easing, which agency wi be responsibe for preparing that and (surveys, maps, specia conditions, etc.)? Define the process for setting ease premiums What agency or office wi be responsibe for determining ease premiums? What process and data wi be used to set the vaue of ease premiums? Shoud premiums be set by auction, by administrative decisions or by some other process? Shoud these premiums be the same for a and or shoud they vary by type of and use? How often shoud ease premiums be updated? When appications are made to change the terms of an existing ease, what premium shoud be charged, if any? Which eve of government shoud receive the revenue from ease premiums? (continued next page) 47

56 SECTION III:LAND-BASED FINANCING MODULES Leasing tasks (Continued) Define the process for setting annua ease payments (and rent) What process and data wi be used to set the vaue of annua ease payments (and rent)? Shoud annua payments vary by type of and use, with some uses paying itte or no rent? Shoud annua payments be adjusted for other costs such as the annua and tax? How often shoud the annua ease payment (and rent) be updated? Wi the updates appy to existing eases or ony to new eases? Which eve of government shoud receive the revenue from annua ease payments? Define the process and standards for advertising the avaiabiity of and to be eased How wi the pubic be notified when new and is made avaiabe for ease? How much notice wi be provided? Define the process for negotiating the specific terms and conditions of a ease Which agency wi be responsibe for negotiating the specific terms of new eases? How much discretion wi be granted to negotiators in finaizing new eases? What reviews of ease terms wi be required before a ease is finaized? Officiay record eases and easehod interests How wi eases and easehod interests be recorded? Which agency or office wi be responsibe for recording eases? What recording requirements wi there be if a ease is sod or sub-eased to another party? Wi officia records aso record occupants as we as easehoders? Coect ease premiums and annua and rent Which office or agency wi be responsibe for monitoring and coecting ease premiums? Which office or agency wi be responsibe for monitoring and coecting annua ease payments (and rent)? If either the premium or the annua payment is coected by one eve of government but forwarded on to another, what proportion of the revenue coected shoud be retained by the coecting agency? Leasing guiding questions Guiding questions How is easing in Finand simiar to easing in Hong Kong? Leasing has a ong tradition in both countries (continued next page) 48

57 SECTION III:LAND-BASED FINANCING MODULES Leasing guiding questions (Continued) How does easing in Finand differ from easing in Hong Kong? Loca governments have the option of either freehod, easehod or a combination Pubic ands were originay donated by the sovereign Municipaities have the right (since 1962) to se pubic ands within their panning areas Acquiring additiona pubic and now requires compiance with aw and must incude compensation to andowner Payment of ease premiums is very rare Annua and rents are negotiated between the city and the essee Annua and rent is adjusted by a Cost of Living Index if the ease is for more than 10 years Since the mid-1990s, other indexes can aso be used to adjust the rent, incuding a and price index if avaiabe Since the mid-1990s, many Finnish cities coect an interna ground rent. Pubic agencies pay interna and rent to the government in order to encourage efficient and use by the pubic sector and to make more and avaiabe for private uses. Land saes tasks Key tasks Generate stakehoder support from the pubic and other stakehoders. What groups wi be most impacted by the sae of pubic ands? What groups might oppose the sae of pubic and? What groups might benefit from pubic and saes? How can information be distributed to a stakehoders? Obtain the ega and reguatory authority to effectivey administer pubic and saes. Is and aready pubicy owned? What agency is egay responsibe for managing pubic ands? Wi the same agency aso administer and saes? What terms and conditions shoud appy to saes? Shoud they be the same for a and or vary by type of and use? Identify the agency or office that wi administer the and saes process Shoud a saes of pubic ands be administered by the same agency or shoud the sae of different types of and be administered by different agencies? Shoud oca governments contro the sae of pubic ands within their boundaries? To whom wi the agency responsibe for administering pubic and saes report and be accountabe? (continued next page) 49

58 SECTION III:LAND-BASED FINANCING MODULES Land saes tasks (Continued) Identify and avaiabe to be sod How wi the pubic be abe to infuence the process for seecting which ands are to be sod and when? What criteria wi be used to seect ands that are to be sod? How wi the rights and needs of current and occupants be respected and accommodated? If existing and uses, environmenta conditions or other factors require remediation prior to sae, which agency wi manage the remediation process and how wi it be funded? Define the process for setting the saes price Pubic ands shoud, in most cases, be sod at fu market vaue in a fair and transparent process. What process wi be used to assure the best possibe price for pubic and that is sod? What criteria wi be used to determine whether a beow-market price for and shoud be accepted? If there are pubic objections to the price obtained for the and, how wi such objections be deat with? Define the process and standards for advertising the avaiabiity of and to be sod How wi the pubic be notified that a pot of and is avaiabe for sae? How far in advance wi the notification be made? Define the process for negotiating the specific terms and conditions of sae Which agency or individuas wi give fina approva for the saes contract? How much atitude shoud be granted to administrators in determining any specia terms or conditions reated to the sae of a pot of pubic and? Officiay record a saes Which agency wi be responsibe for recording a and saes? How wi any subsequent re-saes of the and be monitored and recorded? Coect and-saes revenue Which eve of government wi receive the revenue from the sae of pubic ands? Given the one-time nature of the revenue from the sae of pubic and, how wi the use of these revenues be monitored and accounted for? Who wi determine how revenues from and saes shoud be aocated and spent, and what criteria shoud they use? 50

59 SECTION III:LAND-BASED FINANCING MODULES Land saes guiding questions Guiding questions How were and saes in India simiar to and saes in Egypt? In both cases, pubic agencies sod pubic and to private deveopers In both cases, and for pubic space and pubic use was reserved How did and saes in India and Egypt differ? In India, the government did not initiay own the and but had to acquire it through and readjustment or expropriation In Egypt, and saes were managed by a speciay created nationa agency. In India, saes were managed by a oca deveopment agency. In Egypt, the nationa agency invested biions in infrastructure and sod and on a very arge scae. In India, the arge project was divided into 47 smaer projects, which were then deveoped sequentiay. In Egypt, new cities were panned and created on unused and. In India, and-use pans had to be negotiated and adopted since the and was aready occupied. What do these simiarities and differences suggest about the essentia tasks and functions reated to the sae of pubic ands as a and vaue sharing instrument? 51

60 SECTION III:LAND-BASED FINANCING MODULES MODULE 7: TRANSFER TAXES Session objectives To recognize that the primary roe for transfer taxes is to fund the property registration and and administration system To be abe to articuate the key tasks that must be performed in order to effectivey administer a transfer tax or stamp duty appied to and and property To understand how transfer taxes have been used in certain settings as a too for restraining the rate of increase in and prices Basic reading Leveraging Land: Land-based Finance for Loca Government A Reader, Transfer tax chapter Session notes Key principes Transfer taxes are assessed when the statutory tite to and is transferred to another party. Most commony, the transfer tax is expressed as a percentage of the vaue of the rea property being transferred. The transfer tax is a tax appied to the tota vaue of a and transaction and must be paid in order to compete the transfer of tite to another party. It is often charged even if the transfer is not the resut of a sae. Many jurisdictions use transfer taxes to fund the and registration system. Some aso empoy the tax as an additiona revenue source. In some instances, governments have used the transfer tax to restrain overheated rea estate markets by charging rates that approach 20 per cent of market vaue. Because the transfer tax is evied at the time the registered tite to rea property is transferred from one party to another, the minimum requirements for impementing a transfer tax are tied to the and registration system. There must be an up-to-date forma and registration system that covers a and parces and is accepted by the society. Land aw must require registration of a and tite transfers and set out the process for such transfers. High transfer taxes tend to reduce the number of rea estate transactions and can have a distortionary effect on housing markets. High transfer taxes can aso encourage misrepresentation of transaction prices and may even discourage registration of transfers. High transfer taxes shoud be used with great caution as they may undermine other aspects of and registration and and-based finance. Cases Seect ony two of the foowing cases: Case 19: Singapore s stamp duties Case 20: Stamp taxes in Tanzania Case 21: Transfer taxes in Turkey 52

61 SECTION III:LAND-BASED FINANCING MODULES Key tasks and guiding questions The aw must require that a property transfers must be registered with the appropriate government Tasks Key tasks agency in order to be egay fina, and the property registration system shoud incude a properties and must function reasonaby we. In addition, impementing a transfer tax or stamp duty on property transfers invoves severa key tasks The aw must Identify which agency wi be charged with determining the taxabe vaue of the transfer Set the tax rate, the range of aowabe rates or the formua for cacuating the tax obigation Specify which types of property transfers wi be subject to the tax Specify which property or entity types may be exempt, if any Assign the revenue coected to the desired government entities Estabish guideines for determining taxabe vaue, consistent with the enabing aw Specify the documentation required in order to finaize a property transfer Prepare any necessary forms that parties wi need to compete Receive the appication for property transfer Determine if the parties to the transfer are egay authorized to enter into the transaction Does the party transferring the property have a ega right to se or otherwise transfer the property? Have a other prior ega caims on the property been satisfied in advance of the transfer, or are the prior caims acknowedged as binding on the buyer or party receiving the transfer? Determine the taxabe vaue of the transfer and cacuate the tax obigation If the tax is based on market vaue, does the decared vaue by the parties fa within the acceptabe range of the estimated market vaue? What steps are avaiabe to tax administrators to verify the accuracy of the decared taxabe vaue? Determine if any other tax obigation is due at the same time Is there a capita gains tax due? Have a outstanding property taxes been paid? Determine if a other ega requirements have been satisfied Notify the parties of their respective tax obigations Coect the tax Register the finaized transfer Provide documentation to both parties that the transfer has been competed Account for and process the taxes received according to estabished procedures 53

62 ANNEX 1: LEARNING BY DOING: FUTURE ITERATIONS OF THE LBF TRAINING PACKAGE ANNEX 1: LEARNING BY DOING: FUTURE ITERATIONS OF THE LBF TRAINING PACKAGE 54

63 ANNEX 1: LEARNING BY DOING: FUTURE ITERATIONS OF THE LBF TRAINING PACKAGE This LBF training package has been deveoped over a number of years and the process has invoved numerous UN-Habitat and GLTN partners and other experts, as recognized in the Acknowedgments. This has incuded research, an expert consutation meeting hed in Barceona in May 2015, and testing in two piot training events. It is a fexibe document made avaiabe eectronicay, with the intention to further improve and fine-tune to incorporate ideas and suggestions received, both during the consutations and as the too is used. Two piot training workshops were conducted in Cairo, Egypt, and in Mania, the Phiippines, in October, 2015 and December, 2015 respectivey. The two workshops provided an opportunity to piot the training package and for participants to draw on their experience and knowedge of the and-based financing instruments. At the end of the training, the participants provided hepfu feedback regarding the structure and content of the training. EGYPT The training in Cairo was attended by 33 Egyptian officias from both nationa ministries and nine different governorates. The training was conducted in Engish with simutaneous transation and in Arabic (most of the penary discussions and group reports). During a prior mission conducted in eary September, three LBF instruments had been seected for presentation during this training session (betterment evies, deveoper exactions and sae of deveopment rights). Originay, the intention was to conduct the training over a four-day period and incude the annua property tax, but due to a scheduing confict (nationa hoiday), the training had to be shortened to three days. The reevant chapters from the Reader were transated into Arabic aong with a of the PowerPoint sides used. Because the instruments were not identified unti about a month before the training and the chapters and cases had to be transated, the participants did not receive any of the materias before the training. This put the faciitators at a disadvantage because it meant that more time had to be taken to expain the instruments than the schedue incudes. The participants did receive the written cases and chapters at the beginning of the training. A esson from this experience was the importance of starting preparations we in advance of the actua training event. In order to promote cross-poination of ideas and experiences, one of the first steps was to spit up peope from the same organization. The arge group was divided into six teams and teams were asked to sit with their group. The working groups were constructed so that no two individuas from the same organization were in the same group. The sma groups were then given a hypothetica panning assignment that required them to work as a team to deveop a ist of steps necessary to compete the task. The combination of the initia ice-breaker and the hypothetica panning exercise seemed to break down any communication barriers that may have existed, and the sma groups worked we together throughout the training. The seected cases worked we. They both introduced new approaches and stimuated discussions. They aso heped participants to identify areas where their understanding of the concepts was weak or needed carification. There was some concern from the organizers that the cases were too ong to read in the time aotted since the cases had not been avaiabe to participants in advance. In subsequent sessions, haf of the teams were assigned one case and the other haf discussed the second case. The guiding questions were simpified to focus on ega, administrative and 55

64 ANNEX 1: LEARNING BY DOING: FUTURE ITERATIONS OF THE LBF TRAINING PACKAGE poitica issues raised by the cases. This demonstrated the need for a fexibe response by the faciitators when they become aware of such chaenges. An unanticipated change to the schedue was the invitation of five senior managers from key ministries to attend the ast afternoon and hear the action pan. This created severa chaenges. First, it meant that some of the introductory materia presented on the first day had to be repeated so the visitors had some foundation for the participant presentation. The second chaenge was that the morning of the ast day was focused on arriving at enough of a consensus in the group so that a singe presentation coud be deivered to the visiting eadership. Unfortunatey, this meant that the action pans deveoped by the sma groups were not as we deveoped as they might have been. Most of the groups did not get down to the eve of making specific assignments to group members, designing a foow-up strategy, etc. They identified tasks that were needed, but when the task was not under their direct contro, they reay did not have a pan for reaching out to key actors and gaining their support. The fina presentation was we received by the visitors, but the participants did not accompish a that was hoped for with regard to the action pans. In future, organizers shoud avoid making this kind of modification to the schedue on the ast day. It may be desirabe to have senior eaders come and hear the action pans, but if this is the desire of oca organizers, it shoud happen after the ast fu day of action pan deveopment. This training invoves two types of earning that are very ikey to be new to the participants. First, there is the technica materia to master, which wi probaby require earning new vocabuary, new concepts and new ways of thinking about and. Second, few if any of the participants have experience in deveoping action pans. Based on the Cairo experience, a fu day of interaction and feedback is needed for participants to get a working product. In addition, it woud be important to ensure, during the seection of participants, that they have support from their principas to bring back action proposas to their work pace after the training. These measures woud be in ine with the good practice earning approach referred to in the Trainer s Guide. PHILIPPINES The LBF piot in the Phiippines aso took pace with reativey itte ead time and was conducted over a three-day period. The instruments covered in the training incuded betterment charges and specia assessments, deveoper exactions and sae of deveopment rights. In addition, participants received in-depth action-based training and guidance on the deveopment of action pans. Twenty-two participants were seected from oca and nationa Phiippine government agencies and incuded one participant from Myanmar. Seection was based on the individua s professiona standing, job function, interest in the topic and their potentia abiity to infuence impementation of the instruments. An effort was aso made to baance participation based on gender. Participants and their agencies reviewed a summary of the seven instruments and expressed their preferences for which to incude. Preferences were tabuated by the organizers, who aso made the fina seection of instruments. Participants were provided with materias to review prior to the actua training in order to become famiiar with the reevant chapters and case studies, and over 86 per cent of participants indicated they had read the materias in advance. At the concusion of the training, systematic feedback was soicited from a participants. The training materias presented were judged by 82 per cent of participants to be usefu and appicabe in their oca 56

65 ANNEX 1: LEARNING BY DOING: FUTURE ITERATIONS OF THE LBF TRAINING PACKAGE context. Participants fet the training organization, structure and content were effective, engaging and reevant. The need for additiona technica assistance in order to impement the instruments was recognized. Likewise, the need for a pubic information campaign to overcome resistance from andowners was acknowedged, as was the need for poitica eadership and poitica wi. Participants aso deveoped a set of strategies to address these and other practica chaenges. Overa, participants reported increased knowedge and skis in severa areas: a) Greater understanding of the way in which each of the LBF instruments discussed may affect and use b) Greater comprehension of the potentia negative socia impacts of the LBF instruments discussed and the necessary measures to minimize such impacts c) Recognition by participants that and-based financing can succeed in their city/country d) Knowedge of the major barriers for LBF (e.g. reguatory system, informaity, poitica buy-in, and registration system, etc.) e) Awareness of the ega, reguatory and administrative conditions that woud need to be put in pace (e.g. what powers, what checks and baances, etc.) in order to ensure accountabiity and better service deivery The majority aso came away wanting additiona training in some of the other instruments. OTHER The majority of the feedback received from the Barceona Expert Group Meeting and other consutations was incorporated into the revised LBF package prior to pioting in Egypt and the Phiippines. However, due to time and budget constraints, not a concerns coud be adequatey addressed. In addition, the two piots provided vauabe insights into how this type of training might be improved. A number of potentia improvements wi be considered during future iterations of the package. These incude the foowing. Additiona and updated case studies A number of case studies suggested by participants in the Barceona EGM were subsequenty added to the LBF package. A few others cases and exampes were discussed as possibiities for the next revision: Property tax administrative reforms in Indonesia Municipa bonds in Dakar (as a faied case) The transfer tax in Indonesia The transfer tax in Mexico (particuary reated to underreporting) Subsequent reviews of the training materias, particuary by GLTN staff, have reveaed the need for more information on socia impacts within the cases. Currenty, socia impacts are not described in most of the cases. This can be foowed up in ater editions of the Reader. EGM participants pointed out the need to update the information in many cases in order to see how and-based finance efforts have fared over time. They aso discussed the need to incorporate new cases as they arise and suggested that GLTN and UN-Habitat interview government officias using GLTN networks or coect cases from training participants. High-eve engagement A key theme of discussions during the Barceona EGM, as we as the debrief foowing the piot training in Mania, was the need for different engths and types of engagement for different eves of government staff. One probem that arose during the piot in Egypt was the attendance of high-eve officias during the second haf of the action-panning day to hear participant presentations. This cut into critica action-panning time and put pressure on participants outputs. Within the current LBF framework, it is best for high-eve officias to attend the first day during the overview of and-based finance. 57

66 ANNEX 1: LEARNING BY DOING: FUTURE ITERATIONS OF THE LBF TRAINING PACKAGE Whie first-day attendance is one option for high-eve engagement, participants in the Barceona EGM recommended pre-training engagement with department heads and government decision makers in order to secure a mandate for instrument use prior to the training. This coud give confidence to those attending the training and avoid the concern that the instruments being discussed might not be fuy supported. Pre-training engagement aready incudes instrument modue seection. Deveopment of materias and methods to better market and concisey expain and-based finance instruments coud serve mutipe functions: high-eve engagement, pre-training commitment to impementation, incuding staffing and funding requirements, and informed modue seection. Lega and technica information The Training Package currenty focuses on instrument design but stops short of guidance on technica impementation. In addition to the technica aspects of instrument use, adaptation and drafting of ega frameworks are a fundamenta eement of instrument impementation. These components need more in-depth and detaied support than is currenty within the purview of the LBF package. However, such work woud be an appropriate foow up to the action panning that happens within and as a direct resut of the training. Foow-up workshops coud be designed for technica and/or ega staff to bridge the gap between instrument design and successfu impementation. Aternativey, part of a ega modue coud precede the training in order to assess the current ega code and opportunities to use or revise it for and-based finance. In either a ega or a technica workshop, time woud need to be spent to adapt the content to the countryspecific ega and historica environment. Post-training foow up In addition to the possibiity of technica and ega in-depth impementation modues, there is a wide array of options for continued support from UN-Habitat or reevant GLTN partners during the post-training period, particuary as participants pursue their action pans. A cear recommendation from the Barceona EGM was to have a support network that coud provide avenues for continued technica advising, knowedge sharing and ongoing research. Contextuaization Obviousy, every country and oca context is different when it comes to the appication of and-based finance instruments. However, two more unique contextuaization issues arose during the Barceona EGM that woud need to be addressed in future iterations of the LBF package. One is the adaptation of the package to Isamic aw for affected countries such as Saudi Arabia, and the other is adaptation to and management systems where customary and hodings comprise a significant proportion of deveopabe and, such as in Ghana or Papua New Guinea. A third area for contextuaization that has come up since the EGM is the appication of and-based finance in cities with significant informa areas, specificay reated to the instruments adaptation, appication and impacts for these areas. Whie the Reader addresses the issue of informaity briefy, more information and cases covering informaity, poverty and tenure security woud be very usefu for the type of partners with whom GLTN reguary engages. Format of the too The nature of this too necessitates further thinking on the format in which it is presented. Having the too avaiabe as a free downoad is essentia, yet ways shoud be considered to present it as a more fexibe, iving document which can be amended for specific uses. This woud incude the addition of ocay pertinent information and materias, and possiby the incorporation of the too into aready existing capacity deveopment and impementation processes on and, municipa financing and / or oca governance. 58

67 ANNEX 2: GUIDELINES FOR DEVELOPING LBF ACTION PLANS 59

68 ANNEX 2: GUIDELINES FOR DEVELOPING LBF ACTION PLANS The guideines for deveoping action pans presented in this Annex are adapted from UN-Habitat s Sustainabe Cities Programme (SCP) Source Book Series, Voume 4: Formuating Issue Specific Strategies and Action Pans. events, but a common vision and orientation that makes increments of action by various stakehoders consistent and compatibe with the desired ong-term objectives of sustainabe deveopment. What is an action pan? An action pan is different from, but inked to, a strategy: THE DISTINCTION BETWEEN STRATEGY AND ACTION PLAN What is a strategy? Strategy is about two things: where you want to go and how to get there. It is a ong-term vision concerning broad goas and genera directions. With regard to and-based financing for urban deveopment, strategy begins with a vision of the future city. This is where you want to go. LBF is an essentia part of how to get there. The decision to focus on impementing or improving a particuar set of LBF instruments is consequenty a key strategic decision. The purpose of a strategy is therefore to provide genera guidance, with a ong-term perspective in mind. It provides a framework within which the actions and interests of different stakehoders can be brought together. What is achieved through formuation of strategies is not a dramatic turn of Photo : Land-based finance training event, Mania, December