12 Jul, 2017

New IMFG paper evaluates whether land value capture tools should be used for social equity.

New paper from the Institute on Municipal Finance and Governance evaluates land value capture tools in Toronto and São Paulo through an equity lens.

Toronto, July 12, 2017 – In Toronto, Section 37 of the Planning Act allows developers to exceed height and density restrictions in exchange for cash or in-kind contributions to the neighbouring community. A new IMFG Paper, Land Value Capture and Social Benefits: Toronto and São Paulo Compared, compares the history and use of Toronto’s Section 37 with a similar tool in São Paulo, Brazil, known as the OODC (Outoga Onerosa do Direito de Construir). The paper looks at the effectiveness, benefits, challenges, and politics of these tools, as well as who benefits from them.

The paper finds that Toronto’s negotiated process has led to a concentration of benefits in higher-income downtown neighbourhoods because benefits tend to be located close to the development that is paying for them. In São Paulo, on the other hand, a formula-led approach captures funds in the most expensive regions of the city and redistributes them to projects in the poorest regions – a “Robin Hood” approach to city-building.

Although the underlying rationale for land value capture is not generally to improve equity, the paper argues that it is nevertheless interesting to look at whether there is a redistributional component to these tools. According to the report’s author Abigail Friendly, “It is important to think about these tools in terms of who benefits. To what extent should funds be redistributed from high-income neighbourhoods where development is occurring to low-income neighbourhoods where infrastructure is needed?”

About the Author

Abigail Friendly received her Ph.D. in planning from the Department of Geography and Planning at the University of Toronto. She was the Post-Doctoral Fellow at IMFG in 2015–2016 and is an Assistant Professor in the Department of Human Geography and Spatial Planning at Utrecht University and a Research Fellow at the Global Cities Institute, University of Toronto.

About the Institute on Municipal Finance and Governance (IMFG)

The Institute on Municipal Finance and Governance is a research hub and think tank that focuses on the fiscal and governance challenges facing large cities and city-regions. It is located within the University of Toronto’s Munk School of Global Affairs.

For more information, please contact:

Selena Zhang | Manager, Programs and Research

Institute on Municipal Finance and Governance, Munk School of Global Affairs, University of Toronto

selena.zhang@utoronto.ca | 416-978-2168