Bridging the gap between local finances and urban investment: learning from land value capture instruments in Latin America

This side event aims to contribute to the discussion on how the land value capture instruments can be used as a vehicle for strengthening local governments finance, addressing the increase demand for urban infrastructure and public services, driven by demographic and socioeconomic dynamics. Through the presentation of Latin American case studies, this side event will contribute to the understanding on how can local governments improve the use of traditional and alternative land value capture instruments, allowing them to strengthen local finances and promote a balanced territorial development.

According to the World Bank, the urban population in Latin America & Caribbean had a major increase in the last decades: by 1960, the proportion of urban inhabitants in the region was 49%, increasing at nearly 80% by 2016. Even though the urban population growth is currently decreasing (1,3% annual), a real challenge remains regarding urban land demand, housing supply, urban transportation improvement, public and social services supply, and increased resources for financing development.

Bearing in mind this challenging context, this side event will be divided in two key interrelated sections: (i) a general presentation on the use of traditional land value capture instruments such as Property Tax and other Betterment Levies, highlighting successful case studies; and (ii) a discussion on the possibilities of implementing alternative and innovative land value capture instruments such as Tax Increment Financing – TIF, Certificates of Additional Construction Potential bonds (known in Brazil by the name Certificados de Potencial Adicional de Construção or CEPACs), Public Private Partnerships – PPP as strategies to increase local governments' revenues.