Recapturing Land Rent Value To Fund Contributory Civic Activities in Australia

Discussion

Sharon Ede:

"…in my research and experience, the major barrier to getting established is access to capital, and specifically space. The cost of rent can make or break civic assets such as these.

The issue of rent is central to whether such spaces can survive and thrive.

This opens a broader question of who and what the city is for, and whether affordable spaces for uses that cannot compete in a purely commercial sense have a role in the city — if so, there needs to be support which will include paying for space, as unless a suitable space can be donated or purchased, rent will be an ongoing and major cost.

How can communities, who are generating significant public value, capture some of that value to sustain their activities (and as part of that, sustain the lives of the individuals contributing)?

These initiatives are usually run by unpaid or underpaid people, generate social and economic value, but are always scrabbling for comparatively small amounts of money, applying for grants and inventing new projects when all they want to do is pay the administrative costs which fund the architecture of co-operation.

There are existing models for ensuring a much greater percentage of windfall gains are captured back for investment in public goods and services:

- Australian Capital Territory has been doing it since 1971, charging 75% of the market price for new property rights granted through rezoning.

- Late in 2018, the City of Parramatta, NSW, enacted a requirement that developers pay a contribution of 50% of land value uplift as a way of addressing this.

For proposed development and planning proposals outside of the CBD, Council’s primary position is that satisfactory arrangements for the provision of community infrastructure will be taken to have been made when the value of the planning agreement contributions is equivalent to 50% of the land value uplift.

And just west of Melbourne, a local council and a football team have leveraged value capture to build a new multi million dollar stadium without Federal or State funding:

- Western United and a local council are building a $150 million football stadium essentially out of thin air, thanks to a concept called value capture. The $660 billion single-year profit we didn't tax Western United has kicked goals in the A-League, almost making the grand final in its debut season.

Besides capturing more value back for infrastructure investment, a portion of this could be hypothecated for commons based activities, or any other worthy initiative where much social benefit could be leveraged from a comparatively tiny bit of funding.

The unearned income (rents) extracted from communities could be captured to pay the rent of commons initiatives — or even buy land and buildings to free up revenue that would have gone on rent, and not only direct a flow back to an initiative, but also to sustain commoners themselves. Using this same model, it is entirely possible to create a fund where part of the capital gains of property speculation can be captured to create a perpetual flow of revenue for commons based initiatives.

As someone who has looked for funding and found that many initiatives somehow fall through every crack, and fought for funding for those initiatives on more than one occasion, funders: don’t make it an onerous process, and keep in mind that well-intentioned criteria may inadvertently exclude so many worthwhile initiatives — ‘please attach your latest board minutes’ might render an initiative ineligible, as they may not have minutes (or a Board). They might be overwhelmingly focused on saving veterans’ lives or growing excellent local food. Building a relationship with these initiatives is a better way of determining accountability for funding than box-checking." (https://sharonede.medium.com/slaying-the-rent-dragon-e0085f81185c)