Lincoln Institute in China

BEIJING -- A visit to the Peking University-Lincoln Institute Center for Urban Development and Land Policy in Beijing next week will begin Monday with a daylong symposium based on the book Financing Metropolitan Governments in Developing Countries, which has been translated into Chinese. 
      The event, organized with the Research Institute for Fiscal Sciences at the Ministry of Finance, will bring together researchers and practitioners to examine the importance of sound public finance in the administration of rapidly growing cities.  Joyce Man, director of the Lincoln Institute’s China program and director of the Peking University-Lincoln Institute Center for Urban Development and Land Policy will open the program along with Gregory K. Ingram, president of the Lincoln Institute of Land Policy.
     Deborah Wetzel, country director for Brazil at the World Bank and Roy Bahl, founding dean of the Andrew Young School of Policy Studies at Georgia State University, co-editors of Financing Metropolitan Governments in Developing Countries (along with Johannes Linn of the Brookings Institution), will survey the international experiences in municipal public finance. Christine Wong, professor and director of Contemporary Chinese Studies, Oxford University, Liu Zhi, Lead Infrastructure Specialist, the World Bank, and Tao Ran, professor at the School of Economics, Remnin University, will lead a discussion about paying for urbanization in China.
     Roundtable discussions will consider what international experiences in local public finance may be applicable to China, the role of land-related taxes in financing urban development in China, and the decentralization of governance in metropolitan areas. Jia Kang, director of China’s Ministry of Finance, will conclude the event.
     The Center for Urban Development and Land Policy is celebrating its fifth year. The center seeks to develop institutional capacity in China to address the many challenges of rapid growth, with the goal of strengthening expertise in land policy and planning for urban development, through research, fellowships, and training.

Catalysts for conservation

The business of land conservation is increasingly complex, whether with massive changes in plant and animal species growth and habitation patterns due to climate change, or more recent threats such as palm oil plantations (who knew that palm oil was in so much of everything at the grocery store). To help meet the challenges, Lincoln Institute fellow Jim Levitt has been hard at work expanding the network of thought leaders and practitioners concerned about land conservation, and discovered one sector that was particularly well-positioned to help: higher education institutions.
     Faculty and students from a dozen colleges and universities joined conservation leaders in the field last week at the Lincoln Institute for Universities, Colleges, and Research Institutions as Conservation Catalysts May 13-14. The group examined case studies in the restoration of the clogged Colorado River delta, private land conservation in Chile, conservation easements in Trinidad and Tobego, the Canadian BEACONs Project and boreal forest conservation, working landscapes and the Western Hemisphere Jaguar Network, landscape-scale conservation on the Serengeti, Australian coastal zone management, and current trends in conservation law and finance.
     An additional feature of the gathering was hearing about Charles Eliot and the Champlain Society in the gardens of the Longfellow House next door to the Lincoln Institute, and poetry from Caroline Harvey from the Berklee College of Music at the evening dinner at Henrietta's Table.
     The engagement of colleges and universities complements the Practitioners Network for Large Landscape Conservation established at a similar convening at the Lincoln Institute three years ago.

Taxes and land in Eastern Europe

     Largely under the radar, great strides are underway in land valuation and property tax systems in Eastern Europe -- as well as in Western Europe hotspots such as Ireland. In March, senior fellow Joan Youngman traveled to Ljubljana, Slovenia, with a delegation from the Lincoln Institute for a workshop on market value-based taxation of real property at the Center of Excellence in Finance, a leading
training institution for public officials. The work was with participants from six Eastern Europe
nations to compare international experiences and draw lessons for the successful implementation of value-based property taxes. The group analyzed property tax bases and valuation systems from the perspective of revenue capacity, fiscal policy, property rights, administrative efficiency, and land
use incentives.
     Major property tax changes in Serbia, Latvia, Slovenia, and Croatia were discussed in the context of similar efforts in Estonia, South Africa, Northern  Ireland, and the Republic of Ireland. For example, the Republic  of Ireland has instituted a new property tax this year, after more than three decades without a residential property tax. At the same time, Croatia is scheduled to introduce a new residential property tax this year to replace existing community charges, income tax surcharges, and taxes limited to second homes. Kosovo increased property tax collections by one-third between 2012 and 2013, while in Serbia a change from central to local tax administration led to more than an 80 percent increase in Belgrade property tax revenue between 2006 and 2011. Slovenia and Northern Ireland both undertook a consolidation of property records and tax billing, while in Estonia these separate departments were functionally coordinated through use of compatible software.
     Throughout all regions the economic downturn has had a serious impact on property markets. Residential values doubled in Northern Ireland and in Latvia between 2005 and 2007, then fell sharply and only now are approaching their pre-recession levels. Estonian land prices and rents fell by half in 2009, while Slovenia experienced a 50 percent drop in the number of property sales. These market
fluctuations posed serious political and assessment challenges to value-based taxes. The failure of a hastily designed 2011 property tax introduced in Greece in response to its fiscal crisis offered many potential lessons for legislative drafting, tax administration, taxpayer communications, and public relations.
     The week’s discussion stressed the importance of separating the valuation and rate-setting processes, avoiding the political temptation to overtax business property, and setting specific cycles for revaluation. The danger of excessive transaction taxes, which can easily undermine valuation data by encouraging misrepresentation of sales prices, was demonstrated by the revenue improvements that followed reform of high tax rates, which reach 18 percent in Russia but have been reduced to less than 1 percent in Estonia. All countries had confronted the challenge of minimizing exemptions and deductions, but none more so than the United Kingdom, where the London Eye Ferris wheel, the Houses of Parliament, and even Buckingham Palace and Stonehenge are subject to tax and all exempt property is valued in order to calculate the revenue forgone by the exemption.
     That approach is the subject of an article in the April issue of Land Lines, by William McCluskey and David Tretton: Valuing and Taxing Iconic Properties: A Perspective from the United Kingdom.

The perils of urbanization

    To accomodate the many millions of mostly poor rural migrants streaming into megacities in the developing world, planners must prevail in establishing a grid -- the framework for future urban expansion. That was the message from Joan Clos, executive director of UN-HABITAT, the United Nations organization concerned with helping developing world cities establish basic services, housing, and infrastructure, at a symposium last week at the Massachusetts Institute of Technology. The event, co-sponsored by the Lincoln Institute, honored the SPURS fellowship at the Department of Urban Studies and Planning, a program for international mid-career professionals.
    “The street pattern is the foundation of urban planning," said Clos, citing the work of Solly Angel, who in Planet of Cities calls for minimal preparations for massive urban expansion.
     As it stands, most cities poised for explosive growth seem woefully unprepared. Those moving to cities in search of a better life are going straight to the slums. In sub-Saharan Africa, Close says, 65 percent of the urban population is in informal settlements. Slums in general, he says, range from 200,000 to 750,000 in size; for comparison, the entire city of Boston is a bit over 600,000. Families live in 10 by 10-foot spaces with a crude cooking stove and no toilet, and wait in – or more often bail out of -- long lines for public restrooms.
     By starting with the basics, Clos said, these growing cities would do well to look at the grid created by the planning commissioners in New York City. The zoning, regulations, real estate development composition, and modes of transport changed many times in the two centuries that followed, but the basic framework of the grid has endured.  More on Clos's remarks can be viewed at The Atlantic Cities. 
     Senior fellow Armando Carbonell helped inaugurate the two-day symposium at MIT, describing much of what was discussed as an exercise in building in resilience. Martim Smolka, director of the Lincoln Institute's Latin America program, also served as a commentator following remarks by Medellin mayor Anibal Gaviria Correa. Planning needs its heroes "and its meccas," Smolka said, noting the successes of many interventions such as a tram network in Medellin. But the question remains, he said, how leadership emerges in struggling cities.

The infrastructure of everything

     Infrastructure is famously not the sexiest topic in the world, but for global cities, it's vitally important, whether energy, transport, telecommunications, or water supply and sanitation, just to name a few sectors.  New strategies in the development, financing, and maintenance of infrastructure are detailed in the Lincoln Institute's latest publication, Infrastructure and Land Policies. 
     While infrastructure is as old as cities, technological changes and public policies on taxation and regulation have prompted new issues, ranging from megaprojects and greenhouse gas emissions to involuntary resettlement. For urban areas, the challenges of balancing economic growth with infrastructure development, funding, and maintenance are reflected in debates about finance, regulation, and location and about the sustainable levels of infrastructure services.
    Infrastructure services have technical and economic features such as economies of scale, externalities, and spillovers from users to nonusers that make many of these services difficult to provide as a normal private good. Because of these attributes, much infrastructure is provided either by public entities or privately with regulatory oversight. Infrastructure also delivers economic and poverty-alleviation benefits when it responds to demand and is provided efficiently.
     Recent research is finding that inadequate infrastructure is associated with income inequality. This is likely linked to the delivery of infrastructure services to households, such as direct health benefits, improved access to education, and enhanced economic opportunities.
    Because so much infrastructure is energy intensive, efforts to reduce greenhouse gas emissions and other negative impacts need to address services such as electric power and transport. Bringing the management of infrastructure up to levels of good practice has a large economic payoff, and performance levels vary dramatically between and within countries. A necessary, but so far unmet, challenge is to convey to policy makers and voters that large economic returns can be derived from improving infrastructure performance and maintenance.
    The book covers urban infrastructure in China, the use of mobile phones in Africa, tolling strategies, public-private partnerships and financing experimentation in cities such as Chicago, infrastructure associated with "mega-events" such as the Olympics, next scheduled to be in Rio, green infrastructure and the reduction of greenhouse gas emissions, urban infrastructure and business location, and maintenance and service delivery.
     Infrastructure and Land Policies, which  is based on the seventh annual Land Policy Conference at the Lincoln Institute held in 2012, where economists, social scientists, urban planners, and engineers convened to discuss how infrastructure issues impact low-, middle-, and high-income countries,  also includes material from the keynote talk,  Sustainable Infrastructure for Urban Growth, by Katherine Sierra of The Brookings Institution. 

The peninsula and the prairie

     The American Prairie Reserve seeks to create an unprecedented prairie-based wildlife reserve of more than three million acres in Montana that, when combined with public lands already devoted to wildlife, will protect a unique natural habitat, provide lasting economic benefits and improve public access to and enjoyment of the prairie landscape. The Peninsula Open Space Trust, a traditional land trust operating on the San Francisco Peninsula, has for decades approach land conservation in a targeted and strategic fashion in a more developed and defined area of human habitation. Audrey Rust, with experience with both initiatives, will examine the differences -- and surprising similarities -- in these distinct and highly successful preservation efforts in the American West, as the spring lecture series continues Wednesday May 1, with The Peninsula and the Prairie Regional and Large Landscape Conservation. Key components to be covered  include basic strategy, building relationships and partnerships, and fundraising.
     Audrey Rust, the 2012 Kingsbury Browne Fellow at the Lincoln Institute, is a leader in California land conservation work. She served for nearly a quarter-century as president of Peninsula Open Space Trust, a land trust working on the San Francisco Peninsula. At the organization, she is credited with raising hundreds of millions of dollars to conserve tens of thousands of acres of wildlife habitat and farmland. She is a founder of the Bay Area Open Space Council, Peninsula Working Group and California Council of Land Trusts.  Active in California bond issue initiatives, she has also served on the boards of the Land Trust Alliance, the League of Conservation Voters, Midpeninsula Citizens for Fair Housing and Rebuilding Together, and is currently on the boards of the American Prairie Reserve and the California Council of Land Trusts. Before coming to POST she served in positions of management and fundraising at Stanford University, Yale University, and the Sierra Club. She is the recipient of many awards including the Cynthia Pratt Laughlin Award from the Garden Club of American, Conservationist of the Year from the California League of Conservation Voters, the Jacqueline Kennedy award from JFK University, and the 2012 Lifetime Achievement Award from Sunset Books and Magazines.

The Resilient City

The 6th annual Journalists Forum on Land and the Built Environment was held Saturday at the Lincoln Institute, attended by 35 leading writers and editors focused on cities. The theme was resilience, broadly defined, from coastal cities preparing for future storms such as Sandy, to legacy cities trying to forge a path with diminished populations and business activity.
     Kai-Uwe Bergmann, principal at Bjarke Ingels Group, opened the forum with a look at urban design as loop in Copenhagen, recapturing waste and maximizing efficiency in land, housing, and major infrastructure projects, such as a landfill turned into a ski slope.  Johanna Greenbaum from Kushner Companies, detailed New York Mayor Michael Bloomberg's micro-housing initiative, which she helped run, as well as other similar efforts around the country to accomodate singles and couples who can live in just 300 square feet.
     Alan Mallach, nonresident fellow at the Brookings Institution, and author of next month's Policy Focus Report Regenerating America's Legacy Cities, noted signs of resurgence in places like the Central West End in St. Louis or Over-the-Rhine neighborhood in Cincinnati, but was realistic in ackowledging that Detroit cannot "come back" if only a handful of technology industry entrepreneurs move downtown.
     The task of building $16 billion in resilient transportation infrastructure in the Toronto area is aided by the use of social media, apps and a conversation kit, said Antoine Belaieff, Innovation Director at MetroLinx. The region is testing a range of financing methods including value capture, fuel and sales tax, and congestion pricing and tolling.
     John Macomber from Harvard Business School led off a session on the global city by recognizing the hundreds of millions of people continuing to migrate from rural areas into cities, requiring large-scale planning for infrastructure. He contrasted the explosive growth in Gurgaon, India where traffic snarls at a 52-lane toll booth and the water table recedes at a rate of one meter per year, to better planned projects in Suzhou, China, and Phu My Hung, Vietnam. Martim Smolka, director of the Program on Latin America and the Caribbean, lamented widespread dislocations in preparations for the World Cup and the Olympics in Rio. Bing Wang from Harvard University's Graduate School of Design, noted there are 11 cities in China over 10 million -- and yet the rapidly growing nation is only halfway to its expected urbanization.
     The theme of property rights is increasingly prevalent in rebuilding and recovery following storms such as Sandy, and the GSD's Jerold Kayden asserted that government is within legal bounds by restricting owners from building on a vacant lot that is subject to flooding and sea level rise, or rebuilding a home that has been destroyed, but that "politically, it's another story."  He predicted that the Supreme Court would likely support regulatory requirements in the case of Koontz v. St. John's River Water Management District. 
     Pratap Talwar, principal at Thompson Design Group, detailed the long planning process and local building rules at Long Beach, N.J. -- the one mile of New Jersey coastline that did not sustain major damage during Sandy -- and the integration of natural systems at Buffalo Bayou in Houston.
     John Werner, chief mobilizing officer at Citizens Schools, spelled out how urban school systems can ignite passion in students by bringing in outside professionals as teachers and mentors. Gordon Feller of Cisco Systems envisioned a completely connected world and an Internet of everything, joined by Washington Post investigative reporter Dan Keating, who shared his experiences extracting data from various levels of government. 
    The forum had to be shortened because of the manhunt and investigation in the Cambridge-Watertown area for the Boston Marathon bombers -- but the event prompted dialogue about the "shelter in place" request by Massachusetts Governor Deval Patrick, security and public space, and another kind of resilience in the Boston area. Several participants wrote about the events, including Emily Badger at The Atlantic Cities and Donald Luzzatto at the Virginian Pilot.
    The annual springtime gathering is a partnership of the Lincoln Institute, Harvard's Graduate School of Design, and the Nieman Foundation for Journalism at Harvard University.

Economic development and the innovation economy

At the American Planning Association National Planning Conference in Chicago last week, a major theme was smart tactics for planners to help foster job growth and economic development. In the opening keynote, Xavier de Sousa Briggs of MIT, who had a stint in the Obama administration, said cities -- and not just Boston or San Francisco -- would gain better jobs by being hubs in the innovation economy, "the biggest transformation of our lifetime." He showed correlations between income growth and patent requests, contrasting places like San Jose and San Diego versus Rochester, N.Y. and Flint, Michigan.
     Yet how can this work for cities large and small, still using old playbooks for economic development -- especially when not everyone can be San Jose, with Samsung and Apple in its midst? Amid much discussion of the continued use of TIFs (tax increment financing) -- including its use to fund workforce training -- Lincoln Institute visiting fellow Daphne Kenyon cautioned against the unbridled use of property tax breaks to encourage business location. She noted that "incentive wars" -- as when Applebees moved across and back across the state line three times in the Kansas City area, each time taking advantage of economic development offers -- were destructive for all.
      San Jose city planner Joseph Horwedel, part of the annual gathering of Big City Planners held by the Lincoln Institute in partnership with APA,  said some basics still apply:  doing everything possible for transportation infrastructure, guaranteeing a permitting schedule for new construction, or pilot projects for new green techonology products.  Thomas Clark,  head of the Denver Economic Development Corporation, representing some 70 cities in the Denver area, said his region was stuck in a rut characterized by "Coors, carbon, and the Cold War," but started "thinking like a region" and indeed established a non-compete pact so communities don't race to the bottom in competition against each other, trying to lure businesses.
     Senior fellow Armando Carbonell moderated a lively final-night event hosted by The Next City at the Chicago Architecture Foundation on the Chicago Infrastructure Trust, a framework for financing major infrastructure capital investments totalling more than $7 billion, seen as key to continued business location and quality of life in the metropolitan region.
     Also at APA, Julie Campoli signed copies of Made for Walking, and Jim Holway director of Western Lands and Communities at the Sonoran Institute led a panel on zombie subdivisions -- approved and platted parcels of land that are undeveloped following the 2008 housing bust, and have virtually no chance of being built out. He was joined by Teton County commissioner Kathy Rinaldi and Don Elliott of Clarion Associates, author of a working paper on the topic, who detailed the challenging process of reinventing these properties -- in some cases involving vacating the approved lots. A Policy Focus Report on what is also called "excess entitlements" is due out in the fall.

Tax fairness and folk justice

     Why does the property tax raise so much opposition, yet taxpayers seemingly revolt against it only during periods of economic change? Why have Americans severely limited the estate and gift tax - ostensibly targeted at only the very wealthy - but greatly expanded the subsidies to low-wage workers through the Earned Income Tax Credit, now the single largest poverty program in the country? Why are some groups of taxpayers more obedient to the tax authorities than others, even when they face the same enforcement regime? While the possibility remains that the public is simply inconsistent, these puzzling questions all revolve around perceptions of tax fairness. A sympathetic and unified explanation for these attitudes is based on understanding the everyday psychology of fairness and how it comes to be applied in taxation.
     Steven Sheffrin from Tulane University continues the spring lecture series at the Lincoln Institute tomorrow with Tax Fairness and Folk Justice, an exploration of how tax systems actually function and how they can perhaps be reformed. A professor of economics and the director of the Murphy Institute, he joined Tulane in 2010 from his previous position at the University of California at Davis, where he was on faculty from 1976 and served as dean of the Division of Social Sciences from 1998 to 2008. He has been a visiting professor at Nuffield College, University of Oxford; the London School of Economics and Political Science (LSE); Princeton University; and Nanyang Technological University, Singapore. He is the author of ten books and monographs and over one hundred articles in the fields of macroeconomics, public finance, and international economics.

Strengthening booming cities in developing nations

     A new book published by the Lincoln Institute of Land Policy spells out needed reforms in the governance of metropolitan regions in developing countries -- the major cities that are engines of economic growth and booming centers of rapidly increasing population.  Financing Metropolitan Governments in Developing Countries, edited by Roy W. Bahl, founding dean of the Andrew Young School of Policy Studies at Georgia State University; Johannes F. Linn, nonresident senior fellow at the Brookings Institution; and Deborah L. Wetzel, country director for Brazil at the World Bank, is a compilation of papers from leading scholars presented at The Brookings Institution on the management and public financing of fast-growing metropolitan areas from Brazil to India to China and beyond.
    The book will be translated into Chinese and announced in the People’s Republic of China on May 20 at the Lincoln Institute-Peking University Center for Urban Development and Land Policy in Beijing, as part of a daylong symposium on the subject of public finance and local government.
     The economic activity that drives growth in developing countries is heavily concentrated in urban areas. The very advantages of metropolitan areas that attract investment, however, also draw migrants who need jobs and housing; lead to demands for better infrastructure and social services; and often result in increased congestion, environmental harm, and social problems. 
     The challenges for metropolitan public finance are to capture a share of the economic growth to adequately finance new and growing expenditures and to organize governance so that public services can be delivered in cost-effective ways, while giving the local population a voice in fiscal decision making. At the same time, care must be taken to avoid over-regulation and over-taxation that would hinder private investment and entrepreneurial initiative.
     Sweeping metropolitan-area fiscal reforms have been few and far between, and the urban policy reform agenda is extensive. Financing Metropolitan Governments in Developing Countries  identifies the most important issues in metropolitan governance and finance in developing countries, describes the practice, explores the gap between practice and what theory suggests should be done, and lays out reform paths to be considered. A growing number of success stories in metropolitan finance and management, together with accumulated experience about what works, can inform current efforts to address the growing public service needs of metropolitan-area populations.
     Part of the solution, the scholars conclude, will rest in rethinking expenditure assignments and instruments of finance. But this will need to take account of how government is structured, the characteristics of the local economy, the infrastructure gap, the concentration of poverty and slums, environmental concerns, and external financing options. Another important factor is to increase the accountability of political leaders to design and implement better solutions to the metropolitan finance challenge.
     The contents include a Foreword by Douglas H. Kare; Governing and Financing Metropolitan Areas in the Developing World, by Roy W. Bahl, Johannes F. Linn, and Deborah L. Wetzel; Metropolitan Cities: Their Rise, Role, and Future, by Shahid Yusuf; Metropolitan Cities in the National Fiscal and Institutional Structure, by Paul J. Smoke; The Decentralization of Governance in Metropolitan Areas, by Roy W. Bahl; Institutions and Politics of Metropolitan Management, by Inder Sud and Serdar Yilmaz; Metropolitan Public Finance: An Overview, by Richard M. Bird and Enid Slack; Property Taxes in Metropolitan Cities, by William J. McCluskey and Riël C. D. Franzsen; Local Nonproperty Revenues, by Jorge Martinez-Vazquez; Grant Financing of Metropolitan Areas: A Review of Principles and Worldwide Practices, by Anwar M. Shah; Metropolitan Public Finances: The Case of Mumbai, by Abhay M. Pethe; Paying for Urbanization in China: Challenges Municipal Finance in the Twenty-First Century, by Christine P. Wong; Metropolitan Governance and Finance in São Paulo, by Deborah L. Wetzel; Metropolitan Infrastructure and Capital Finance, by Gregory K. Ingram, Zhi Liu, and Karin L. Brandt;  Slum Upgrading, by Maria E. Freire; and External Assistance for Urban Finance Development: Needs, Strategies, and Implementation, by Homi Kharas and Johannes F. Linn.