Programa de Licenciatura especial en Educación Intercultural Bilingüe

In section 6.3.1 we examined the costs of land take for transport infrastructure – comprising land purchase as well as actual construction – and noted several difficulties regarding valuation of urban land in this connection80_{. In this appendix} we look at the issue more closely, thereby distinguishing between new construction projects on the one hand and redevelopment projects on the other.

H.1.1 New infastructure

Until a few years ago, local authorities developing land for housing, offices and commercial/industrial estates were generally able to recuperate the full project costs from returns on land, i.e. rent, in some cases even generating a substantial profit81_{. More specifically, the proceeds were sufficient to cover the cost of land} purchase as well as the full cost of new on-site infrastructure, and in many cases that of access infrastructure too. This meant the latter infrastructure was essentially paid for by the users of the new amenities. In effect, then, all urban infrastructure has in principle been paid for by users at some time in the past, even though this may be a very long time ago. It is fair to say, then, that the costs of existing urban infrastructure are not borne by the present users of that infrastructure, but by those benefiting from the services it provides. In this sense, the costs of urban infrastructure are at any rate borne by parties with a (commercial) interest and it would not then be fair to pass these on once more to a second party, viz. infrastructure users. Between these two parties (those enjoying the services associated with the infrastructure and users) there will be a considerable overlap, moreover, so that there would a form of double payment. In recent years, however, the role of municipal development corporations has been taken over increasingly by commercial developers. Land rents to municipal authorities are on the decline and the full costs of development projects (land purchase plus construction) are no longer recovered. In the Netherlands, cost recuperation now stands at 75-90%. The shortfall must be made up from public funds and from the perspective of fair allocation these costs, at any rate, may be passed on to infrastructure users. There is no reason to treat land-purchase or construction costs any differently from other development-related costs. For

80 _{This appendix is based on telephone interviews with municipal development corporations throughout the} Netherlands (Almere, Amersfoort, Amsterdam, Breda, Ede, Eindhoven, Enschede, Groningen, Middelburg, Rotterdam, Utrecht, Venlo and Zwolle). While there were obviously differences, the findings were broadly similar across the country. The greatest differences relate to the supralocal infrastructure providing general access. The municipalities of Amsterdam and Rotterdam, for example, keep this kind of infrastructure (including rail infrastructure for public transport) separate from the project budget in their accounts, while Almere, Ede, Groningen and Venlo include these costs in their entirety. Breda, Enschede, Middelburg and Zwolle, in contrast, book only part of the access infrastructure under this heading.

81 _{Only rarely (and many years ago) have development projects resulted in financial losses at the municipal} level, and most of these were heavy industry projects or housing estates with a high proportion of dwellings at the bottom end of the market.

recent years, then, we feel justified in allocating a limited fraction of these costs to users.

H.1.2 Redevelopment projects

In the case of redevelopment projects, which in the Netherlands generally means conversion of a commercial estate into a housing estate, returns on land are generally far from sufficient to recuperate project costs. There are several reasons for this. In the first place, the overall cost of land purchase is considerably higher in this case, because a fully-fledged commercial estate must be first bought up before work can be started on new housing (etc.). As the companies with premises on the estate will usually have to be compensated for relocation, the effective land price paid will be many times higher than the straightforward sum paid for a rural plot. In the case or redevelopment projects it is therefore hard to put a definite price on the land in question.

Inquiries among municipal authorities in some cases yielded figures within a broad range, from € 130 to € 240 per m2_{, say. In other cases the rule of thumb} was cited that the total value of the property on the land at the time of purchase will turn up later in the accounts as the overall project loss. Although this rule of thumb is widely applied, it provides no ready route to estimating the price to be put on direct and indirect land take in such cases. The price paid for land for new development projects, under the physical planning heading ‘urban expansion’, is not that paid for farmland but that for land zoned for housing, i.e. between about € 20 and € 40 rather than the € 4 tot € 10 paid for farmland82_.

Finally, there may be expenditures on site remediation that increase project costs enormously. These will be offset, to some extent at least, by savings on construction due to the prior existence of infrastructure already paid for by the companies leaving the estate. There will then be less need to build additional on- site infrastructure. That some municipal authorities take the value of the property on the site as a rough indication of future project losses is a sign that these losses cannot really be allocated under the heading ‘infrastructure costs’ (whether as ‘land purchase’ or ‘redevelopment’).

Summarising, we can conclude that in the past the overall costs of new on-site infrastructure (i.e. the costs of land purchase as well as actual construction) were borne by the users of the site in question. This holds true for both new construction and redevelopment projects. As an exception to this situation in which costs are recuperated from local users, we have some portion of the supralocal (access) roads that is covered by public funds or national government subsidies.

I

Valuation of land take for transport infrastructure