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Public-Private Negotiation of the Increase in Land or Property Value by Urban Variant: An Analytical Approach Tested on a Case of Real Estate Development

Author

Listed:
  • Maria Rosaria Guarini

    (Department of Architecture and Design, Sapienza University of Rome, 00196 Rome, Italy)

  • Pierluigi Morano

    (Department of Science of Civil Engineering and Architecture, Polytechnic University of Bari, 70125 Bari, Italy)

  • Alessandro Micheli

    (Department of Architecture and Design, Sapienza University of Rome, 00196 Rome, Italy
    PhD in Architecture and Construction, Sapienza University of Rome, 00196 Rome, Italy)

  • Francesco Sica

    (Department of Architecture and Design, Sapienza University of Rome, 00196 Rome, Italy)

Abstract

The insufficiency of public resources in Europe, which increased due to the debt crisis of 2010, has raised the need for combined financing forms to activate urban settlement transformation processes. Among these is the partial recapture of surplus value generated by interventions that derogate from urban planning tools as a regulation form of the differential rent phenomenon. This form of financing recalls the concept of land value recapture ; it consists of an extraordinary charge of urbanisation (ECU) paid to policymakers. In Italy, the national law (2014) assigns responsibility for ECU determination to local decision-makers. Their plurality of operational guidelines are generally inspired by the transformation value criterion, and are sometimes methodologically incoherent and dispersive in their modus operandi . To support policymakers in the programming of public works within the limits of their available financial resources, the aim of the present work is to test a coherent, rational and applicable procedure in the field of estimation in order to analytically determine the “surplus value” generated by the intervention ante and post urban variant. The proposed procedural model is based on the structural characterisation of multiple methodologies used in practice and in the literature. The procedure was tested on a case study in the Italian context of Rome City. The results deduced from its implementation clarify that the ECU evaluation must also appropriately weigh the mutual benefits according to the “timing” and “riskiness” of the investment.

Suggested Citation

  • Maria Rosaria Guarini & Pierluigi Morano & Alessandro Micheli & Francesco Sica, 2021. "Public-Private Negotiation of the Increase in Land or Property Value by Urban Variant: An Analytical Approach Tested on a Case of Real Estate Development," Sustainability, MDPI, vol. 13(19), pages 1-30, October.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:19:p:10958-:d:648817
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    References listed on IDEAS

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    1. Antonio Nesticò & Maria Rosaria Guarini & Pierluigi Morano & Francesco Sica, 2019. "An Economic Analysis Algorithm for Urban Forestry Projects," Sustainability, MDPI, vol. 11(2), pages 1-13, January.
    2. Rebelo, Emília Malcata, 2017. "Land betterment capture revisited: A methodology for territorial plans," Land Use Policy, Elsevier, vol. 69(C), pages 392-407.
    3. Kim, Minjee, 2020. "Upzoning and value capture: How U.S. local governments use land use regulation power to create and capture value from real estate developments," Land Use Policy, Elsevier, vol. 95(C).
    4. Pierluigi Morano & Paolo Rosato & Francesco Tajani & Benedetto Manganelli & Felicia Di Liddo, 2019. "Contextualized Property Market Models vs. Generalized Mass Appraisals: An Innovative Approach," Sustainability, MDPI, vol. 11(18), pages 1-28, September.
    5. Mark G. Dotzour & Terry V. Grissom & Crocker H. Liu & Thomas Pearson, 1990. "Highest and Best Use: The Evolving Paradigm," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 17-32.
    6. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
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    Cited by:

    1. Benedetto Manganelli & Sabina Tataranna & Marco Vona & Francesco Paolo Del Giudice, 2022. "An Innovative Approach for the Enhancement of Public Real Estate Assets," Sustainability, MDPI, vol. 14(14), pages 1-14, July.

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