EU Planners: Land use change and betterment and compensation

EU Planners: Land use change and betterment and compensation is an article that investigates planning practice concepts to deal with the most important factor influencing the pace of urban development the land value. Official planners at the time of urban development are directed to tools like changing land use and offering compensation to land owners to facilitate the urban development project.

Land use is influenced by many urban characteristics like urban densities and transport nodes and networks. Changing one of these urban elements in the development process will affect directly others and vice versa.

To have a clear idea about how land changes in value three factors determine the land value according to Edward J. Kaiser ¹ that indicates the three factors of land value.

Social Value is the value that people see in the land in terms of the desired patterns of uses and social aspiration. Market Value is the value that people see in land in terms of real estate commodities. Ecological Value is the weight that people give to the natural system and ways to mitigate the environmental threat.

Various problems cause a change in one of these factors and accordingly land use changes and planners are required to deal with this change to minimize any negative effect on urban development. For example, the nature of a land function changes causing either the shift of this function or modification of land uses.

River banks and waterfronts in many cities in the world are very precious parts of city land. These lands comprise the three factors that specify their value social, market, and ecological value. The land here in these locations is attractive locations for luxurious residential development, commercial, and urban space for public use, and marine civic activity.

River Thames ² between 1960-1990 has gone through a big land use change because, as mentioned earlier, of the change of function nature of land uses. Industrial, commercial and public facilities were aligned to the river bank. Heavy ship building that requires deep waters and the river could no more accommodate them caused a shift of this function to Essex. Some heavy industrial functions preferred to move to green field areas and focus on resources. Public facilities that were using water in operations and materials used in producing electricity like coal carried by ships on the river were cleared away to other locations because water is no more a transport means for materials and other places provide a good source of water. See figure 1

These changes in the land use function nature came to the planner’s attention after many environmental, human, health, transport, and congestion problems.

The global restructuring in terms of economic activities and the change of industries towards the service sector caused London city’s economic function to change to financial, tourism, and consumer service and information technology sectors. This riverside area categorized as, urban riverside, led to the increase of office space built along the river taking advantage of the property boom in 1972-1979and 1980. A clear change of land use from industry to clean function as office space on vacant land of previously shifted industries.

The planning activities of gentrification of river banks, an increase of open space, and an increase of access to the area led to the introduction of residential land uses. Planners, policymakers, and officials directed towards this type of land use because of an increase in development revenue especially since land is under the control of the government. Very limited open space and green space near and along the river bank have changed or been introduced because of limited revenue and alternative places in the city. See figure 2

Land use change in the Thames river bank was caused because of either improper planning or the types of land uses required attached locations to the river as means of transport and water use in industry.

One can argue that there was improper planning because public facilities that were using water for operations and use could have been located at the seaside of London and still have access to the city by the river. Chemical and other industries that use water for transport also could have been located near the seaside. Labor and staff working in these industries also may have been located near their work and still have access to the city. See figure 3

Planners in the EU at the beginning of the 19^th century were against Zoning of land use. Yes, segregating uses like residential, commercial, industrial, and farmlands is not a good idea because this requires a very developed transport system, and services systems that are, in this case, very costly. This type of planning that depends on a fixed blueprint is still used in some Middle East areas. Planners in the EU see the negative side of Zoning as increasing societal segregation, increasing crime, decreasing land value, and being very costly for services systems and transport systems to construct. For that London, the city came in a free form planning that changed in terms of policy and planning approaches several times since the beginning of the 19^th century.  

Land use change must consider the three factors of the direct relationship of land use, urban densities, and transport node’s size and network.

Zoning in a development plan produced by planners, specifically in Europe, can be either for newly vacant land or on developed land. In the UK zoning is not preferred presumably for the problem of compensation and betterment in Tax EU systems. That is a good idea to tackle paying money for owners by the government.

What is compensation and what is betterment?  Peter Penny ³ defines betterment as any increase of land or property value due to community cause or public sector development. Betterment can come in three type’s recoupment, set-off, and direct charges. I can simplify the concept of betterment as the distribution of charges on plot owners that have received an increase in their land or property value due to public work like constructing a new road. The charges should not exceed the amount of value received by owners due to this work. Compensation is the amount of money to be paid to owners when their properties are damaged by public work or development. And to pay for owners when their property or land is taken over by the public sector or developer. Compensation is paid when there is rezoning or zoning for an area of land. These two actions in planning are still under debate in urban planning circles.

Osborn ⁴ in his book presents many obstacles and views of applying the concept of compensation and betterment. For example, how can planners define which lands have received betterment and which must receive compensation? How to decide the value of betterment and compensation. If zoning occurred it’s hard to decide or investigate which lands are at a loss in terms of value due to the uncertainty in planning permission. And Osborn says an important issue is how we get funds for the betterment and compensation.

Many ideas introduced by officials and planners to tackle this problem as they say. The first idea is the Pooling of ownership

Here the authority buys land and buildings for an area compulsorily for redevelopment and prepares a development plan. Executes the development plan and resells all the land and buildings to former owners. The resell considers the owner’s previous property value when reselling them back to them. At the same time, the authority does not buy land but makes a development plan and re-divides the plots as per the development plan. Then the owners receive their land in the new arrangement equivalent to their previous land value.

Another Idea is permanent ownership pooling. Here the idea is that the authority takes over all of the town or part of it for development with infrastructure. A development company is established and land owners become shareholders (by the amount of their land value) and receive some amount of public transport revenue. In this idea, betterment and compensation do not exist.

The third idea is the purchase of all land by the municipality, municipal Land-ownership. Here the idea is applied when there is a plan to redevelop old areas completely and the betterment and compensation disappear totally.

 We can raise various issues about the debate of land use change and the concept of betterment and compensation as follows:

• Land use change comes into action when there is no zoning in urban planning. In all cases, planners will not allow industrial land use adjacent to housing land use or residential land use. Here the land value is defined based on the existing land uses and market conditions as demand and supply. Restructuring land uses for a whole area will not create any land use change and value problems.
• EU countries suffer from land use change because of their financial burden on government funds. Changing land use will affect road networks and public transport networks like buses, trams, trains, and metro which will affect the area development layout. The continuous land-use change requires revisiting the road network and public transport network design to define the new requirements for the new development of roads or increase in size and maybe building a new metro station.
• Free-form land use planning like the UK is still relying on the suitability of land uses and groups. Land use planners conduct land suitability assessments for development when preparing a development plan. Here planners are still doing zoning but in free form subject to change at any time.
• In the free form of land use planning redevelopment for example an area should be by phases. In this case, the authorities will not worry about preparing funds but only for the present parts subject to development like residential buildings. Here owners will not be forced to sell their land or property but they will be encouraged to redevelop their land as per the main development plan financed privately or by taking loans from banks or investors.
• Betterment and compensation is a NAÏVE concept and does not exist in reality. Tax systems blow up this idea because the government takes control of development and is forced to pay for funding the development. In many Middle Eastern countries and maybe in Asia also any owner whose land is part of a redevelopment or new development is subject to compensation if the land is taken. The idea of betterment does not exist as the government’s duty is to provide services for new and redeveloped areas.  Landowners are obligated to pay for services installation and connection when they decide to build on the land which covers the expenses.
• Zoning is a great idea in preparing for development for various reasons. In reality, there is no loss in any means for the variety of uses. Industrial land will generate income equivalent to land use and value in the long run. While residential land use has direct and short-run high benefits if compared to industrial land use. Zoning helps governments to predict the number of services required for an area to be fixed in a funding plan. Zoning will determine the road network and public transport required to eliminate congestion and to define clearly what type of public transport is required in the future like trams, trains, and metro in terms of size and location. Here the developer knows exactly the allowable densities for development to remove the uncertainty of planning permission and define the development revenue. Land value is clear based on the land uses of the zoning specified for the area.
• In Middle East countries areas are subject to be removed under a certain time length like after fifty years of development. This way the government will not have the financial burden to purchase land if required for redevelopment because the land and the property are within the time limit for demolition.  

References

1. Kaiser, E., Godschalk, D. and Chapin, F., 1995. Urban land use planning. Urbana: University of Illinois Press.
2. LPAC/LRA, 1992. Land use change and policy on the Thames-side 1967-1991. London: London rivers association / London planning advisory committee.
3. PENNY, P., 1966. THE COMPENSATION AND BETTERMENT PROBLEM IN TOWN PLANNING. The South African Journal of Economics, 34(4), pp.257-269.
4. Osborn, F., 1942. The land and planning. London: Faber and Faber.
5. Talib, H., 2017. The evolution of land use policy in central london. M.A. Liverpool university.