Guide
The right way to do urban renewal is to match the new market demand by updating outdated policies, so that the market can play a decisive role in the economy. If we can design paths and methods that match the allocation of land to meet the needs of new cities, we will unleash the potential value of huge cities and maximize the return on assets, so as to achieve the goal of preserving and increasing the value of all natural resources owned by the whole people.
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Reading time: 14 minutes
author
Shen Jie, Research Assistant, Xiamen University;
Wang Shengqiang is a graduate student in the Department of Urban Planning, School of Architecture and Civil Engineering, Xiamen University
01
Why use allocated land?
As new urban demand continues to emerge, there will inevitably be a mismatch between the original planned land use and plot ratio and the emerging market demand. This mismatch caused by the lack of function is especially obvious in the old urban areas, for example, the old urban planning is far from the popularity of cars, with the rapid increase of cars, it is difficult to find a corresponding space for "parking demand" in the old urban areas that have already been built. One of the important goals of urban renewal is to make up for the lack of this function. The question is where to find the space to meet these new additions?
In a built-up area, land can be basically divided into two categories: one is the transfer of land, and the right to use the land is transferred to the beneficiary for a certain number of years, and the other is the allocation of land, which is used for different public purposes free of charge, and in principle, the land still belongs to the government. Since the transferred land has obtained the land use right for a certain number of years through the market, if it is to be changed to a new use, it needs to be redeemed from the property owner at the market price, and such property replacement will inevitably bring high demolition costs. The other type of allocated land is generally provided by the city government in a gratuitous and indefinite manner for the allocation of public services. This type of land accounts for nearly 40% of urban construction land, and since the government has not transferred property rights in the open market, there is no need to change property rights to change ownership, and if it can be redeveloped to meet emerging urban demand, the cost will be much lower than that of using the transferred land.
02
Impediments to the allocation of land for reuse
One of the biggest institutional obstacles to the allocation of land for reuse is the public's misconception that public services should be free. Once it comes to fees, it is easy to cause heated public opinion and even a public relations crisis, and the relevant audit also greatly increases the uncertainty of the allocation of land use. In fact, any public service and infrastructure is charged. The difference is only in the way fees are charged. Generally speaking, there are two pricing models for public services, the first is direct pricing, who uses and who pays, that is, "fees", such as water, electricity, bridge tolls, etc., and the second is indirect pricing, as long as the service covers the space to pay, such as national defense, education, etc., this is "tax". "Fee" is just a more precise "tax", and "tax" is a "fee" that is less expensive to collect.
The government spends a certain amount of money on providing public services, and if you reduce the fees in one place, you must increase the fees in other places; If you can't accurately "pay" for certain services, everyone must pay for them (pay "taxes"). For example, in the parking fee case of Nanning Huibo Company, parking users were charged by demarcating parking spaces and parking belts on allocated roads and parking lot land, which was actually a more accurate charging method. If the road facilities cannot be tolled, the road will become the "public share" of all citizens, and all road maintenance and operation are actually the financial (tax) expenditure of the city government, which means that the level of other public services will decline. Free parking is not really "free", but people with cars transfer the wealth of other citizens.
The real impediment to the conversion of allocated land to revenue-generating uses is that the allocated land is acquired free of charge through non-market channels, and if it is allowed to be used for commercial purposes, there is a strong incentive for the actual user to arbitrage between the two types of land, which is obviously unfair to the transfer of land for the same use through market payment. For this reason, use beyond the allocated catalogue is strictly prohibited for the allocation of land. Understanding this, we can understand that the reuse of allocated land is not that it cannot be charged, but that it depends on how it is used and distributed after the fee, and whether its use will have an impact on the market. If the new urban demand is used to form a positive cash flow through reuse, it will not only not impact the market, but also meet the new market demand, make up for the lack of planning, and revitalize the stock of public assets.
03
How to use the allocated land?
3.1
Principle 1: Adapt only to the missing uses
In order to make up for the mismatch between planning functions and market demand in the city over time, and to avoid the impact on the existing land market, the primary principle of allocating land for reuse is to limit it to uses that were not in the original plan. The project uses the Xiamen government's underground space to encourage development and introduces the "RT-Mart" supermarket in the underground of the square to meet the new urban demand. The following three conditions must be met for the new use and reuse of land.
01
The reuse of the allocated land shall not damage the original functions, such as the normal provision and operation of the original functions of medical services, educational facilities, transportation and social welfare on the allocated land, and then add other functions.
02
The new functions must not have negative externalities to the area, such as noise, pollution, threats to life and property, etc. The government formulates a "negative list" of functions according to regional conditions, and new functions cannot break through the "negative list" provisions, for example, commercial functions such as karaoke and bundi bars are not allowed on educational and scientific research land.
03
The new features must not affect the market value and related rights and interests of the land that has been transferred around the site. For example, if there is already commercial land in the surrounding area, the allocated land can no longer add the same commercial function, so as to avoid homogeneous competition and the impact on the surrounding businesses that have been transferred. For example, M0 land (new industrial land), which is now being promoted, is actually hitting the market for commercial land with the price of industrial land.
3.2
Principle 2 of reuse: "rent" as the mainstay, and income to "public"
There are two charging methods for the reuse of allocated land: one is continuous collection ("rent"), the government publishes the "land revenue money" corresponding to different functions according to the market price around the area, and collects it from the operators of the new functions on an annual basis. If it involves the layered reuse of the allocated land, the new function can transfer the property rights in a layered manner in space, and collect the corresponding land transfer fee through bidding, auction and listing (for example, in the comprehensive development model of the subway superstructure, the above-ground commercial part is also transferred, and the underground subway part is partially allocated). If the land owner wants to continue to adjust the use according to the market demand after the transfer, the "land income payment" for the corresponding use will still be paid annually.
Comparing the two pricing models, the tiered auction is essentially the same as the new land supply, and once the market demand changes, it is difficult to make timely adjustments to the land use that has not expired. However, the demand for urban development is often lagging behind the generation of planning, and the reuse of allocated land is difficult to achieve through advance planning and approval. Therefore, the original one-time "ex ante charge" pricing model in the incremental stage should be gradually transformed into a "ex post rent" model in the stock stage according to market changes.
Another issue that is likely to cause controversy is the ownership of the allocated land rent. An important reason for the uproar caused by Nanning Huibo's parking fees is that the public mistakenly believes that "a parking fee company that does not need to acquire land, does not need to build, and only needs to draw lime lines on the roadside can borrow 7.2 billion yuan". If parking fees enter the public treasury and are used for public purposes, it will be more acceptable to the public to charge for public parking. In view of the fact that the rent of allocated land is essentially a "tax", the rent of allocated land should be included in the public treasury as extra-budgetary revenue. In order to encourage the entry of social capital, a "franchise" for a certain number of years can be granted to investors. Since the users of the allocated land must be the public sector, the government can reward the actual users through transfer payments and other means to match the land for new market demand.
04
Typical case: Xiamen University Visitor Center
Photo credit: Luo Lianbi, photographer
4.1
The "yes" of transformation: the complementation of infrastructure
The Visitor Center of Xiamen University is a project that combines the renovation of the Yanwu Stadium to carry out the composite development of the three-dimensional space of the underground space, which was officially laid in 2015 and officially put into use in 2019: (1) for the ground, through the upgrading of the facilities of the original ground sports field, the east-west campus track that is not suitable for use is changed to the north-south direction, and the scale of sports facilities is added; (2) For the underground space, the visitor center digs 11 meters under the Yanwu Stadium, carries out the construction of 2,600 parking spaces, and implants 28,759 square meters of commercial facility space, realizing the development of two-and-a-half-story underground space。
First of all, it must be affirmed that the use of the allocated ground sports field land for the development of underground space is beneficial to both the city and Xiamen University. Due to the demand for tourism and the automobile industry, which were not in the original planning, there is a serious shortage of parking space in and around Xiamen University. According to the policy of the government at that time, all construction must be equipped with no less than a certain proportion of parking spaces according to the construction area, and there is no charge for the use of underground space. Not only that, but projects that can provide excess parking spaces can also be subsidized by the government. Therefore, the transformation of the underground space of Xiamen University playground into a paid parking lot is not only a precedent (RT-Mart in Wuyi Square), but also in line with the government's incentive policy.
The construction of the Xiamen University Visitor Center has also produced positive spatial benefits: (1) it does not change the function of the ground sports field, and at the same time improves the quantity and quality of facilities; (2) the provision of underground parking spaces effectively alleviates the problem of "parking difficulties" in the surrounding area; (3) the "underground" of campus parking strengthens the management of people and vehicles on campus and improves the safety of campus tourists; (4) the provision of commercial facilities provides convenience for teachers and students and surrounding consumption, and enriches the provision of life services; (5) financial "throttling" (6) From the perspective of refined charging of public services, the construction of underground parking facilities in the Xiamen University Visitor Center has carried out "precise" charging for the use of urban roads for tourists visiting the campus and surrounding functions, which has strengthened the targeted charging method for campus and road assets to a certain extent.
4.2
The "non" of transformation: the dispute over commercial functions
The real problem of the Xiamen University Visitor Center is that it does not follow the principle that the allocation and use should only be used to make up for the missing functions, which is equivalent to the development of commercial facilities that should be carried out in the form of paid use of land without compensation, which has caused several controversies:
01
Different from the lack of parking facilities, there is a developed business around Xiamen University. Since the Xiamen University Visitor Center is better than the existing businesses in terms of location and rent, it will have a significant impact on the surrounding commercial facilities that have been sold and used (such as the Golden Cat Circle Mall opposite Xiamen University, many shops have been transferred to the visitor center) after completion.
02
Some of the commercial formats of the visitor center were not effectively controlled, and there were commercial activities (such as bar activities, etc.) that were contrary to the quiet and learning atmosphere of education and scientific research, which caused dissatisfaction among teachers, students and surrounding residents.
03
The rent of the Xiamen University Visitor Center does not go into the government's public finances, but is "withheld" by the users of the allocated land.
4.3
Suggestions for resolution
For the solution of the reuse of the visitor center, the land can be reserved for use, and the "rent" can be continuously collected according to the existing function. The city government has issued a "negative list" for such educational and scientific research land in Xiamen University, requiring operators to rectify and review existing commercial activities, and at the same time, according to the land rent of the same function around the area as a reference, the "land revenue money" will be collected annually, and the funds will go into the treasury to correspond to the expenditure of relevant public services. This approach minimizes the impact on the existing activities of faculty, students, and visitors at the Xiamen University Visitor Center, minimizes the loss of the government's public interest through ex post facto approval of permits and fees, and the government can repatriate the relevant revenues to Xiamen University by recognizing the operator's franchise rights, legitimizing them in policy, and supporting higher education transfer payments. The government should use the "land revenue funds" for other expenditures that benefit the public and make them public, so as to avoid public opinion about the Nanning Huibo incident.
Of course, it is also possible to set up land property rights in layers, and the property rights of the underground commercial part can be auctioned and sold in layers. However, the bidding, auction and listing are the highest price, and for the existing business entities that have obtained the right to operate for 15 years, they may not be able to obtain the property rights at the highest price, and there may be certain coordination disputes. Moreover, for Xiamen University, the property owner of the original allocated land, it is equivalent to not obtaining assets after the transformation, and the willingness to participate may be greatly reduced.
05
Conclusion
The construction of the Xiamen University Visitor Center is an effective practice of allocating land for the renewal of the old city, and if it is only completely denied, it will lead to the severance of similar urban renewal paths, and it will be difficult to revitalize the assets of a large number of allocated land in the city. The government should be more tolerant and supportive of the market exploration of allocating land for revitalization. It is important not to easily reject the new model created by the market because it is in conflict with the existing policy. At the stage of urban growth from incremental expansion to stock upgrading, there will inevitably be a conflict between practice and existing policies, and it is the policy that should be changed rather than the practice to encourage beneficial urban renewal.
The right way to do urban renewal is to match the new market demand by updating outdated policies, so that the market can play a decisive role in the economy. If we can design paths and methods that match the allocation of land to meet the needs of new cities, we will unleash the potential value of huge cities and maximize the return on assets, so as to achieve the goal of preserving and increasing the value of all natural resources owned by the whole people. The Xiamen University Visitor Center case, like the Nanning Huibo parking case, is a pioneering exploration of urban growth and transformation. In the face of controversy, the correct approach is to repair the defects found in the exploration through reform, rather than being busy shirking responsibility. We cannot pay lip service to encourage reform while intimidating or even stifling innovation and exploration in action. The Huibo case shows that attempts to protect oneself through hasty confession of mistakes can sometimes be more harmful than flawed exploration, because it blocks the way to future reforms.
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