The new Dutch Land development Act as a tool for value capturing

The new Dutch Land development Act as a tool for value capturing
profitable public transport facilities possible. Originally, creating scarcity of building land was
seen as an important policy tool for the financial feasibility of the new urban areas. The rise of
the prices of building land was necessary for the government to be able to develop the rather
expensive new urban areas. However, this planning policy also made it rather early clear
which sites would be developed for urbanisation. Buying agricultural land in the areas
involved was therefore for private developers less risky than it had been in the past. And,
because the policy also involved a limitation of the areas to be developed, buying land
became even more important to be able to participate in the development at all.
Sometimes, local government itself asked private developers to participate in land
development. The relatively poor economic situation in the 1980 has made them rather
reserved against buying land on stock; cooperation with private developers was seen as a
possibility to reduce risks for the government.
These trends were intensified by developments on the housing market. The general rise of
house prices made land development less risky.
Nowadays the situation on the land market in the Netherlands therefore differs from the
situation 20 years ago. More and more parties have become interested in participating in land
development.
This new situation, asks for a reorientation on the position of the government in land
development. The traditional active land development often has to be replaced by a more
facilitating land policy. The question who profits from the plus value has to be answered in a
different context.
From site development towards area development
In 2004 a new memorandum on National Spatial Strategy has been approved by Parliament
(Nota Ruimte, 2006). In the new spatial policy, development on a regional level is stimulated.
An integrated approach on the regional level is regarded as important for improving spatial
quality (Korthals Altes, 2006).
One of the conclusions of the former Spatial Strategy was that in some areas the development
of new housing areas was not enough connected to the development of for example
recreational projects or (public) infrastructure projects. If the spatial policymaking is
organised on the regional level, the decision about this kind of projects could be better
connected. But not only the decision-making: also housing and other commercial
development projects could contribute financially to make other regional projects feasible. In
such an area oriented development strategy, the concept of value capturing becomes relevant.
Legal system for value capturing in the Netherlands: current practice
Until now, the general system in the Netherlands is that the value increase of land, caused by
a change of the admitted land use in a legally binding planning document (for example from
agricultural land to commercial development), falls to the landowner. The actual legal
possibilities for the government for value capturing in the case a private land owner develops
the land himself, are mainly limited to cost recovery.
For this situation, two legal instruments are relevant: the so-called Land development
Agreement (Exloitatieovereenkomst) and a cost recovery tax (baatbelasting). These
instruments allow the recovering of costs of (some of) the investments done by the local
government. The system is comprehensive: the government cannot use other powers for value
capturing, besides these two. So for example, the government cannot refuse some kind of
permit a developer needs as long as a payment based on the plus value has been made.
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Workshop: Legal Aspects of Housing, Land and Planning
Author: Herman de Wolff