Implementing land value capture in a Global South city: evaluation of the experience in the City of São Paulo, Brazil

Abstract

The use of land value capture (LVC) tools has been advocated by many authors as way of financing public investments in urban interventions. The rationale behind these tools is to capture part of the capital gains on land derived from public sector interventions in urban development, such as implementing infrastructure or changing land use regulations. They may be of great significance in very limited budget environments such as in countries undergoing rapid urbanization that need to provide a great amount of infrastructure and urban services in order to accommodate urban growth. Since the 1980s, the City of São Paulo, Brazil, has been implementing LVC through a wide range of different tools. The objective of this paper is to evaluate the implementation of two of these tools, the Building Rights Levy (OODC – Outorga Onerosa do Direito de Construir) and the Additional Building Rights Certificates (CEPAC – Certificado de Potencial Adicional Construtivo), from 1995 until 2020. Rather than evaluating these instruments just from a revenue viewpoint, the study also sets out to analyze how effective they have been in reducing social disparities, considering the location and type of investments undertaken.