Charges for development rights in Ecuador

Charges for development rights (concesión onerosa de derechos) are a regulatory instrument of financing of urban development, introduced in 2011 on a local level and extended nation-wide in 2016. Developers pay charges for development rights in exchange for zoning changes of their properties, or to build at a higher density beyond an established baseline or for public investments in infrastructure, services and urban improvement. Charges for development rights are predominantly used for the construction of eco-efficient buildings in order to guarantee the participation of society in the economic benefits due to urban planning. Eco-efficient projects shall include, for example, the reduction of potable water consumption, green infrastructure or vegetation coverage and urban trees.

Overview

Type of instrument:

Economic and fiscal instruments›Financing mechanisms /market-based instruments (e.g. taxes to generate revenue)

Challenges addressed

Ecologic connectivity
Water management (e.g. reuse)
Green space management (e.g. accessibility)
Social cohesion
Social equity
Human health, comfort and well-being

Consideration of nature-based solutions:

This instrument aims to scale up investments in the construction of eco-efficient buildings. Resources generated through charges for development rights shall be used inter alia for necessary public support systems, in particular, guarantee of safe water service, adequate sanitation and integrated waste management, or other actions required for the sustainable development.

Targeted (peri-)urban areas:

Parks and (semi)natural urban green areas

Urban green space connected to grey infrastructure

Good practice characteristics:

Locally appropriate

Potential to be replicated / upscaled

Governance

Government body/bodies

Initiating body:

Ministry of Urban Planning and Housing

Instrument design:

Details about how the instrument was designed:

In Ecuador, municipalities are the planning authorities and are competent to decide on land use and management. Changes in zoning have to be in line with local plans or other specific planning instruments. Local governments receive the revenues from the charges for development rights. The price is calculated by using a fixed formula, it can be either payed in cash or in-kind charges (provide serviced land, social amenities, public infrastructure or affordable housing).

Instrument implementation:

Targeted actors:

Public sector institution (e.g. school or hospital)

Private: household, real estate developer, business , financial

Financing

Sources of funding:

Public national budget

Public regional budget

Details about instrument financing:

During the course of this research no information was found with regards to the instrument financing.

Monitoring, evaluation and impacts

Achieved outcomes and impacts:

The Organic Law of Spatial Planning, Land Use and Management (LOOTUGS) introduced charges for development rights on a national level. It promotes an increase in social amenities or affordable housing and moreover, an increased number of investments are made in eco-effcient buildings.

Success factors and lessons learned:

The OECD questions the effectiveness of this financial instrument for urban development as the model which determines buildings' eco-efficiency is very complex. Furthermore, rights were sold without following urban planning objectives, resulting in supporting already-dense areas' development instead of focusing on underdeveloped areas. However, in 2019, charges for development rights allocated for USD 3,206,148 in Quito.

Sources and further information

References

List of references:

Ley Orgánica de Ordenamiento Territorial, Uso y Gestión del Suelo (LOOTUGS). (2016). Article 72-73. Available at: https://www.habitatyvivienda.gob.ec/ley-organica-de-ordenamiento-territorial-uso-y-gestion-del-suelo-lootugs/ (Accessed: 30.01.2023). OECD. (2022). Global compendium of Land Value Capture Policies. Ecuador. Available at: https://www.oecd-ilibrary.org/sites/e16390f2-en/index.html?itemId=/content/component/e16390f2-en (Accessed: 30.01.2023). Plan Metropolitano de Desarrollo y Ordenamiento Territorial 2021-2033 del Distrito Metropolitano de Quito. (2015). Available at: https://www.patronato.quito.gob.ec/wp-content/uploads/2021/04/PMDOT-Plan-Metropolitano-de-Desarrollo-y-Ordenamiento-Territorial-2015-2025-Vigente.pdf (Accessed: 30.01.2023).

Further documents

Weblinks:

https://gvn.com.ec/2020/04/20/cambio-movilidad-quito-2/

Photos

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