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Land Administration and Management in Ulaanbaatar, Mongolia 1 Meskerem Brhane, David Mason, Olga Kaganova, Geoff Payne and Chinzorig Batbileg Annual World.

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Presentation on theme: "Land Administration and Management in Ulaanbaatar, Mongolia 1 Meskerem Brhane, David Mason, Olga Kaganova, Geoff Payne and Chinzorig Batbileg Annual World."— Presentation transcript:

1 Land Administration and Management in Ulaanbaatar, Mongolia 1 Meskerem Brhane, David Mason, Olga Kaganova, Geoff Payne and Chinzorig Batbileg Annual World Bank Land and Poverty Conference March 2015

2 Purpose and Context of Report UB’s population and built area have greatly expanded during a period of economic growth City has been exploring ways of improving financial management, creditworthiness Parallel work examining urban service delivery and municipal expenditures How can urban land be used as a resource for the infrastructure investments and enhancing quality of life? 2

3 Overview of Presentation UB’s population and built area have greatly expanded during a period of economic growth This has negatively impacted the quality of life for many urban residents Despite all of the investment and expansion of the built area, land administration and management have not kept pace The city has likely foregone substantial revenues because of this Overview of recommendations for UB 3

4 Background: Mongolia in Transition  Transition to democracy and market economy  All land was state owned  Use of land for private purposes is now allowed  Land ownership by Mongolian Citizens  Land possession by private and state entities  Land use by foreign entities  Land management and administration practices, and related legislation are totally new 4

5 “Survey” of Urban Land Issues  Land Administration Issues: Tenure Land ownership for all Mongolians (good for low income housing) Land Use and Planning Uncoordinated & poorly planned land use and development Cadaster and Registry Poor land administration capacity, procedures and systems Land disputes, challenges to land & property titles Taxation and Value Capture Active and profitable land and property market (known to all but the city  Land Management: Poor records of publicly owned land Loss of public land from “carvings” Lack of land for public use 5

6 Existing Policies Encourage Low Density Entitlement of large free plots with little taxation result in low density residential areas Zoning that separates residential use from commercial use and discourages mixed land uses result in: – People having to travel long distances to meet their daily needs of jobs, education, food etc. – Increases burden on roads and contributes to traffic congestion Master Plan promotes expansion of city without regard to the cost of per capita infrastructure provision 6

7 Between 2000 and 2013: 87% of all new expansion has occurred in the form of low density development 2013 New growth is mostly low-density expansion

8 Low average density compared to other East Asian cities of similar size Average Source: ‘East Asia’s Changing Urban Landscape’, World Bank 2014 Ulaanbaatar has low density by international standards

9 Infrastructure has not kept up with the city’s expansion 9

10 And there are more cars using limited road space

11 Ulaanbaatar Beijing Shanghai Manila Bangkok Jakarta WuhanCebu Singapore Seoul Ho Chi Minh Hong Kong Ha Noi Da Nang Which increases average commute times

12 Transit coverage centers on the central city 12

13 Proximity to Amenities and Location Drives Land Prices 13

14 Dimensions of Residential Land Markets City’s built area is dominated by khashaas and low density growth Limited penetration of formal credit (less than 10 percent) – Plots have limited value for collateral – Avoid price reporting Little information about prices, volumes, submarkets 14

15 Control of Public Land  Lack of strategic land management o Lack of strategy and coordination results in shortages of land for public use – “Carve outs,” lack of protected land for new streets in city centre or schools in ger areas o Excessive land holdings: - About 2,500 individuals hold close to 6,000 m2 each for household use - Do budgetary organizations need 5.9 hectares each and NGOs hectares each?  Forgone revenues from land allocations => non- transparent land allocation – direct allocations 15

16 What is public land used for? 16 Inventory of the public land was carried out, but it still does not provide crucial information

17 Land Management and Administration Practices 17 The databases at PRD are at best incomplete and at worst inaccurate

18 Looking to the Future

19 The Master Plan could extend existing problems Aims to disperse rather than concentrate population (satellite cities) Does not dedicate adequate space for mix land uses Costs for full implementation far exceeds available resources Existing tax and fee structures for land preclude value capture

20 Conclusions and Recommendations 20

21 Key Conclusions 1.UB is undergoing a historic transformation toward market-driven urban development, but the process has its internal imbalances: o Market forces already value land according to its location and infrastructure amenities o Free access to land for residents, budgetary institutions, NGOs, and other land users led to low-density urban expansion and overall overconsumption of land by various land holders o The Master Plan exposes UB to risks of non- sustainable spatial

22 Key Conclusions, cont’d 2. UB has the street system that is dramatically insufficient for its needs o “Better” streets rather than “more” streets 3. Significant foregone public revenue from potential land value capture: o Land and property holders have been paying very low property tax and land fee, if at all (for example, owners of apartment not paying property tax at all) o Land for commercial activities was allocated free-of-charge or at low administrative prices

23 Key Conclusions, cont’d 4. However, the current efforts face three key sets of constrains: o Existing national laws and regulations that limit UB’s power to establish taxes and fees o Still conflicting perceptions about land as a designated public entitlement for residential use o Flaws in the land management and administration system, such as (i) lack of strategic direction, (ii) insufficient transparency, and (iii) missing critical elements of land administration infrastructure

24 Key Recommendations, Short Term 1. Begin developing an explicit land management policy and strategy for publicly owned land, by a special and temporary Task Force o Members from different departments, district level governments o Develop long-term comprehensive land management strategy and practices o Review existing practices and procedures to reduce fragmentation in land administration and management o Complete inventory of public lands o Determine which vacant public lands to retain for future public use, which to release to the private sector; which to retain for future determination

25 2. Some priority actions to pursue, cont’d o Enhance city’s budget revenues by capturing land value of newly allocated land through using auctions as the main instrument of allocating good-quality vacant land to the private sector o Introduce new procedures for good-quality auctions of land and other ways of land allocation o Create and use a separate budgetary fund to collect revenues from privatization of land rights (e.g. land privatization, allocation of possession rights) for capital investment purposes Key Recommendations, Short Term

26 All municipal land Land for current and future public uses Land that can be allocated for private uses Sites in less valuable locations Sites in valuable locations “Golden reserve” for future auctions For auctions only Can be allocated via other mechanisms (e.g. lottery) A framework for sorting out municipal land

27 3. Start engaging the population, businesses, and the civil society in open and evidence-based discussion of land-related challenges that UB faces and choices and changes ahead Key Recommendations, Short Term

28 4. Conduct “audits” on land held by individuals with large land parcels / holdings, budgetary organizations, and NGOs, in order to identify excess land and re- possess it to the city for further release on the market or charge market price for it Key Recommendations, Longer Term

29 Key Recommendations, Longer Term, cont’d 5. Explore further land value capture via two internationally tested instruments: A. Market-based property / land tax Example: A modest market-value based tax on non-residential buildings can generate 16% of UB’s 2012 budget; a similarly modest, market- value based property tax on apartments can generate 18% of the UB’s 2012 budget B. Land Development Fee o A one-time charge paid by everybody before they may start construction, with revenues spent on infrastructure; used in Europe, the US, and former Soviet countries

30 Key Recommendations, Longer Term 6. Regulatory and administrative reform related to land: o Streamline procedures for obtaining and transferring land and property and construction permits (in partnership with GASR and ALAGaC) o Improve interdepartmental coordination and sharing of information and databases (PRD and Tax Office) o Review and revise existing land regulations to support density and diversity of land uses, access to transit

31 Key Recommendations, Longer Term 7. Pursue legal reform at the national level for o Improving the investment climate by reforming the current land tenure laws o Eventually reconsidering the current practice of allocating low-cost urban land for residential use in current form, o It is not compatible with more sustainable, environmentally and economically feasible urban environment that provides modern quality of life

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