32.0 Rezoning for Mass Transit

In an earlier post, I stress the need for integrated planning to make mass transit successfully and hence a higher quality sustainable living environment and lifestyle.  See the excerpt from 25.0 Jakarta Mass Transit, Development Planning and Economics below or click on the hyperlink in the title to see the whole post.

Density of land along with the convenience of Mass Transit always makes land more valuable.  Governments have the ability to dictate development zoning and density and directly alter the land value and this is exactly what governments like Jakarta should do to finance and make Mass Transit viable and effective once it is built. 

Singapore Queenstown MRT Station with Density 
and new high rise apartments being added.

So how does one execute the rezoning to land around transit stations in order to increase density?  This question can only be answered by the legal experts of the individual country in which is being discussed, but below are a few possible examples.  Not being a legal expert by any means, these are more intuitive common sense recommendations.  The policy and strategy in the 4^th approach below is really the strategy that I am tabling in this blog post.

1. Authoritarian Power -  This one is easy, if an absolute authority has the power either person or committee and it’s what is wanted then it’s done.

2. Eminent Domain – in some countries there are law such that the Government has the right to acquire land in order to do something for the benefit of the whole population. 

3. People’s Mandate – In some countries the votes of the people will determine what can and cannot be done.  In this case the general population must support the initiative and this of course can only be done if they totally understand it and agree to it.  Most of the time these types of votes are for raising or adding taxes to fund public facilities.  In this case you would be presenting an alternative to raising taxes.  Question will also be who has the right to vote, is the larger population base or only the individual community in which a station is being planned and potentially surrounding sites to be rezoned. 

4. Rezone and allow Market Forces to Take its Course – this is an approach that can work together with option 3 above or independently.  Of course there are still further legal issues but the key assumptions here is that the government has the right to rezone property, but maybe does not have the mandate to take land or financial resources to buy back the land.  The process I would imagine as follows:

a.       Master Plan - First important issue is that the government must have a sound master plan to develop the mass transit system this includes both physical, economic and operational.  The right of way for the system must be in their control and investment cost clearly identified with sufficient contingencies. 

b.       Funding - Since there are lots of aid agencies and private investors willing to invest let’s assume the initial investment is within reach, so building the physical network is viable in terms of at least financing of initial cost.  The real question then becomes can the ridership make good use of it and get it to an operational sustainable level?  And can there be a way to fund some of the cost through property value where the government doesn’t own the land?  This is where the density around stations and property value needs to come into play.

c.       Rezone the Land around Stations – Within a walking distance of say 500m to the station all the property large or small should be rezoned for high density mixed use commercial / residential development.  It should be together with strict guidelines on maximum unit sizes, maximum carparking allowed, strict definition of urban edges to promote walking, strict use of ground levels. Plot ratios, height limits and Building coverages should ultimately be as high as possible to maximize the usage.  The plot ratios I will talk more about under Property Taxes below.  The plot ratios should probably be granted in 2 phases.

d.       Property Taxes – Firstly we must have a common understanding that property around major transit stations have a premium value if transit is successful.  With the change in zoning and increase in development entitlement comes associated increase in Property Taxes.  For small property owners of say individual houses, it will not make financial sense to pay exorbitant property taxes while the rezone to commercial / residential mixed use will increase the land value well above the residential property value.  Potentially a win win!  The rezoning should also not give the new sites the ultimate desired maximum plot ratio to begin with but probably in 2 phases, which will allow the Government or partnership of the Government and Transit Investor or to sell more plot ratio to the eventual developer prior to actual redevelopment. 

So in summary once rezoning is done and property taxes raised the smaller lot owners will through economic forces sell to a developer who can build density.  The developer can then further increase the density by buying entitlement from the Government and Transit Operator joint venture. 

In working out this system, it is probably best to fix a maximum price of the entitlement for at least a given time period so it doesn’t become a stand off of negotiating price and hence no density at all gets built by stations. 

Remember our overall objective is to provide density at stations for transit to be fully utilized and hence operationally sustainable and in the mean time allow Investors in transit to recover some of the upfront costs.

Within this overall all principle and process there are lots of variations that can be considered depending on the variable of local laws and development practices, etc. 

Jiwa Studio
Jakarta, October 2016

http://jiwastudioweb.blogspot.com/