Description
As land prices continue to rise, so too does the pressure on our cities: for far too long public land has been sold to the highest bidder to fill municipal coffers. And that although mechanisms for steering land use policy towards more sustainable and more socially responsible concepts already exist. Long-term leasehold arrangements (also called heritable building rights), concept tendering procedures and land taxation are three key means that, for the most part, however, are often deemed too unconventional. But with the increasing scarcity of affordable housing, land use and land prices have become a central issue. Citizens’ action groups and foundations are becoming increasingly vocal in their calls for a change in thinking, and trade associations are publishing position papers and roadmaps. Municipalities, meanwhile, are self-critically reappraising their approaches. So, what is the state of this highly charged and long overdue debate in 2018?
ExRotaprint
ExRotaprint is a site in the Wedding district of Berlin purchased by its tenants for the modest sum of 600,000 € in 2007 – unbeatable value for its location. Formerly a printing press factory, it looks a little like a stack of giant shoe boxes that someone forgot about. The roughcast concrete tower at the corner of the site juts out into the street, and the 1950s building unceremoniously abuts a Wilhelminian-era urban block. This architectural mix reflects the spectrum of tenants: the 10,000 m² site is home not just to graphic designers and artists but also metalworkers and electricians. In addition to studios and small workshops, it is a base for social providers, for example providing German courses for migrants. In the canteen on the ground floor, one might see a worker in blue overalls sitting next to a young artist and a schoolgirl in a headscarf – a model of neighbourhood integration. Just ten years later, a private investor put in an offer of 3.5 million euros, which the non-profit holding company ExRotaprint promptly declined. Why? Firstly, because from the outset, the intention was to remove the site from the cycle of property speculation and single ownership. By jointly acquiring the site, they were able to have a say in its development and remain as long-term tenants at favourable rents. And secondly, because they can’t: “We hold a protective hand over it,” says Rolf Novy-Huy, a trained banker and one of the founders of Stiftung trias. The foundation was instrumental in ensuring ExRotaprint was sold to the tenants rather than an investor, and in constructing a leasehold agreement that ensures they can remain there for 99 years. “As such, the site cannot be sold,” says Novy-Huy.
ExRotaprint is an example of how people can get involved in their neighbourhood, a trend that is gathering momentum across Germany, where more and more people are actively engaging, for example by initiating district meetings. In many cases, however, these events are increasingly turning into crisis meetings, such is the pressure on cities and the lack of affordable living and working space. Whether in Berlin, Munich or Hamburg, in Stuttgart, Frankfurt or Regensburg, people are fighting not to be displaced by rising prices. If one good thing has come of this crisis, it is that the question of land use and land prices has once again become a topic of public debate. The housing crisis is, after all, a crisis of land prices, because land use and land selling policies determine what is built on it, and in turn who moves in, who can afford to remain and how a neighbourhood develops.
Land management as a key factor
Throughout Germany, initiatives are working to bring about a shift in the approach to land management: away from the highest bid, with which the vast majority of municipalities replenish their public funds, towards the common good. A range of mechanisms are available, ranging from a simple tax on land to long-term leasehold arrangements, concept tendering procedures or better networking among municipalities. They all share the same goal: the sale of land as if it were any old commodity must stop; public plots of land should be allocated to those with an active interest in the community, for whom urban development is for the many rather than a vehicle for property speculation and quick profits.
The Stiftung trias was one of the first such initiatives to highlight the role that land policy plays in social displacement. When it was founded in 2002, it called for a return to land as “common ground”, i.e. as a common good. At that time, it was still “an unconventional idea of interest to a very small circle,” Novy-Huy recalls. Aside from anthroposophists and downshifters, few were interested. That has since changed. “Rising land prices across the country have lent our arguments added impetus and legitimation,” says Novy-Huy. The foundation based in Hattingen (Ruhr), works together with some 100 donors to promote sustainability and communally organized housing projects, helping initiatives like ExRotaprint to acquire land for their projects through a sophisticated financing concept. The most important tool in this process is the leasehold principle. For Novy-Huy it is a vehicle for more sustainable land use. When a municipality grants a plot of land on a leasehold basis, it ultimately remains the owner and can determine a specific use. In the case of ExRotaprint, for example, the ground lease contract stipulates mixed use.
“Professors who lecture on land policy are frequently amazed that such principles can work in practice,” says Novy-Huy, who is invited to speak at events precisely because he can speak from experience. An indeed, he can wax lyrical about leasehold arrangements and heritable building rights as if enthusing about a masterful Bach sonata recital. Unfortunately, most city councils and local authorities do not share Novy-Huy’s passion for such mechanisms. The willingness to engage with such promising methods is lacking, with drastic consequences: they are either ignored or implemented ineptly.
This is beginning to change. Since the socialist-green coalition took over in Berlin in 2016, public land has been granted almost exclusively on a leasehold basis. The problem, however, is that the city sold off much of its land in the preceding years and now owns comparatively few plots of land. For this reason, the Initiative Stadt Neudenken, which made a decisive contribution to establishing leasehold arrangements along the Spree, is now turning to concept tendering procedures as a way of changing how land is being used and allocated. “This is currently our favoured approach,” says Florian Schmidt, one of the initiators of Stadt Neudenken. The question, he says, is what criteria are applied in the allocation of land, and who is involved in the decision-making process. “It’s about enabling people who want to contribute to participate in the process rather than smothering them with all kinds of stipulations,” says Schmidt. But what does this mean in practice? There is a danger that concept tendering procedures could turn into a standardised catalogue of points, by which land development contracts are awarded, once again, to those most able to afford this project phase. “We are still in the experimental phase,” says Schmidt, who in late 2016 became a district councillor for construction, planning and facility management in Friedrichshain-Kreuzberg. The creative quarter at Berlin’s former wholesale flower market, where plots of land were allocated according to concept tendering procedures, shows the “maximum variant for establishing a concept in dialogue with the citizens”.
Concept tendering procedures are still an exception
The allocation of plots at Berlin’s former wholesale flower market according to the concept tendering procedure is, as yet, an exception to the rule, not just in Berlin but across Germany. For the Initiative Stadt Neudenken, a central objective is to enable as many different participants to take part in urban development processes from the outset. This is perhaps also because it was co-founded by artists and creatives. In their founding manifesto published in 2011, they called for the realignment of Berlin’s land allocation policy: “Decisions about the city are not made by parties or the business community alone, but develop through processes of opinion-forming and decision-making from the neighbourhood to the quarter to the district – they begin at a local level and shape the city, not from the senate down to the citizen.” Instead of turning public land into money, they should be used to steer urban development. Seven years later, Schmidt says, “we are on the right track but there’s still a long way to go.” For example, a transparent catalogue of properties owned by Berlin, which was called for at the very beginning, has still not been produced.
Local municipalities are beginning to work together
Municipalities and housing associations have yet to learn how to sensibly apply instruments such as leasehold arrangements and concept tendering procedures. To this end the Münchner Initiative Bodenrecht (Munich Initiative for a Social Land Law) set itself the objective of bringing together those cities that suffer most from the housing shortage, high land prices and land scarcity. The best example of this is the place where the initiative was founded in 2017. Munich’s local newspapers are filled with near-daily reports of people struggling to maintain a foothold in the city – a family of seven who are evicted from their rented apartment, a pensioner who has only one room, a single parent living with three children in 30 m² are just some of the many examples. The rapidly rising rents have hit poorer residents particularly hard, as the city’s 2017 poverty report showed. 60% of poor households spend 40% or more of their income on rent. For rich households, however, the percentage can be as low as 3.5%. “The question is who actually makes a contribution, and who can afford to remain here,” says Christian Stupka, one of the initiators. It is deeply unfair, he says, that high land prices benefit a few landowners but what makes a neighbourhood diverse and attractive are the people who live there. The supporters of the Munich Initiative include the Alliance for Affordable Living, the German Academy for Urban and Regional Planning, the Hans Sauer Foundation, the Protestant City Academy of Munich and the former Lord Mayor of Munich, Christian Ude. At the Initiative’s first public meeting in Autumn 2017, he stood with one foot in both camps: for 50 years he has watched “with great exasperation” as land prices have continued to rise but at the same time, when challenged as to what he was able to do about it in his time as Lord Mayor, he had to admit: “Nothing at all”.
This is the change the initiative hopes to achieve by strengthening networks among the municipalities. Stupka, founding member of the Munich housing cooperative Wogeno, which develops concepts for sustainable housing and settlement projects for Stattbau München, has issued a set of land policy recommendations with the goal of establishing “a preferably concrete agenda in which strategies are outlined from a municipal perspective, needs prioritised and a roadmap established for initiating a broad socio-political debate on the subject.” As Stupka argues, “we have a far greater chance to make a difference in Berlin if we join forces”. Some of the changes necessary to embark in a new direction – such as a reform of property taxation – require action by the Federal Government.
More than just technical solutions
A nationwide initiative “Grundsteuer: Zeitgemäß!” aims to change this. It calls for a reform to property tax legislation that affords greater control of land taxation. Current property tax legislation taxes both the land and the building erected on it. The signatories of the initiative find this unfair, an unnecessary burden to administer and disastrous for the environment: land should be treated equally whether it is developed or undeveloped, and thus land should be taxed separately. The supporters of this initiative include the Federation for the Environment and Nature Conservation, the Institute of the German Economy or the Federal Association for Housing and Urban Development as well as many mayors: this form of land taxation would give municipalities an effective instrument for steering land policy.
For the German Institute of Urban Affairs (difu), strong municipalities are crucial to overcoming the housing shortage. The difu has drawn up the “Land Policy Agenda 2020-2030” which includes a nine-point plan that they hope every municipality will frame and hang up in their building departments as well as in their finance departments. The plan brings together the ideas of the various initiatives. “It’s not about developing a single instrument that will save the world. Multiple methods must be applied at multiple points,” says Ricarda Pätzold of difu. The roadmap that her institute has developed is much more concrete than the position paper of the German Association of Cities and Towns, which also calls for a “reorientation of housing and land development policy”: “The way public authorities deal with their land and property ownership must change fundamentally.” Land should no longer be sold for the maximum possible price; land policy should instead be oriented towards the common good.
The 9-point plan set out by difu begins with the need to award land plots to projects oriented towards the common good, using long-term leasehold arrangements and concept tendering procedures rather than simply selling to the highest bidder. Frauke Burgdorff, Jochen Lang and Stefan Rettich propose the establishment of land funds in the form of a federal land foundation, and municipal land reserves policies that allow municipalities to determine how their own land is awarded. In addition, difu advocates strengthening the municipality’s right of first refusal and the inclusion of public welfare objectives when building according to paragraph 34 – i.e. for infill sites. Measures to strengthen the development of central locations must also be implemented, allowing municipalities to impose a building obligation on undeveloped or heavily underused land in key locations, along with value-based and area-based land taxation. And finally, property transfer tax must be reduced and cooperation between the municipalities must be strengthened. difu makes it clear in the agenda that land policy is about more than just technical solutions: “It has become evident that a predominantly functional ‘technical’ debate on the effects on urban planning or the housing market does not do justice to the subject. It is just as much a debate about values, because it concerns justice, solidarity, the common good and sustainability – values that form the foundation of a democratic, open society capable of a rational balance of interests.”
Originally published in Bauwelt 06.2018, pp. 16-21, abridged and edited for Building Types online, translated by Julian Reisenberger