Land pooling or readjustment
Description: 

The goal is to restructure private or partly private properties in a given area, with public intervention (Regulation, authorization, financing, and even targeted expropriations), in order to maximize their usefulness and construction of infrastucture financed entirely or partly by owners  (through land transfers, whose sale revenue is used by public revenue to finance investments  and lands  dedicated to public use; and financial contribution). They can take place in peri-urban areas with little or no built-up sites (land readjustment) or in the under-used urban areas (land redevelopment). Those lands, (or built-up surfaces in case of redevelopment) are redistributed between owners based on their value after operation.This restructuring can be initiated by land owners, local governments, public or private developers, public or private transportation companies (metro-vehicles for instance), and even the local population. It is a consensus-based process, with a minimum approval threshold that varies across countries. 

Advantages: 

Enables the public intervention in areas where real estate is highly fragmented and mostly private, without bearing the costs and risks of expropriation. Investment costs are also at the expense of owners, who can initiate the operation. It is easier politically and more equitable than expropriating, because it necessary involves a participatory process, at least partially. 

Drawbacks and precautions: 

Finding the right balance between collective bargaining and imposition, engineering and land restructuring call for high level technical expertise and support of the institutions concerned. Time-consuming and often complex process

Prerequisites: 

Suitable regulatory framework, accurate and consensual evaluation system on land value before and after the operation.

Success factors: 

Trust between all parties involved.

Operation: 

Local governments, land owners, developpers, public transportation operators, local population.

396
397
398
399
Joint development of the PPP with initial public control over lands
Description: 

Equity partnership with private players in order to develop local urban real estate. One or several public partners provide lands, modify city-planning rules, and sometimes contribute to the investment costs. They are in turn remunerated through profit-sharing systems when real estate is sold or rented and/or through the handover of parts of the property assets. 

Advantages: 

Risk (and benefit) sharing between the private and the public sector: private partners do not have to purchase lands, public partners bear little or no investing costs. The public partner benefit from private expertise regarding real estate operations (and even sometimes regarding airport, underground transportation...).

Drawbacks and precautions: 

The higher the risk, the higher the private operator's margin, which limits self-financing possibilities for the project and/or elements of general interest and/or increase public financial contribution. 

Prerequisites: 

Suitable Regulatory framework (authorizing and securizing this form of partnership), similar or convergence of interests between the several public entities involved, availability of private partnerships that have the right competencies and are interested, suitable types of private financing if needed

Success factors: 

Public players' internal capacities that allow them to build a balanced partnership, flexibility to adapt to changing market conditions.

Operation: 

Public insitutions that own the land, control urban legislation and sometimes inject capital, private partners (property developers, dearlers).

395
Buildings permits sales or transfers, fees for planning applications
Description: 

Separation of land property right from right to build, and sale of those rights by local governments in exchange for compensation in kind, at a fixed or auction price. Those rights to build are enforceable in determined areas. They can also be used as payment for private lands acquired for public use or to mitigate the costs (or lack of profits) born by the private players who are acting for the general interest (for instance, maintenance of heritage building that prevents from using the full rights to build attached to the land, or preservation of a natural space).

Advantages: 

Public investment can be financed by private investors and operators. In case of auction sales, local governments achieve greater capital gains on land value increase.

Transfers, sales or change of use of additional building permits.

Drawbacks and precautions: 

Those mechanisms can only be applied in cities and areas with great potential for profit, and are based on a pricing system that can trigger social exclusion.

Prerequisites: 

Legislation allowing the sale of rights to build. Existing a real estate market for in case of auction sale.

Success factors: 

Planning schemes channeling development for the valuation of additional construction permits (few  construction permits “a minima” attached to properties), enough land pressure (also foster by developers) to encourage densification, and densification that adapts to current or planned infrastructures. 

Operation: 

Public institutions in charge of urban legislation (which grant rights to build), private owners and property developers, investors (if those rights take the form of tranfereable securties).

393
Long-term leases
Description: 

Sale of a specific right of use (use, density, etc.) more or less clearly defined, for a determined, generally long, period  (50 to 99 years), on a land that remains under public ownership. This right of use can generally be traded on markets

Advantages: 

Compared to selling lands, the sale of rights of use implies to contractually agreeing on a definition of “right of use”, requiring any modification (greater density for instance) to be set out in a written addendum that lead more easily to additional payment from the beneficiary than in a situation where public authorities change urban parameters on private properties.

Prerequisites: 

Same as above. This mechanism is used mostly in countries where lands are publicly owned (leasehold, as opposed to freehold), but can be extended to emphyteutic lease on public lands.

Success factors: 

Public expertise in land/ real estate management as well as in urban planning, especially critical when local governments take greater risks, and when land surface gets bigger. Local governments can capitalize on this know-how in building a specific operational structure (Structural Plan). Urban planning must enhance land value on strategic areas controlled by the local government, and allow some flexibility in local development planning parameters (use, density…) to optimize the lands’ worth.When purchasing public lands previously used, there must be a clear and consensual compensation process set up for initial owners/users to avoid conflicts carrying a potentially high political and financial cost. The public institution that owns the land, if it is not the main beneficiary from capital gains on land value, must benefit from the project, in order to avoid institutional blockages. It is also true for all the institutions involved, whose role is critical in the valuation process. 

Operation: 

Land owners (public and private if acquisition), public institutions involved in urban development (regulation and investment), initial land users, private developers and final users.

Public land sale
Description: 

Use of public real estate capital (existing capital or set up for this purpose) as a financing and implementation tool for public policies, by selling or renting (sometimes to the highest buyer and/or with a more or less defined agenda linked to it) public lands or properties that have been valued by public authorities (through investments or normative changes) and/ or that are not in use (often implying a cost for local governments). Those lands can initially be public or purchased from private/public owners. Local governments can sell bare or serviced lands as well as constructed sites but they can also keep those lands to rent them as a real estate product. The level of risk, the cost and the capacity to capture capital gains on land value increase along with local governments’ degree of involvement. Real estate can be directly managed by local governments, or through a specialized public entity, that can be shared across local governments and/or the State, and, if required, financed by its own resources (provided by public authorities), with debt (with the land itself sometimes used as collateral, at initial, future or intermediate value) or through a specific taxation system.  The proceeds can take the form of a monetary payment, handovers of serviced lands or properties and or public work (infrastructure; social housing…) on site or off-site. This mechanism may be used under a concession scheme that includes other financing means (e.g : user-pay). 

Advantages: 

Allows the preservation of public lands to be held for use in the public interest/ to better maintain the form and content of urbanization and/or to capture most of the surplus on capital gains from the increase in land value due to urban development (if it has not been anticipated in purchasing prices when acquiring lands) to finance general interest measures (equipment, social housing,...), and by then selling it back or renting part of it to private players. Allows also the mobilization of public and non strategic assets in order to finance public policies, to reduce operational costs (security…) and to increase the land supply.

Drawbacks and precautions: 

When purchasing lands: high public capital lockup and need  for a clear upstream definition of future land use in order to avoid holding the land inefficiently. Purchasing, expropriating and even the mobilization of occupied public land raise the issue of compensation to initial owners or users, which can lead to conflicts and a decreasing ability to capture capital gains on land value. When re-saling lands, one-off revenues largely depend on the location and on the interest from potential buyers (the bigger the transaction, the higher the commercial risk). The limited absorptive capacities of the resale market and/or the local governments’ lack of ability to overcome this obstacle (through subsidies) may leave little room for maneuver. Leasing induces lesser but more steady revenue streams; nevertheless it requires public expertise in this area.  Maximizing capital gains on land value may prove incompatible with achieving certain social objectives or building high-quality properties. 

Prerequisites: 

Suitable regulatory framework, existing framework in case of auction sale. Availability of operators and adequate financing sources when local governments support part of or all the land development process.

Success factors: 

Public expertise in land/ real estate management as well as in urban planning, especially critical when local governments take greater risks, and when land surface gets bigger. Local governments can capitalize on this know-how in building a specific operational structure (Structural Plan). Urban planning must enhance land value on strategic areas controlled by the local government, and allow some flexibility in local development planning parameters (use, density…) to optimize the lands’ worth.When purchasing public lands previously used, there must be a clear and consensual compensation process set up for initial owners/users to avoid conflicts carrying a potentially high political and financial cost. The public institution that owns the land, if it is not the main beneficiary from capital gains on land value, must benefit from the project, in order to avoid institutional blockages. It is also true for all the institutions involved, whose role is critical in the valuation process. 

Operation: 

Land owners (public and private if acquisition), public institutions involved in urban development (regulation and investment), initial land users, private developers and final users.

370
372
401
403
404
405
406
407
408
409
410
Franchise
Description: 

When local governments partner with the private sector to finance and build new infrastructures, they created a public private partnership. Those partnerships are set up in order to  provide public services that meet the public's expectations while transferring part of the risks to the private entity: the most transferred the risk, the further away from the project the local government. Hence, local governments are financially involved (through subsidies, guarantees, etc.) but do not bear the risks associated with project management and delivery risks.

Advantages: 

Transfer of operational risks (in addition to construction risks) to the private sector  ; acceleration of project implementation ; low impact on public budget.

Risk transfer, especially delivery risks and risks associated with project management.

Drawbacks and precautions: 

Additional financing cost, inability  to cover independently unprofitable areas ;  public control more remoted.

When the level of risk transfer is too high, local goverments can be kept away from the project and lose control over operations.

Success factors: 

Use of technical engineering and socio-economic expertise : when the public authority is not competent to do it, it has to seek assistance from specialized experts while preventing any conflict of interest.

Operation: 

A franchise is a management system in which the local government entrusts the co-contracting party with construction work and allows it to provide their services at their expense for a specified period.

Investment attached to the public private partnership.

Own or external resources.

Franchise
Description: 

When local governments partner with the private sector to finance and build new infrastructures, they created a public private partnership. Those partnerships are set up in order to  provide public services that meet the public's expectations while transferring part of the risks to the private entity: the most transferred the risk, the further away from the project the local government. Hence, local governments are financially involved (through subsidies, guarantees, etc.) but do not bear the risks associated with project management and delivery risks.

Advantages: 

Transfer of operational risks (in addition to construction risks) to the private sector  ; acceleration of project implementation ; low impact on public budget.

Risk transfer, especially delivery risks and risks associated with project management.

Drawbacks and precautions: 

Additional financing cost, inability  to cover independently unprofitable areas ;  public control more remoted.

When the level of risk transfer is too high, local goverments can be kept away from the project and lose control over operations.

Success factors: 

Use of technical engineering and socio-economic expertise : when the public authority is not competent to do it, it has to seek assistance from specialized experts while preventing any conflict of interest.

Operation: 

A franchise is a management system in which the local government entrusts the co-contracting party with construction work and allows it to provide their services at their expense for a specified period.

Investment attached to the public private partnership.

Own or external resources.

Partnership contract
Description: 

When local governments partner with the private sector to finance and build new infrastructures, they created a public private partnership. Those partnerships are set up in order to  provide public services that meet the public's expectations while transferring part of the risks to the private entity: the most transferred the risk, the further away from the project the local government. Hence, local governments are financially involved (through subsidies, guarantees, etc.) but do not bear the risks associated with project management and delivery risks.

Advantages: 

Balanced distribution of risks due to transfer of the construction risks amongst others ; lifecycle cost approach ; guarantee of performance ; single rent payment for a lower impact on budget.

Risk transfer, especially delivery risks and risks associated with project management.

Drawbacks and precautions: 

In case of abusive use, potential desequilibrium in risk distribution, cumbersome and expensive process for candidates.

When the level of risk transfer is too high, local goverments can be kept away from the project and lose control over operations.

Success factors: 

Use of technical engineering and socio-economic expertise : when the public authority is not competent to do it, it has to seek assistance from specialized experts while preventing any conflict of interest.

Operation: 

Contract by which a local government entrusts a third party with a broad mission related to investment.

Investment attached to the public private partnership.

Own or external resources.

385
Mixed enterprise (public/private)
Description: 

When local governments partner with the private sector to finance and build new infrastructures, they created a public private partnership. Those partnerships are set up in order to  provide public services that meet the public's expectations while transferring part of the risks to the private entity: the most transferred the risk, the further away from the project the local government. Hence, local governments are financially involved (through subsidies, guarantees, etc.) but do not bear the risks associated with project management and delivery risks.

Advantages: 

Combines the flexibility of private organizations with public control over decision making.

Risk transfer, especially delivery risks and risks associated with project management.

Drawbacks and precautions: 

Limited risk transfer.

When the level of risk transfer is too high, local goverments can be kept away from the project and lose control over operations.

Success factors: 

Use of technical engineering and socio-economic expertise : when the public authority is not competent to do it, it has to seek assistance from specialized experts while preventing any conflict of interest.

Operation: 

Creation of a company with public and private capital funding.

Investment attached to the public private partnership.

Own or external resources.

Maîtrise d'ouvrage publique
Description: 

Lorsque les gouvernements locaux s'associent avec le secteur privé pour financer et construire de nouvelles infrastructures, elles créent un partenariat public-privé. Ces partenariats sont montés en vue de délivrer des services publics à hauteur des attentes tout en transférant une partie des risques vers le partenaire privé: plus le risque est transféré plus la collectivité est "éloignée" du projet. Ainsi, la collectivité intervient financièrement (par subventions, garanties, etc.) mais ne portent pas les risques liés à l'ouvrage ou à la prestation.

Advantages: 

Maîtrise par la personne publique.

Transfert des risques, notamment liés à l'ouvrage ou à la prestation.

Drawbacks and precautions: 

Externalisation a minima qui laisse à la charge de la personne publique, maître d'ouvrage, une part importante des risques liés à la réalisation de l'ouvrage et à son entretien, une procédure de passation longue et rigide et un impact budgétaire direct.

Un transfert trop important des risques peut être synonyme, pour la collectivité, d'un "éloignement" du projet et donc d'une maîtrise moins grande de l'opération.

Prerequisites: 

Cadre réglementaire adpaté.

Success factors: 

Recours et maîtrise de l'ingénierie qu'elle soit technique ou socio-économique : lorsque le donneur d'ordres public n'a pas ces compétences, il doit se faire accompagner de consiels spécialisés en veillant à ce qu'il n'y ait pas de confilt d'intérêts.

Operation: 

Entité publique et entité privée travaillent de concert

Emploi: Investissement sur lequel porte le partenariat public-privé.

Ressources: Ressources propres et externes.