Evaluation of Government Improvement Schemes in Dhaka city

Government involvement in land market is crucial in land value capture paradigm from redistribution perspective as well as channelling growth and development to desired direction. The rationale behind the appreciation of value increment by government is that the benefit of collective effort must be distributed for the common goods and interest with the focus to the disadvantaged group. Large urban project is one of the ways of achieving this goal which has been practiced in Bangladesh through improvement schemes in Dhaka city. This study intended to assess these schemes from this perspective in a situation where housing and infrastructure shortage is a major problem. Therefore the major concern of the study is to investigate if the combination of mixed land use, early land acquisition and different land leasing mechanism is well enough to cross subsidize within project to ensure access to housing for the low income group. For this research, single embedded case study has been chosen as the main research strategy using office documents (both GIS data and oracle database) as the main data source. Three different phases named as 1st, 2nd and 3rd phase of Uttara residential area of Dhaka city have been selected as cases for unit of analysis. The analytical methods used here are based on empirical data on land value increment and detailed statistical analysis of cost and revenue data. In theory, revenue should be at least equal to cost to ensure project’s viability. Calculation of current market value of land and comparison with cost price helps to reveal the real increment in land value. Interview of two sub groups: government officials and individual experts were conducted for in depth study about the existing practice as well as triangulation of information. These large urban projects were designed and executed in different time period. As a result, time value of money of the cost and revenue components were calculated and adjusted at the price level of 2014 to make them comparable. The important aspect of improvement schemes is the redistribution of value through cross subsidy that is profit from the auction of commercial land to subsidize flat premium of residential plots for enabling access to housing provision. This allows keeping the premium of residential plots lower than the market price but enough to subsidize within the scheme. It was evident from the data analysis and findings that, the combination of adequate mixture of land use and different rates of premium has positive impact on cost recovery with possibilities of making large urban projects profitable. Early acquisition at current use value is also an important determinant for the cost effectiveness of the project. All these elements were evident in Uttara 3rd phase where revenue was 7.5 times as much as the actual cost. But the plot distribution process did not follow the target group of low income people as was evident from the plot allotment policy and subsequently failed to provide public goods part of value capture regime. The case study reveals how a potential package of land value capture instruments can be obliterated by non transparent policy and lack of political will. At the end, it may be difficult to generalize the outcome of the study due to difference in socio- economic as well as cultural context. But compared to other world practices it is equally important that, the package of land value capture instruments used in Bangladesh model will open up new ideas for formulating large urban projects with cost effective solution for public goods provision through redistribution within project. At the same time, the study reveals the importance of setting development objectives to be achieved through direct government intervention in the land market.