Public land leasing and property rates as land value mobilization mechanisms to finance public transport infrastructure in Nairobi

Kenya has been on a path of infrastructural development aimed at achieving its Vision 2030 status of attaining middle income status and as a result has been accumulating external debt for infrastructural development albeit of the financing viability that can be obtained from land. Land Value capture concept empowers land administrators and local authorities the validation to recoup part or whole of increment in land values accruing from government/public development interventions. The practice deploys various instruments for capturing land value and for the case of Kenya, the instruments are land leasing and property rates, however, while these instruments are at play, the authorities do not recognise that they are capturing land values. This research was conducted in Nairobi with the main objective of establishing how land leasing and property rates/taxes could be used to capture land values through revenues generated from leasing and property rates where increments in value of land can be used to finance construction and maintenance transport infrastructure. To ascertain this objective, the main research question which read ‘How effective is public land leasing and property rates as land value mobilization instruments to finance the construction and maintenance of public road transport infrastructure?’ guided the entire research process. Establishing the effectiveness of an instrument entails measuring changes in defined outcomes which have set targets and operationalizing the targets would achieve the outcome. For this research, construction of 1kilometer of Thika superhighway is the defined outcome that would be measured against the target revenues generated from leasing and property rates generated annually. To establish the effectiveness of land leasing to construct 1kilometer of a road he class of Thika superhighway, it was firstly discovered that stand premiums generate less revenue compared to annual rents and this was occasioned by the fact that stand premiums are paid for new leases and lease renewals and more interestingly both stand premiums and annual rents were paid daily. However, even with the generation of stand premiums daily could not be compared with annual rent generation. From the revenues, the Stand premiums were sufficient to construct 0.97kilometers of a road. It may be sufficient but not effective to construct a kilometre of road since the revenues may not be relied upon to meet the objectives of constructing a road. On maintenance however, the premiums are sufficient to maintain 41.9 kilometre of Thika superhighway class road. On the other hand, annual rents are sufficient to construct and maintain 12.7 kilometres and 552 kilometres respectively of a road the class of Thika superhighway standard. This implies the annual rents are effective to meet the objectives of construction and maintenance of road. On property rates, the revenues are sufficient to construct and maintain 25.8 km and 22.2 km respectively and therefore can be said to be effective in road construction and maintenance. Infrastructure development has an impact on land values which the government can capture as Accessibility Increment Contribution. In conclusion, the instruments are sufficient to construct and finance road construction but are not effective since the objectives are not defined and thus the target for revenue generation are not set that can capture the land values to finance road construction and maintenance.