Infrastructure investment and land value capture

Urbanization of towns and cities within the past decades has become a matter of concern in both academic and political circles. With an estimation of seventy-five percent of the global population living in towns and cities by 2025, the onus lays on the local governments the world over to generate enough revenue to provide infrastructure and services to cater for the urbanites. Local governments in Ghana for that matter the Ejisu-Juaben Municipal Assembly (EJMA) rely mainly on inter-governmental transfers as the District Assembly Common Fund and District Development Funds which are not regular inflows for the provision of public infrastructure for the Municipality. This therefore means that internal sources of revenue such as property rate, ground rent and other non-land related revenue need to be effectively mobilized to help alleviate the challenges of revenue for the municipality. The objective of this research was to explain the extent to which the EJMA is generating internal revenue from property rate and ground rent within the municipality as a result of the development of the Boankra Inland Port (BIP). Property rate and ground rent were chosen because assessment of property rate in Ghana is based on buildings alone using the Depreciated Replacement Cost (DRC) Method which does not make it an efficient value capture tool therefore ground rent was included to consider the extent of value capture from the BIP development within the municipality for this research. To achieve the objective, the main research question “to what extent is the Ejisu-Juaben Municipal Assembly generating internal revenue from property rate and ground rent as a result of the development of the Boankra Inland Port” was asked. A range of literature based on the main concepts like urbanization, infrastructure, land value capture, property rate, and ground rent were reviewed from which a conceptual framework was developed and operationalised. The case study strategy was adopted to facilitate answering the main research question. The data sources were primary, secondary and primary-secondary data. While the data collection methods included semi-structured interview guides which was used to solicit in-depth knowledge about the study from purposively selected key actors from the study area. Additionally, observations were made and through the use of stratified and simple random sampling methods, closed-ended and open questionnaires were administered to property owners within the municipality. The research findings and analysis indicated that the EJMA witnessed increased rate of urbanization as indicated by the population and housing stock data with land and property values increasing after the development of the BIP. Furthermore reassessment for property rating and ground rent purposes had not been done. In addition, the municipality was having challenges with the collection of revenue for both land instruments. The customary stool land tenure found to be operational in the municipality meant that the municipality was entitled to only 55 percent of the total revenue collected from ground rent hence, the inability for ground rent to contribute more towards the IGF of the EJMA. As such, property rate contribution towards the IGF was more than the ground rent contribution though the Valuation List had not been updated. Further discovery indicated that after 2012, the EJMA was allowed to use not more than 45 percent of the IGF for public infrastructure provision. As such up 2015, 2 sets of a 4-bedroom teacher’s accommodation, a 14-seater water closet toilet and an Accident and Emergency Unit had been built for the municipality.