Policy resources and municipal capacity in the implementation of Land Value Capture Instruments in Chile

In Chile, Land Value Capture (LVC) instruments do not have the same rich tradition as other Latin American countries. Regardless of considerable historical attempts, political opposition has not allowed these instruments to develop extensively. Nevertheless, the scarcity of local resources and strategies to cope with challenges as the mitigation of intense real estate activity as well as the need for local governments to strengthen planning in their territories, led to policymakers to create a new tool for local financing. Literature agrees that among LVC instruments in the region, one of the most relevant ones -because of its widest used- are Developers’ Obligations (DOs). The features of this tool are found in the Public Space and Mobility Contribution Law (LAEP). This research addresses from the local governments’ perspective, the first land-based financing tool that gathers planning and investment. Even though there are contested views about its design and projections considering its current advantages and disadvantages, there is recognition that LAEP is a step forward for Chilean urban policies, but it will require for further modifications. It is therefore relevant for research to tackle the implementation process of an under-research policy. Throughout statistical analysis obtained from a survey applied to 206 LGs of Chile complemented with expert interviews, this research unveils, to what extent the level of policy resources and municipal capacity influences the LG perception of the LAEP implementation. The results obligated to notice the influence of a strong planning culture that affects greatly the policymaking process of urban policies. In this way, LAEP design challenges LG governance ethos by creating new decision-making strategies. Therefore, the key factors insights for implementing an LVC instrument are not only critical for the development of the LAEP itself, but also, for new instruments that can be developed by policy makers in a context of financial constraints in Chile and in several other developing countries.