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Land Administration and Management in Ulaanbaatar, Mongolia

Meskerem Brhane, David Mason, Olga Kaganova, Geoff Payne and Chinzorig Batbileg

Annual World Bank Land and Poverty ConferenceMarch 2015

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Purpose and Context of Report

• UB’s population and built area have greatly expanded during a period of economic growth

• City has been exploring ways of improving financial management, creditworthiness

• Parallel work examining urban service delivery and municipal expenditures

• How can urban land be used as a resource for the infrastructure investments and enhancing quality of life?

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Overview of Presentation

• UB’s population and built area have greatly expanded during a period of economic growth

• This has negatively impacted the quality of life for many urban residents

• Despite all of the investment and expansion of the built area, land administration and management have not kept pace

• The city has likely foregone substantial revenues because of this

• Overview of recommendations for UB

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Background: Mongolia in Transition

Transition to democracy and market economy All land was state owned Use of land for private purposes is now allowed

Land ownership by Mongolian Citizens Land possession by private and state entities Land use by foreign entities

Land management and administration practices, and related legislation are totally new

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“Survey” of Urban Land Issues Land Administration Issues:

Tenure• Land ownership for all Mongolians (good for low income housing)Land Use and Planning• Uncoordinated & poorly planned land use and development Cadaster and Registry• Poor land administration capacity, procedures and systems• Land disputes, challenges to land & property titlesTaxation and Value Capture• Active and profitable land and property market (known to all but the

city Land Management:

• Poor records of publicly owned land• Loss of public land from “carvings”• Lack of land for public use

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Existing Policies Encourage Low Density

• Entitlement of large free plots with little taxation result in low density residential areas

• Zoning that separates residential use from commercial use and discourages mixed land uses result in: – People having to travel long distances to meet their daily needs

of jobs, education, food etc.– Increases burden on roads and contributes to traffic congestion

• Master Plan promotes expansion of city without regard to the cost of per capita infrastructure provision

Legend

District boundariesInhabited Areas 2013Land use/ land cover classes

111 Continuous Urban Fabric (S.L. > 80%)112 Discontinuous High Dense Urban Fabric (S.L. 50% - 80%)113 Discontinuous Low Dense Urban Fabric (S.L.: 10% - 50%)120 Industrial, Commercial and Transport Units

Between 2000 and 2013:• 87% of all new expansion has occurred in the form of low density development

2013

New growth is mostly low-density expansion

Low average density compared to other East Asian cities of similar size

500,000 1,500,0000

5,000

10,000

15,000

20,000

25,000

30,000

East Asian Cities (Pop 0.5 -1.5 million)Ulaanbaatar

Population

Densi

ty (

People

per

sq. km

. of

built-

up a

rea)

Average

Source: ‘East Asia’s Changing Urban Landscape’, World Bank 2014

Ulaanbaatar has low density by international standards

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Infrastructure has not kept up with the city’s expansion

Hong Kong

Beijing

Singapore

Seoul

Jakarta

Ho Chi Minh

Da Nang

Shanghai

Manila

Kunming

Wuhan

Bangkok

Ha Noi

Ulaanbaatar

0 1 2 3 4 5 6 7 8 9 10

Road Density: Linear km of paved roads / urban area

Ha Noi

Jakarta

Ho Chi Minh

Da Nang

Ulaanbaatar

Kunming

Bangkok

Wuhan

Manila

Seoul

Shanghai

Hong Kong

Singapore

Beijing

0 500 1000 1500 2000 2500 3000

Total Registered Vehicles / Linear km of paved roads

And there are more cars using limited road space

- 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 0

10

20

30

40

50

60

Buit-Up Urban Area (km2)

Avera

ge C

om

mute

Tim

e (

min

)

Ulaanbaatar

Beijing

ShanghaiManila

Bangkok

JakartaWuhanCebu

SingaporeSeoul

Ho Chi Minh

Hong Kong

Ha Noi

Da Nang

Which increases average commute times

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Transit coverage centers on the central city

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Proximity to Amenities and Location Drives Land Prices

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Dimensions of Residential Land Markets

• City’s built area is dominated by khashaas and low density growth

• Limited penetration of formal credit (less than 10 percent)– Plots have limited value for collateral– Avoid price reporting

• Little information about prices, volumes, submarkets

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Control of Public Land

Lack of strategic land managemento Lack of strategy and coordination results in shortages of land

for public use– “Carve outs,” lack of protected land for new streets in city centre

or schools in ger areas o Excessive land holdings:

- About 2,500 individuals hold close to 6,000 m2 each for household use- Do budgetary organizations need 5.9 hectares each and NGOs - 1.25 hectares each?

Forgone revenues from land allocations => non-transparent land allocation – direct allocations

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What is public land used for?

Inventory of the public land was carried out, but it still does not provide crucial information

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Land Management and Administration Practices

The databases at PRD are at best incomplete and at worst inaccurate

Looking to the Future

The Master Plan could extend existing problems

• Aims to disperse rather than concentrate population (satellite cities)

• Does not dedicate adequate space for mix land uses

• Costs for full implementation far exceeds available resources

• Existing tax and fee structures for land preclude value capture

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Conclusions and Recommendations

Key Conclusions

1. UB is undergoing a historic transformation toward market-driven urban development, but the process has its internal imbalances:o Market forces already value land according to its

location and infrastructure amenitieso Free access to land for residents, budgetary institutions,

NGOs, and other land users led to low-density urban expansion and overall overconsumption of land by various land holders

o The Master Plan exposes UB to risks of non-sustainable spatial

Key Conclusions, cont’d 2. UB has the street system that is dramatically insufficient for its needso “Better” streets rather than “more” streets

3. Significant foregone public revenue from potential land value capture: o Land and property holders have been paying very low

property tax and land fee, if at all (for example, owners of apartment not paying property tax at all)

o Land for commercial activities was allocated free-of-charge or at low administrative prices

Key Conclusions, cont’d 4. However, the current efforts face three key sets of constrains: o Existing national laws and regulations that limit

UB’s power to establish taxes and fees o Still conflicting perceptions about land as a

designated public entitlement for residential useo Flaws in the land management and administration

system, such as (i) lack of strategic direction, (ii) insufficient transparency, and (iii) missing critical elements of land administration infrastructure

Key Recommendations, Short Term

1. Begin developing an explicit land management policy and strategy for publicly owned land, by a special and temporary Task Force

o Members from different departments, district level governments

o Develop long-term comprehensive land management strategy and practices

o Review existing practices and procedures to reduce fragmentation in land administration and management

o Complete inventory of public landso Determine which vacant public lands to retain for future

public use, which to release to the private sector; which to retain for future determination

2. Some priority actions to pursue, cont’d o Enhance city’s budget revenues by capturing land value of

newly allocated land through using auctions as the main instrument of allocating good-quality vacant land to the private sector

o Introduce new procedures for good-quality auctions of land and other ways of land allocation

o Create and use a separate budgetary fund to collect revenues from privatization of land rights (e.g. land privatization, allocation of possession rights) for capital investment purposes

Key Recommendations, Short Term

All municipal land

Land for current and future public uses

Land that can be allocated for private uses

Land that can be allocated for private

uses

Sites in less valuable locations

Sites in valuable locations

“Golden reserve” for future auctions

For auctions only Can be allocated

via other mechanisms (e.g.

lottery)

A framework for sorting out municipal land

3. Start engaging the population, businesses, and the civil society in open and evidence-based discussion of land-related challenges that UB faces and choices and changes ahead

Key Recommendations, Short Term

4. Conduct “audits” on land held by individuals with large land parcels / holdings, budgetary organizations, and NGOs, in order to identify excess land and re-possess it to the city for further release on the market or charge market price for it

Key Recommendations, Longer Term

Key Recommendations, Longer Term, cont’d

5. Explore further land value capture via two internationally tested instruments:

A. Market-based property / land taxExample: A modest market-value based tax on non-residential buildings can generate 16% of UB’s 2012 budget; a similarly modest, market-value based property tax on apartments can generate 18% of the UB’s 2012 budget

B. Land Development Feeo A one-time charge paid by everybody before they may start

construction, with revenues spent on infrastructure; used in Europe, the US, and former Soviet countries

Key Recommendations, Longer Term

6. Regulatory and administrative reform related to land:

o Streamline procedures for obtaining and transferring land and property and construction permits (in partnership with GASR and ALAGaC)

o Improve interdepartmental coordination and sharing of information and databases (PRD and Tax Office)

o Review and revise existing land regulations to support density and diversity of land uses, access to transit

Key Recommendations, Longer Term

7. Pursue legal reform at the national level foro Improving the investment climate by reforming the

current land tenure lawso Eventually reconsidering the current practice of allocating

low-cost urban land for residential use in current form, o It is not compatible with more sustainable, environmentally and

economically feasible urban environment that provides modern quality of life

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