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REGULATING THE MARKET: STRENGTHENING THE CITY’S ROLE 5.1. Building Developer Responsibility into New Developments

Even if the state cannot shape market forces, it can certainly exert influence through regulation. But effectively regulating the market requires a strong state and direct state intervention. The preceding section has briefly outlined the City’s underlying strategy of utilising location-based supply incentives in order to attract development in the Corridors. Furthermore, the incentives on offer remove important regulatory barriers to development. An important finding of this research is that there has been insufficient review of the implications of these development incentives for the longterm interests of the City. The City’s incentives to the private sector raise critical questions regarding whether the balance can be struck between social and economic development, and the will of the private sector to make a positive contribution to spatial transformation. Campbell and Henneberry (2005: 37) state that planning impacts on the property market through its control over land supply. While the City seeks to attract developers to the Corridors, the question remains as to what the City is asking for in return for these rights? And further, how is the regulatory system working to mitigate against developments that are contrary to the SDF? In the research undertaken for this project there was no reference to the obligations of property developers. Even the ICHIP framework is silent on property developer obligations (for instance for the rehousing of evictees). What are property developers required to do in exchange for a permissive planning environment, fasttracked development applications and bulk infrastructure provision? There was some reference made to inclusionary housing as a form of developmental obligation. However if there is a business case for development in the Corridors, the private sector should be compelled to make a more directed contribution to building sustainable neighbourhoods. International precedent demonstrates that planning gain has been abused in many contexts,


Transit corridors & the private sector

and has been manipulated by the real estate sector so that they do not in fact carry the costs. One such example is inclusionary housing. The UK planning system mandates each development to go through an economic viability process, and all developments are required to go through a process of determining the cost effectiveness of affordable housing in a development (Campbell et al 2005: 154). Yet, rather than mainstreaming inclusionary housing ratios, private developers have spent an enormous amount of time and energy proving the lack of the affordability of inclusionary housing ratios (see Wainright 2014 for more on this). In the United States context, Coiacetto articulates how the rise in land costs due to restrictive planning regulations is passed onto the consumer and multiplied four times (2006: 428). This alarming figure raises the necessity for the City to take a property economic lens to its decision-making on land release and to prioritise the public good in all land release decisions, whether this means reserving land for public uses or trading land for investment in public uses. The public benefit derived from land release must outweigh the land value. It is not clear how much thought the City has given to addressing the need for broader social and developmental objectives. For instance, the environmental impact of new developments can be mitigated through an emphasis on good urban design practices. During interviews it was confirmed that an urban design committee would review development plans to ascertain that they are meeting the design requirements of the COF (interview with Linah Dube, 21 July 2016). Yet there is scope to expand this function. It is

possible for the City to develop urban and street design policies, such as Scotland’s ‘Designing Streets’ and ‘Designing Places’ policies, which would compel developers and the public sector to begin restructuring public and private spaces for a better experience (Government of Scotland 2010). When interviewed, developers often expressed a willingness to play an active role in their neighbourhoods, if asked by the City. The constraint to these kinds of arrangements to date has been the lack of a framework for partnerships. It is important that these kinds of partnerships are well regulated to guard against policies that may result in exclusionary practices. The Corridors provides a real opportunity for the City to begin a process of demanding more from property developers in the form of high quality inclusionary housing, affordable housing and the provision of community facilities. Gentrification and displacement could be very real side effects of the TOD project if not carefully managed. The question needs to be asked: what mechanisms has the City put in place or thought through to minimise the impact, and ensure that there is social inclusion in all neighbourhoods? There will be current residents who will be pushed out of their existing informal accommodation should development begin to happen at scale. Unless the City thinks through these realities and determines how to balance the subsidies it is giving with social benefits and with private sector obligations, there could be very real displacement experienced.

Transit corridors & the private sector


Transit Corridors and the Private Sector: Incentives, Regulations and the Property Market  

Part of the Spatial Transformation through Transit-Oriented Development in Johannesburg research series. Published by the South African Rese...