Developer obligations in relation to land value capture in Taiwan

Abstract

Only until the mid-1990s had specific legislation started to be enacted in Taiwan to deal with land value capture. Taiwan seems apparently to employ a non-negotiable developer obligations system. However, when looking closely, often only the minimum obligations are specified, and room is left for negotiation. In addition, an expert committee that consists of government officials and external professionals is given a high degree of discretion to make the final decision. There is a distinction between urban and non-urbanized areas. Developer obligations in urban areas tend to be based on the expected value of land in the new and more valuable use. This is more in line with the rationale that landowners do not deserve the entire enhancement of land value. In contrast, the development impact fee based on the costs of new public facilities in non-urbanized areas aligns more with the rationale that developers are liable to internalization of the negative impacts. Moreover, recent years have seen the introduction of a feedback fee on development of farmland and slope land. Imposition of these fees is hoped to conserve a better agricultural environment, which represents a new rationale. Finally, how the recently enacted Spatial Planning Act will affect the developer obligations in land development remains to be seen.