Evaluating the planning gain in the practices of local authorities

The public/private partnerships have been a successful innovation in the implementation of urban plans and they became an ordinary instrument in city planning and management. In the partnerships, agreements on zoning allow more advantageous planning rules. The corresponding economic gain is shared between the administration and the property. Research has devoted attention to the nature of the economic gain, investigating its nature and how it should be shared. Less effort has been devoted instead to understand how general norms have found application in the administrative action of public authorities. The research focuses on these aspects and investigates methodologies and techniques with which public administrations have evaluated public/private partnerships in cities development projects. The study identified Veneto Region as a privileged area of research. We examined the administrative acts approved by the municipalities with regard to the public/private partnerships allowed by Veneto planning law (LR 11/2004) and by decree 380/2001 derogatory building permits. Attention was paid to provincial capitals and, in order to have a representative sample of smaller towns, the survey considered all the municipalities of the Vicenza province. Conclusions of the research are controversial. The economic issue seems well managed: local administrations acquired the economic ratio of the agreements and the necessity of sharing the gain resulting from administrative decisions between public authorities and landlords. Local acts focus on valuation methodologies, in particular on automatic or quasi-automatic valuations, with debatable outcomes: the application of automatic procedures does not necessarily lead to quality results. Lastly, in territories substantially homogeneous, only a few kilometers away, levy rates can be very different, posing obvious and relevant problems of effectiveness and fairness.


INTRODUCTION
The season of regional planning laws in the last decade has profoundly innovated the framework of instruments to be entrusted with the implementation of the plans.Public/private agreements, together with urban equalisation and the transfer of development rights, have fundamentally changed the way in which public administration and private operators confront each other in the development of plans and projects.Expropriation has become a residual procedure and The public/private partnerships have been a successful innovation in the implementation of urban plans and they became an ordinary instrument in city planning and management.In the partnerships, agreements on zoning allow more advantageous planning rules.The corresponding economic gain is shared between the administration and the property.Research has devoted attention to the nature of the economic gain, investigating its nature and how it should be shared.Less effort has been devoted instead to understand how general norms have found application in the administrative action of public authorities.The research focuses on these aspects and investigates methodologies and techniques with which public administrations have evaluated public/private partnerships in cities development projects.The study identified Veneto Region as a privileged area of research.We examined the administrative acts approved by the municipalities with regard to the public/private partnerships allowed by Veneto planning law (LR 11/2004) and by decree 380/2001 derogatory building permits.Attention was paid to provincial capitals and, in order to have a representative sample of smaller towns, the survey considered all the municipalities of the Vicenza province.Conclusions of the research are controversial.The economic issue seems well managed: local administrations acquired the economic ratio of the agreements and the necessity of sharing the gain resulting from administrative decisions between public authorities and landlords.Local acts focus on valuation methodologies, in particular on automatic or quasi-automatic valuations, with debatable outcomes: the application of automatic procedures does not necessarily lead to quality results.Lastly, in territories substantially homogeneous, only a few kilometers away, levy rates can be very different, posing obvious and relevant problems of effectiveness and fairness.
Abstract more and more often the administrations admit the contribution of private parties in the clarification of the choices set by the strategic or structural instruments, as is the case in the Piano di Governo del Territorio (PGT) in Lombardy, or in the Piano di Assetto Territoriale (PAT) in Veneto.The agreements between administrations and landlords have thus become an ordinary instrument for the transformation of the city and the discontinuity is clear with respect to government formulas aimed at prefiguring the final state of any parcels of the city without any dialoque with landowners and developers.Numerous studies have deepened the way in which evaluation innervates such instruments, focusing attention on methodological aspects in order to refine the instrumentation available to local authorities.Much less has been the effort to understand how, in the practice of administrative choices, such tools have found concrete application after years of reform laws.The research investigates this little-beaten area and aims to verify how and with which instruments the administrations have undertaken the evaluation of the agreements.The paper is organised in four parts.The first part considers the main evaluation themes related to agreements and presents the aims of the research.The second part illustrates the data used: the survey considers the acts produced by a wide range of municipalities, of all sizes, in the Veneto Region.The third analyses the data with reference to the economic and estimative aspects, while the fourth moves to interpret the analyses carried out for an overall assessment of the use of evaluation in planning agreements.

BACKGROUND. PLANNING BY AGREEMENTS: ECONOMIC AND EVALUATION ASPECTS
The possibility of governing urban transformation by agreement is now widely acquired.On the basis of numerous international experiences, partnership formulas between administration and private operators have progressively transformed from extraordinary instruments into ordinary urban project management devices (Healey et al., 1995;Nelson and Duncan, 1995;Urbani, 2005;Curti, 2006;Micelli, 2011;Stanghellini, 2012).
The urban planning legislation of several regions of the country has for years now implemented the possibility of governing urban transformation projects through agreements that punctually redefine the legal conditions of transformation of the city.The regions of the North have been protagonists of the change starting from Emilia Romagna that already with the regional law 20/2000 has established the possibility of negotiated formulas of agreement.In the following years, two other important regions such as Lombardy and Veneto have created similar formulas and allowed the development of agreements between administration and private parties (Camarda, 1999;Cremaschi, 2010;Urbani, 2011;Calabrò and della Spina, 2014;Camagni et al., 2014).The initiatives of the regional legislator have also been matched by the action of the national legislator.With the amendment of Presidential Decree 380/2001, local administration can make timely changes to the urban planning provisions with building permits in derogation also in favour of private landlords (ANCE, 2016;UrbJus, 2017).
In the face of new and more advantageous urban planning rules, there is also an economic benefit that affects the agreed project as a whole, the amount of which is shared between the same administration that decides on the changes to the urban planning instruments and the operators who benefit from them with a view to increased exploitation.
In the international literature, planning gain and the way it is distributed can take different forms depending on the national context.In general, the levy through negotiation agreements is the alternative to the tax levy.
In fact, taxation has the disadvantage of hitting indifferently the properties that immediately benefit from the increase in value and the properties that, while benefiting from public action, do not intend to monetize, at least in the short term, the increase in value.
The implications in terms of the actual capture of value are important.In our country, as in other important international experiences, the option of value capture in urban planning has been considered the most effective because it identifies more precisely the beneficiaries of the value increase (Alterman, 2011 and2012;Falco, 2016;Falco and Boca, 2017;Micelli, 2016).The methods of distribution of the value are not specified in the regional laws that in this sense leave room for the action of local authorities to determine the rates of levy and the nature of goods and services for the benefit of the community (Camagni, 2019).This is not the case for the national rule on derogating building permits: the national legislator has laid down precise rules on the rate (set at a minimum of 50% of the increase in value) and the nature of the goods and services to be granted to the administration.For theoretical and methodological reasons, the research has focused on the nature of value.On the first front, the nature of the value appears to be consolidated, understood as a change in the rent inherent in the assets to be transformed.At stake, therefore, is only a specific component of value -a change in real estate rent -with significant consequences on the legitimacy of the withdrawal (Camagni, 1993).
journal valori e valutazioni No. 27 -2020 Evaluating the planning gain in the practices of local authorities The rent is in fact public value, in Marshall's expression, and therefore a partial return to the community appears not only legitimate, but theoretically necessary to restore conditions of allocative efficiency (Bowers, 1992;Camagni, 1999).On the second front, the one concerning methodological issues, the scientific literature has entrusted the task of identifying the most appropriate instruments for the topic to the extensive literature on real estate valuation.
Market approach procedures can be used in the same way as income approach instruments, with particular reference to financial models that estimate the market value of the assets, before and after the modification of urban planning instruments, as residual value on the basis of the economic balance sheet of the developer.
The acquisition of the conceptual and operational instruments relating to the agreements and the ascertainment of the benefit in favour of local authorities and landlords appeared less obvious and linear than expected.
Research carried out in the areas most characterized by the use of partnership instruments has revealed difficulties in correctly determining the withdrawal for the benefit of the public party and has raised doubts about the effectiveness of the value capture.
The investigations promoted in particular by Camagni (2011 and2019) on the Milan case are precise on the merits and require us to return not so much to the issue in its theoretical formulation as to the concrete ways in which such procedures are applied.Further research carried out by Oppio et al. (2018 and2019) is along the same lines, highlighting difficulties in the harmonization of the procedures of appraisal and value capture in favour of the public party.
The application difficulties can no longer be attributed to the necessary phase of adaptation of regulatory instruments to the practice of the offices, as well as to the delicate acquisition of instruments that are not always consistent with the technical tradition of the offices responsible for the government of the territory.The complexities of economic agreements following agreements do not represent a national prerogative.As Boca and Falco (2016) recall, the uncertainty of the assessments made in the planning agreements in the UK is at the centre of a lively debate to the point of raising the request by some private sector operators to restore mechanical formulas for the payment of extraordinary contributions, similar to our tables for the calculation of concession fees.
The centrality and delicacy of the operational phase therefore make it necessary to carry out more in-depth research on the subject.It is a question of verifying whether the development of new instruments for governing the territory has been matched by an adequate methodological and technical effort on the part of the administrations to make the reform process complete.More precisely, it is a question of verifying whether, and how, local authorities have equipped themselves to evaluate the surplus value deriving from precise variations and how they have proceeded to divide it between landlords and community.What is at stake is the success of reforms that otherwise risk being outlined only in the part of the principles and that are partial and incomplete in the implementation phase.

DATA. A RESEARCH IN THE VENETO REGION
The research investigates the ways in which municipalities have regulated the economic assessment of public-private agreements and how they have then proceeded to split the surplus value formed as a result of administrative decisions.
The survey looks at the way cities in Veneto have operated.The choice of this region can be explained by the long custom with public-private partnership instruments: the 2004 urban planning law has provided since the middle of the last decade the possibility to modify the planning instrument -the plan of interventions -with specific agreements (art. 6 Lr 11/2004).
In addition to the agreements, there is also the possibility of specific variations for specific types of land for productive use for the interventions within the competence of the SUAP and, as in the rest of the country, the possibility of specific interventions following the application of the rules on building permits in derogation, as a result of the modification of art.14 of Presidential Decree 380/2001.The municipalities have therefore had a long apprenticeship with the instruments of the agreements and therefore the measures taken in this regard cannot be considered merely experimental.Almost fifteen years after the town planning reform law, the administrations have had sufficient time to prepare all the appropriate instruments to implement the new rules from an operational point of view.
The research has examined administrative measuresdeliberations, regulations and other measures of a similar nature -to analyse how the issue of agreements and the resulting value is addressed and how administrations arrange for action on its evaluation and distribution.
The research sought to investigate cities of different rank.The hypothesis is that large municipalities have a different degree of technical capacity from small centres and that therefore the choices may be different.The provincial capital cities were therefore examined and the survey then considered all the municipalities of one of the Veneto provinces -in this case the province of Vicenza -in order to have a representative sample of smaller towns.The choice of the municipalities in the province of journal valori e valutazioni No. 27 -2020 Vicenza is justified by their location on the A4 motorway axis, the main infrastructure of the Region, and by the presence of a wide and differentiated framework of territories -the hills, the high plains, the foothillswhich make this province largely representative of the entire region.
The investigation of the provincial capitals has acquired the documentation of all the provincial capitals -Venice, Verona, Rovigo, Padua and Treviso -with the exception of Belluno, which has not yet regulated the agreements from an economic and evaluative point of view (Fig. 1; Tab. 1).
The survey of minor centres covered all the municipalities in the province of Vicenza.Of the 120 municipalities contacted, 71 replied to the request for documentation.Of these 17 stated that they had not taken any measures regarding the agreements, while 54 municipalities provided the documentation (Fig. 2; Tab. 2).
The municipalities whose action is known represent less than half of the universe.Though, the local administrations equipped with appropriate instruments to regulate the economic relationship between property and public subject host just under 70% of the population and a similar percentage of journal valori e valutazioni No. 27 -2020 22   Evaluating the planning gain in the practices of local authorities businesses in the province, confirming the significance of the documentation collected (Tab.1).
Adding up the 54 municipalities of the province of Vicenza to the remaining five provincial capitals, the survey sample amounts to 59 municipalities.
The documentation acquired, which differed greatly in terms of the richness of technical and operational references, allowed a systematic comparison between the acts with respect to the nature of the value at stake; the basis of the valuation; the procedures suggested or prescribed and, finally, the withdrawalrates set by the local authorities (Tab.3).

ANALYSIS. THE NORMS OF MUNICIPALITIES: BASIS OF VALUES AND EVALUATION PROCEDURES
The analysis focuses on the instruments that regulate the distribution of the economic benefit deriving from the approval of town planning agreements.On the basis of the data collected, whether we consider the provincial capitals or the smaller municipalities, the attention of the administrations to this issue appears significant, particularly where demographic and economic pressure are more important.
The first theme considered in the survey concerns the nature of the economic value at stake.The documents of the municipalities reveal how in the absolute majority of cases (53 of the 59 municipalities provided with documentation) the administration has identified the real estate surplus value resulting from the urban variant as the reference value for the subsequent relationship between landlord and local authority.
Only a minority of municipalities choose other values.
In three cases, the administrations refer only to the value of the assets following the variant.It should be noted that the error leads to an overestimation of the value at stake of a modest amount if the assets subject to the variant belong to the domain of agricultural land, while the error may be relevant in cases of physical and functional transformation of assets already belonging to the urban domain.In this case, the use of such criteria overestimates the benefit determined by the zoning variation, since it assumes zero value prior to the local intervention, a hypothesis, however, unlikely in the phase of urban regeneration and regeneration, in which the intervention on existing urban assets appears to be the priority.
In the remaining three cases, the municipalities set a unit value to be multiplied by the size of the granted journal valori e valutazioni

Norms of Piano degli Interventi
Norms of Piano degli Interventi The extraordinary contribution is replaced by the "sustainability contribution", consisting of a unit value to be multiplied by the consistency of the transformation.This value, determined by the local authority, varies according to the location of the intervention.

Table 3 -Value basis, appraisal procedures and withdrawal rates in provincial capital cities
building.The non-utilisation of the added value and the share in it make these municipalities unsuitable for research purposes, thus reducing the comparable cases from 59 to 56 municipalities.The basis of value is another topic on which the survey focused.In the vast majority of the documents acquired the reference is, correctly, to the market value, while in some cases the reference is omitted or the acts refer to the transformation value.From an international perspective, the latter does not have the same dignity as the market value and could not be a true basis for evaluation.The transformation value is not an autonomous value from a theoretical and methodological point of view, but represents an operational procedure for estimating assets subject to transformation -residual valuation, to take the expression of the RICS Red Book -in which the market value is determined on the basis of the reserve price that the developer can grant to the property in the context of a real estate development (IVSC, 2013;D'Alpaos and Marella, 2014;RICS, 2017;French and Gabrielli, 2018).Differences between the positions of the municipalities emerge when considering the assessment procedures.All municipalities address this aspect, with the exception of one municipality, which merely indicates the added value without mentioning the estimation procedures to be used.The first notable aspect is the desire to differentiate the estimate of the value of assets before and after the change in urban planning instruments.From an empirical point of view, it seems possible to identify some reasons related to the nature of the assets: normally the assets, before the modification of the urban planning instruments, have an agricultural use or have a limited building capacity, while subsequently they acquire a higher functional complexity and therefore other procedures are more appropriate.The second aspect that emerges concerns the use of procedures of a comparative nature.In the absolute majority of cases (47 out of 56 municipalities) the administrations propose the estimate by comparative procedure of the assets before and after the modification of the urban planning instruments.The income approach is instead left to the assessment of assets following the change of the zoning rules, in 8 cases as the only procedure proposed, in 11 cases as a possible alternative to the market approach.In the absolute majority of cases, administrations still refer to values set for expropriation or tax purposes.The estimate of the value of areas before the zoning rules modification is often (28 out of 56 municipalities) associated with the average agricultural value, traditionally used in the estimate of expropriation allowances, while the fiscal value used for the calculation of the IMU represents a reference value in 36 of the municipal resolutions examined.
A cross-reference between population data and the choice of procedures shows a positive relationship between the size of municipalities and the use of income approach assessments.In fact, if we consider the municipalities surveyed according to their population and assume three different levels of complexity in estimates -exclusively tabular values, tabular values and other procedures, exclusively estimation procedures specifically related to the case of estimation -a significant direct relationship can be identified (Fig. 3).The determination of rates represents an area of significant differentiation between the municipalities considered.A first classification distinguishes between municipalities that have opted for a fixed rate -often determined at 50% of the surplus value -and those that have opted for a variable measure of the levy, with rates that change with respect to the subjective characteristics of the applicant.
The choice of variable rates is preferred in small centres.The use of differentiated rates of levy concerns 34 municipalities, about one and a half times that of the 22 administrations that have opted for a fixed rate (Fig. 4).

Evaluating the planning gain in the practices of local authorities
In non-capital municipalities, the variability of the rate is accompanied by lower rates of levy.Even if the maximum rate is taken as a term, just under a third of the municipalities have set the value of the levy at 50%, the threshold set by the legislator in the case of building permits in derogation.The relationship between the size of the municipalities and the value of the rates has been tested to investigate their analytical nature.The graph in Figure 5 highlights the relationship between the size of the cities and the value of the rates, confirming the higher taxation by larger centres and the propensity of smaller centres to stay below the 50pc threshold.

DEBATE. SOME ISSUES: THE SEARCH FOR AUTOMATISMS, OVERREGULATION AND TERRITORIAL INEQUALITIES
The interpretation of the data is based on some elements that show a significant convergence between the results of the research and the administrative action of the municipalities considered, without distinction of size and rank.The focus on the economic theme represents the first of these elements.In almost all cities, local authorities distinguish between profits and rents and identify the variation in real estate value before and after the administrative decision as the basis on which to apply the levy.
Similarly, the basis of the value is identified in the market value of the assets before and after the change in urban planning instruments.All in all, the different choices made by local authorities are marginal with respect to a framework that highlights the correct definition of the economic problem and its valuation basis.
The interpretation of the valuation procedures used is more controversial.The first observation concerns the differentiation of the assessment approchaes before and after the zoning rules modifications.If, from an empirical point of view, there are elements that justify such a differentiation, from a theoretical and methodological point of view there is no reason that justifies different valuation approaches, especially in the far from remote hypothesis developers operate in the already built city and therefore with assets characterized by functional and economic complexity both before and after the variation of the urban planning instruments.
A second observation concerns the important recourse to conventional values such as the VAM and the IMU tax bases for market approach evaluation of the planninh gain.While on the one hand the choice seems understandable due to the willingness to treat the property in a similar way, on the other hand the precise and accurate assessment on the planning gain resulting from such values debatable (Morano and Manganelli, 2014;Bisulli and Micelli, 2015).
In other words, by using the data sets available on the value of certain classes of real estate assets, the administrations obtain the simplification of the procedure and its consistency with other acts, but this does not necessarily lead to the reliability of the estimates.
The use of income approach evaluations is indicated in many documents and in some cases it is required that the estimate of the value following the resolution is determined using a procedure that takes into account the benefits and costs associated with the expected transformation.However, it is difficult to determine when to adopt the use of market approach evaluations, possibly supported by tabular values, and when to require more sophisticaed income approach evaluations.
Assessment procedures are rarely proposed in relation to the degree of complexity of the estimate.The risk is that tabular valuations may be used for very complex transformations.On the other hand, the figure of a valuer may be superfluous in assessment of ordinary transformations of modest complexity, for which the administrations themselves, with the help of database already available may be able to determine the amount of the planning gain.  of co-managed planning.The survey used the deliberations and all the acts produced for this purpose by the provincial capital cities of Veneto and, for an in-depth examination of smaller cities, by all the municipalities in the province of Vicenza.
The conclusions of the research show a contrasting picture.The economic theme appears to be consolidated.In the overwhelming majority, the administrations have acquired the economic rationale of the surplus-value distribution resulting from the planning decision.The valuation of the surplus value takes the market value as the basis of the valuation in the vast majority of cases.Only in a few acts the transformation value, whose hybrid nature between procedure and autonomous value must be recalled, is the reference.
The acts regulating the agreements focus on the procedures for estimating the real estate assets value variation.Often binding indications emphasize automatic or quasi-automatic valuation procedures, based on the use of data already available.While it is understandable that the estimation process should be made intelligible and transparent, the results may be contradictory.The application of automatic procedures does not necessarily lead to results that simultaneously meet the need for transparency and quality and therefore for adherence to the actual values at stake.In general, even on the basis of the main international evaluation standards, the emphasis on choices that should be left instead to the professionalism of the valuer and his or her ability to identify the most valid procedures in relation to the evaluation issue and the available data seems questionable.
Conversely, the absence of rules regarding the nature of the valuer and his or her independence is puzzling.While international standards dwell at length on the need to make this aspect explicit with the utmost precision, in the deliberations of local authorities the issue is rarely addressed and seems not to touch the sensibility of administrators.
Finally, the withdrawal rates appear to be very different.Net of any judgement on the percentage of the rent withdrawal often left largely to the landlord, a contradictory picture emerges: in the face of a substantial urban and economic homogeneity, a few kilometers away, the forms of levy can be of great difference, posing obvious problems of effectiveness and fairness.Future research can certainly deepen and detail the evidence outlined.And this is not only for the purpose of a necessary reconnaissance of the ways in which regulatory innovations have been implemented in practice, but also with the aim of developing guidelines that can support, in particular, the administrations of minor cities faced with a challenge, that of a different relationship with private operators, which imposes a radical revision of the instruments with which to govern the transformations of cities and territories.
value generated, while in the most ordinary transformations discretionary rates are set by local authorities (Boca and Falco, 2016).More generally, the documentation seems to focus on methodological aspects that traditionally fall to the professionalism of the valuers, while the protocol that regulates the choice and nature of the evaluator and the identification of the procedure to obtain an adequate level of quality of the evaluations appears to be poorly defined.
The choice of an independent valuer appears crucial for the transparency and solidity of valuations in the field of, for example, the valuation of real estate funds.Little or nothing is said about this aspect, which is considered decisive in international valuation standards.The implicit hypothesis is that it is the public body, the guarantor of the quality of the valuations on which decisions on the distribution of value are based (Bartke and Schwarze, 2015).
Rather than supporting the abundant textbooks on the assessment of real estate assets under different legal conditions, it would be more useful for local authorities to establish clear rules of engagement for both the professional figures in charge and the performance requirements about the quality of the valuations.
The choice of the withdrawal rates is the last problematic aspect that emerges from the analysis.The choice of rates, fixed or variable, remains a prerogative of local authorities.However, the variability of rates between cities, parts of wider "local territorial systems", to take up an effective expression of Calafati (2009), is debatlabe because within socially and economically homogeneous territories properties and investors are potentially treated with different levies, with effects of improper territorial competition or simply with effects of inequality in the levies.At a distance of a few kilometers it is possible that the valorization of similar assets is subject to a highly differentiated treatment (Rusci, 2016 and2018).
The issue could still be considered negligible if in many regions, including that of of our investigation, equalisation in the treatment of properties was not considered a central issue in the implementation of urban planning instruments.The shift to a larger scale shows that the issue of equalisation cannot be achieved only through action at the scale of municipalities (Micelli, 2014), but must take into account the choices of neighbouring municipalities, fully integrated from an urban, economic and social point of view and nevertheless administratively autonomous.

CONCLUSIONS
The research investigated the ways and means by which the evaluation supported agreements between the administration and private operators in new forms Abstract
Nella letteratura internazionale il planning gain e le sue modalità di ripartizione possono assumere diverse declinazioni a seconda del contesto nazionale di riferimento.

CONCLUSIONI
La ricerca ha indagato i modi e gli strumenti in cui la valutazione ha sostenuto gli accordi tra amministrazione e operatori privati nell'ambito delle nuove forme di governo del territorio.L'indagine ha impiegato le delibere e tutti gli atti prodotti a questo scopo dalle città capoluogo di provincia del Veneto e, per un approfondimento sui comuni di dimensione inferiore, da tutti i comuni della provincia di Vicenza.Le conclusioni della ricerca evidenziano un quadro con-

Figure 1 -
Figure 1 -The provincial capital municipalities of the Veneto Region with regulation on agreements.

Figure 3 -
Figure 3 -Complexity of the procedures indicated in the administrative norms and demographic dimension of the municipalities.

Figure 4 -
Figure 4 -Frequency of the withdrawal rates by their nature (fixed or variable).

Figure 5 -
Figure 5 -Withdrawal rates by the rank of the cities (provincial capital vs other cities).

Table 2 -
The municipalities of the province of Vicenza and their main demographic and economic characteristics