Morocco
Land value capture in Morocco
Land value capture instruments are moderately used in the country (Table 2.37). Developer obligations and infrastructure levies have national legal provision but are rarely, if ever, adopted by local authorities. Land readjustment was more systematically used in the 1960s and 1970s, while today it is limited to road construction projects. Strategic land management serves the purposes of generating public revenues and promoting major national public development programs.
Enabling framework
Morocco is a constitutional monarchy with a three-tier subnational government structure that includes regions at the higher level, prefectures (urban areas) or provinces (rural areas) at the intermediate level and municipalities (communes) at the lower level (OECD/UCLG, 2019, p. 95[1]). The country also has a network of more than 25 000 villages and rural localities for administrative purposes, with no legal personality.
The government is responsible for creating the legal framework for land value capture, notably through the Permanent Inter-Ministry Commission of Land Policy (Decree 2.16.263 of 2016). The principle of social function of property establishes that the right to property can be limited by the state for exigencies of economic and social development (Article 35 of the 2011 Constitution).
Land readjustment
Land readjustment projects are used for the purposes of urban expansion, urban development, brownfield regeneration and farmland consolidation. Local institutional representatives of the government (LIRG), private landowners and non-government organizations can implement such projects, but they rarely do so. LIRG collect the revenues from them, when there is a project that yields revenues.
Private entities need the consent of landowners whose plots represent more than 50% of the total area in order to carry out a project. Participation is compulsory for projects initiated by public entities or that have a public purpose. If landowners resist land contributions, their lands are acquired through expropriation, and compensation is paid at market rate based on the original land value.
A share of 25% to 30% of the readjusted plots is reserved for public improvements, such as affordable and social housing, public roads, public utilities, schools, parks and green space – from which landowners will benefit. The share is of 25% in road development projects and 30% in housing projects.
After readjustment, landowners receive a plot based on value and surface area, located on or as close as possible to the original land. But, depending on the case, they may be reallocated to different plots within the readjustment area. They cannot exchange reallocated plots for cash. Yet, compensation may be due if the readjusted plots are less or more valuable than the original ones.
The main obstacles to the adoption of land readjustment are the reduced levels of administrative capacities and the high costs of expropriations. Another challenge is the lack of resettlement alternatives for displaced residents, such as tenants and informal residents.
Strategic land management
Strategic land management is used by the government and local authorities to enable the construction of public utilities and amenities and to promote major public development programs. Besides these actors, independent public agencies may also collect the revenues from operations, although they are not involved in the planning or execution. The national Permanent Inter-Ministry Commission of Land Policy is in charge of defining the strategic orientations and policies of land management.
The government acquires greenfield land zoned for public infrastructure through acquisitions at market price, expropriations or transfers from another public entity. The purchasing entity typically sells the land at a predetermined price or transfers it without costs to a jurisdiction or public company specialised in land development. These actors will then carry out the public amenities or land development projects. The government’s role is to intermediate land transfers in order to facilitate public development.
Public land is leased to generate public revenues and facilitate planned urban development. Lease length is usually of 40 years, but it can vary with the purpose of the intended project, if industrial, touristic, agricultural or educational. The ground rent is paid through recurrent lease payments. No exemptions or discounts to payment are admitted.
In all, land management is a strategy to facilitate public development projects, by intermediating land transactions that otherwise would be costly and lengthy. Still, the lack of financing for land acquisition and the low capacity levels of local governments are notable challenges to the implementation of this strategy.
Developer obligations
Developer obligations may be collected by municipalities since 1989, through which developers can be subject to obligations to obtain approval for new developments. The obligations are designed to compensate the impact of development on public infrastructure and services needs and resulting costs.
The government and independent public agencies can implement the obligations and receive their revenues, but they never implement them. They have no discretion in issuing development approvals, establishing the impact rule or reinvesting the collected funds.
The obligations consist of cash payments, calculated using a formula that takes into account the size and type of development, as well as the value of the land on which the development takes place. The charge is paid in two installments: 75% upon approval and 25% after project achievement. Public development projects, military projects and projects with social benefit are exempted from payment.
The main obstacle to implementation is the lack of political will of municipalities, who, authorised to charge the obligations under national law, never actually impose them. Administrative capacities to do so are limited too. The calculation formula itself is not a problem, since it follows standard rules.
Infrastructure levy
Landowners pay a levy for government-built infrastructure from which they specifically benefit, for example public roads, public transport, public utilities and green space. When the announcement or execution of public works confers an increase in value greater than 20% on private property, the beneficiaries of this increase are jointly liable for compensation. Compensation must equal up to 50% of the value, but may be reduced to a minimum of 20% of the value gains (Article 59 of Law 7.81 of 2011).
Local governments and independent public agencies are authorised to implement the levy and receive its revenues. However, there is no public engagement and local governments lack the administrative capacity to conduct implementation. Hence the instrument has been rarely adopted in the country.
References
[3] OECD (2022), “Subnational government structure and finance”, OECD Regional Statistics (database), https://doi.org/10.1787/05fb4b56-en (accessed on 13 January 2022).
[8] OECD (2021), “Subnational government structure and finance”, OECD Regional Statistics (database), https://doi.org/10.1787/05fb4b56-en (accessed on 25 November 2021).
[2] OECD (2017), Land-use Planning Systems in the OECD: Country Fact Sheets, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264268579-en.
[1] OECD/UCLG (2019), 2019 Report of the World Observatory on Subnational Government Finance and Investment - Country Profiles, OECD/UCLG.