ABSTRACT. The Urban Institute (UI) worked with five cities in
post-Soviet Kyrgyzstan to apply better management practices through the
development of Strategic Land Management Plans. Kyrgyzstan transferred
property to local governments, but municipal land management had
remained poor owing to a proliferation of responsible agencies, lack of
rule of law, corruption, and passiveness on the part of local
governments. UI worked with local governments to make an inventory of
municipal land, publicize the results, and develop a strategy that
articulated principles for land management and an implementation plan.
This led to several improvements including proper registration of
parcels and proactive policies to lease and sell land through open
competition. It also established a model for determining public policy
that countered corruption and public deliberation of costs and benefits
in the use of local assets. Donor involvement to promote good land
legislation, the property registration system, and decentralization was
also critical to success.
KEYWORDS: Land management; Local government; Municipal property;
Decentralization; Transparency
SANTRAUKA
Urbanistikos institutas bendradarbiavo su penkiais posovietines
Kirgizijos miestais, kad, pletodamas strategines zemetvarkos planus,
ivestu geresne vadybos praktika. Kirgizijoje nuosavybe perduota vietos
valdziai, taciau zemetvarkos bukle savivaldybese isliko vargana del
atsakingu tarnybu gausos, istatymu trukumo, korupcijos it vietos
valdzios pasyvumo. Urbanistikos institutas bendradarbiavo su vietos
valdzia, siekdamas inventorizuoti savivaldybiu zeme, paskelbti
rezultatus ir sukurti strategija, pabreziancia zemetvarkos principus ir
jgyvendinimo plana. Tai leido kai ka patobulinti, iskaitant derama
sklypu registravima ir aktyvia zemes nuomos bei pardavimo per atvirus
konkursus politika. Be to, sudarytas modelis, nustatantis viesaja
politika, kovojancia su korupcija, ir viesus sanaudu ir naudos
svarstymus naudojant vietini turta. Prie geru zemes istatymu, nuosavybes
registravimo sistemos ir decentralizacijos sekmingo propagavimo daug
prisidejo it remejai.
1. INTRODUCTION
Local governments are often considered to be poor managers of land
because they lack the incentives of the private sector to maximize
utility from land and because politicians and the citizens that hold
politicians accountable tend to view land as simply one of the component
means to deliver public services rather than a discrete asset to be
managed. Yet public land often is a substantial part of local
governments' asset bases, and improved management will necessarily
have broad budgetary, public policy, and service delivery impacts. This
is particularly evident in countries undergoing decentralization: newly
empowered local governments can demonstrate greater responsiveness and
effectiveness in their management of a key local resource. Improved
municipal land management is thus at the intersection between efforts to
(i) improve regulations and practice to foster effective property/land
management and (ii) decentralize public management to obtain the
interrelated benefits of increased participation of citizens in
governance and more effective, responsive, and accountable local
government.
The authors of this paper were the primary staff of the Urban
Institute seeking to apply better land management and decentralization
principles in local governments in the former Soviet republic of
Kyrgzystan. This work was undertaken as part of a technical assistance
project funded by the U.S. Agency for International Development to
support more effective and responsive local government. We faced
specific circumstances where public land management and particularly
decentralized government in practice did not fully match the ideal
conditions due to the political realities of how Kyrgyzstan had
conducted reforms in these areas. These included in particular cynicism
about formal legal process and lack of genuine participation among
citizenry and corresponding motivation and responsiveness of local
governments. The imperfect, incomplete nature of public land management
is more likely the norm than the exception (Rajack, 2007; Garba and
Al-Mubaiyedh, 1999; Buckley and Kalarickal, 2006). Therefore the
realities of improving municipal land management in Kyrgyzstan are
likely relevant to other transitional countries, particularly in the
former Soviet Union. Yet despite the challenges, improvements could and
did occur, albeit not as rapidly or as fully as might have been the case
with more effective public land management systems and decentralization.
This paper summarizes the work performed and assesses the context,
lessons learned, and factors of success in the development of Strategic
Land Management Plans (SLMPs) in five Kyrgyz cities--Osh, Jalalabat,
Karakol, Cholponata, and Karabalta. The SLMPs emerged thanks to
cooperation between local officials in each of the 5 cities and the
Urban Institute. The paper first reviews the country context for the
SLMPs, including an overview of Kyrgyzstan's land management and
decentralization reforms and a listing of key factors blocking effective
public land management at the local level. Than, the paper outlines a
detailed framework for strategic land management and discusses results
and implications of applying this framework in five cities. It concludes
with reflections on lessons that can be learned by donors and local
actors.
2. COUNTRY CONTEXT
2.1. Review of reforms
Kyrgyzstan is a small country in Central Asia, with the population
of about 5.2 million of which 1/3 is urban. It became an independent
state in 1991 following the break-up of the Soviet Union. During the
first 10 years of independence, the country was a leading reformer among
post-Soviet countries, including ambitious efforts to denationalize real
estate and enterprises and to decentralize government. In particular,
there were several important changes in terms of property rights to
land:
--The Constitution established that there are distinct state,
municipal, private, and other types of property, and all forms are
equally protected by law;
--The Constitution and other legislation established decentralized
local 'self' government, i.e. locally constituted governments
empowered with autonomy from the central state, particularly with regard
to municipal property. This meant that local governments enjoyed, at
least in principle, independent authority to make and implement land
management decisions, which is unusual among post-Soviet countries where
central governments retain a variety of controls over local
administrations;
--The Land Code (adopted in 1999, revised in 2001) mandated that
all land inside city, towns, and villages, which is not state and not
private, is in municipal ownership. Moreover, this provision was
interpreted by government agencies to be directly applicable, i.e.
requiring no additional implementing regulations to transfer land from
state to municipal ownership. This comprehensive granting of property
rights to local governments made transfer of urban land into municipal
ownership substantially easier than, for instance, in Russia where a
similar transfer requires site-by-site approval by regional branches of
the central government agency.
--The 1999 Land Code also stipulated that allocations of land to
private individuals or legal entities must be in the form of either a
transfer of full ownership rights or lease right, thus precluding the
provision of "indefinite" or "permanent" use rights
to private persons and entities. Moreover, legislation introducing the
1999 Land Code called for the automatic conversion of << permanent
>> use rights (the main land tenure form in the Soviet Union) to
full ownership. The Land Code identified a special category of
land--"public use land" (streets, roads, public parks,
etc.)--that may not be privatized and may only be leased for up to 5
years. The Land Code stipulated that allocation of vacant land to
private parties should be conducted through auctions or tender
procedures (except land plots allocated, once-in-a-lifetime, for
individual housing);
--The Civil Code established that property rights are not legally
valid until they are registered by a special state agency. The State
Agency for Registration of Rights to Immoveable Property (Gosregister),
was established for registering property rights and transactions
involving such rights in 2000. Thanks to a World Bank loan and technical
assistance Gosregister was able to establish 50 regional offices and
conduct systematic registration of all real estate in cities and towns
by the end of 2004.
--Privatization of urban land was conducted through simple
channels: for individuals, land plots occupied under various "use
rights" and used for single family homes or household kitchen
gardens were automatically converted to private ownership; enterprises,
which were privatized before the new Land Code was enacted in 2001,
received their land sites in private ownership free of charge as well;
owners of apartments in multi-apartment buildings are entitled to common
shared ownership of land sites appurtenant to the buildings (in
practice, the process of identifying the borders of these sites is not
completed yet).
To date, more then 6% of the country's entire territory is
privately owned, with a much higher share of private land in urban areas
(the vast majority of territory are state-owned mountain ranges and
pastures). For example, in five cities discussed in this paper private
land makes up from 18 to 50 percent of city area, being close to 50
percent in three of these cities. Moreover, the real estate market in
urban areas is quite active. For example, in 2006 5.3% percent of all
registered residential properties and 3.3% of non-agricultural land
sites in our five cities went through sale transactions. This is a very
active market, by any standard (Kaganova, 1999).
One of Kyrgyzstan's fundamental steps in launching its program
of government decentralization was to transfer substantial portfolios of
built-up property (e.g., school and kindergarten buildings, town halls,
clinics, and local cultural facilities) and municipal service
enterprises (e.g., water/sewer utilities and companies providing solid
waste management, street cleaning) into municipal ownership. This
transfer happened, similarly to many other transitional countries,
quickly (Kaganova, 2006), almost overnight. For example, as the result
of this transfer, the cities of Osh and Jalalabat received about 140
properties each. The very fact that there was some process and procedure
of the transfer, and the transferred properties were identified,
established a clear initial point for local governments to start
recognizing their new role of property owners (though this explicit
transfer was not prepared well, especially for the enterprises, and has
been associated with some long-lasting legal, accounting, and
operational issues. However, given the strong inertia of centralized
government from the Soviet era, the newness of the concept of municipal
ownership, and initial weakness of local governments, property asset
management in cities was quite embryonic until technical assistance on
this subject was offered by USAID-sponsored projects. With technical
assistance, some cities moved energetically with improving some elements
of asset management, such as testing competitive procedures of engaging
private investors (Kaganova et al., 2001). Also, many cities started
registering their municipal ownership on the transferred properties. By
late 2003, about 56 percent of the transferred properties were
registered, on average, in all 25 cities of Kyrgyzstan.
Unlike built-up properties, taking control over municipal land
turned to be a bigger challenge for local governments, and progress on
this front has been substantially delayed compared to the built-up
properties explicitly transferred to local governments. Such a lag for
asserting control over vacant land parcels has been typical for cities
in many, if not most, transitional countries. For example, many cities
in Croatia, even those that progressed well with improving management of
their portfolios of built-up properties, still don't have complete
inventories of their land. In Kyrgyzstan and other Newly Independent
States much of the confusion lies in the Soviet-era determination that
land rights followed, rather than were primary to, the rights to
buildings (FIRS, 2005; Strong, 2003). This led to a situation where
there were transfers of buildings with land being an afterthought,
providing grounds for competing assessments of the borders of land
parcels appurtenant to buildings. Furthermore, it meant that land
without buildings were generally not established as distinct parcels.
2.2. Challenges to effective land management
The overall situation with municipal land in Kyrgyzstan's
cities prior to introduction of Strategic Land Management Plans can be
summarized as follows:
--Competing agencies involved with land management. Management of
urban land in Kyrgyzstan, as in most post Soviet Union countries, is one
of the most non-transparent and confusing areas of public management.
There are three key institutional players involved in a process of
allocating vacant land and land rights for new construction: a local
branch of the State Architecture & Urban Planning Agency
('Architecture Department'), local branch of Gosregister, and
local government. Both the Architecture Department and local Gosregister
are subordinate to a central government agency rather than to local
government. Traditionally, the allocation of vacant land has been the
stronghold of the State Architecture & Urban Planning Agency, which
controlled the process and held information about vacant land.
Gosregister attempted to carve a niche for itself in the process, well
beyond its direct responsibility to register rights and transactions,
emerging as a second strong player through its control over securing the
legal rights to land. Gosregister was created out of older Soviet-era
registration and mapping entities but granted additional powers to
'promote the land market' and was the implementing agency for
successive World Bank-funded projects. It had resources, a large staff,
a broad but vague mandate, as well as a dynamic Director to compete with
the Architecture Departments for power over land management. Municipal
Property Departments at local governments that, theoretically, should
have assumed management of all municipal property including land as the
representative of the 'owner', i.e. the municipality itself,
have been the weakest institutional link. Moreover, in most cities,
particularly larger ones with independent Architecture Departments,
these departments have been explicitly removed from dealing with land
management in any substantial way. At most the Municipal Property
Departments oversaw short-term leases on small plots located on
"public-use lands" to street retailers. The key process of
allocating vacant land for construction has been controlled by the
better staffed and almost always more experienced Architecture
Departments and Gosregister. This is despite the fact that allocation
decisions must be formally approved by the Mayor or his/ her deputy;
these figures in effect wholly relied on agencies not under their direct
authority rather than their own property departments. Inertia from the
Soviet era where local mayors were directly subordinate to the State
contributed to local governments' passiveness.
--Fragmented, unreliable information about land. Information on
municipal land has been fragmented, unreliable, and on the whole not
available to citizens and local governments themselves. Thus, local
governments--which technically by law are owners of all land that is not
private or state--have very incomplete information about which sites are
municipally owned and where they are located. Some information about
vacant land has been in possession of the local Architecture Departments
and some information in Gosregister branches, but these agencies
typically do not share or join information on a systematic basis. During
systematic registration by Gosregister, most parcels, which should have
been identified as municipal land, were given only
"preliminary" registration in the absence of a specific
document detailing the given parcel. Moreover, Gosregister officials
routinely commented that local governments did not bother to utilize the
systematic registration process to clarify their rights and their
specific land parcels. We found that many cities indeed were passive in
asserting their rights, despite repeated urgings to be more cognizant of
the need, responsibility, and benefit to having a clearly defined
portfolio of municipal land. This led to a situation where Gosregister
offices arbitrarily determined municipal land in 2000-2002, leading to a
very large margin of error both in favor and against cities. For
instance, according to surveys of municipal lands undertaken with our
project's help in five cities, the difference between actual
holdings of municipal land and official Gosregister data is in the range
of 7-24% of the city territory (for further discussion see Table 1 in
section 3).
--Prevalence of transactions inconsistent with law. Local practices
of land allocation to private parties very often occurred with
significant violations of land legislation. Typical violations included:
* allocation of land to private parties without competitive
procedures,
* allocation of the land rights without terms or without specific
types of use,
* privatization of "public use land," especially park
land, and
* creation of conflicting claims due to allocation of the same
sites to various holders.
Many of these violations were not intentional, especially in early
2000s. They occurred due to several factors, including simple ignorance
of legislation at the local level among all of the actors--local
governments, state agencies, entrepreneurs, and general public;
insufficient professional skills of municipal staff, often as a result
of high turnover; and an aversion to directly applying new, reformist
legislation without a specific implementing regulation from the central
government, a typical problem with the legal culture of many former
states. The general ignorance of existing laws at all levels of
government is well illustrated by the fact that the central government
agencies and the government of Bishkek attempt, time to time, to promote
their interests by introducing new laws and regulations that explicitly
conflict with existing laws. For instance, legislation was adopted that
effectively contravenes the principle of competitive allocation of
property rights in order to facilitate a particular deal.
--Corruption, at least in perception. Land allocation and
registration, at least in popular perception and in surveys on
corruption, are perceived to have high incidence of corruption and abuse
of power. In particular, there is the widespread perception that the
following occurs: (i) allocation of land sites by corrupt officials for
informal payments approximating market prices, while the formal prices
are substantially below market or zero, and (ii) land grabs by those in
power and their networks of land that is otherwise not available (for
example, land plots for individual housing allocated to high-ranked
officials on land cut from parks). This perception was confirmed in
several cases against municipal officials for improper allocation of
land.
--Lack of a proactive government strategy to manage land,
particularly allocation. Not surprisingly, with the competing agencies
and poor information, local governments are not prepared to engage in
proactive management. It takes private sector to be motivated enough to
navigate these problems and secure the allocation of public land. Thus,
in general, the process of allocating land to new tenants--be this a
small spot on a sidewalk for a short-term lease or a lucrative site for
new construction--has occurred when potential tenants "find"
land sites suitable for improvement and go to authorities with requests
to allocate the sites to them. Local governments haven't been
supplying sites for lease or sale by their own initiative and through
open procedures, except some very limited "show cases" in
large cities such as Bishkek and Osh.
3. STRATEGIC LAND MANAGEMENT PLANS
3.1. Objectives
Given this situation, we thought it would be useful to offer cities
assistance on improving management of municipally owned land. This work
was to be conducted in the context of our project to support effective
decentralized governance; making land management a matter of local
public policy was an important element in support of this project goal.
The main objectives in proposing to develop land management plans were
to:
* Help local governments assert management control over municipal
land, which should include oversight by local councils;
* Introduce greater transparency in the land allocation process to
build public trust as well as the opportunity for more popular control;
* Switch the land allocation process from re-active and
non-transparent to more pro-active, with local governments offering land
on market within explicit long-term land allocation plans;
* Facilitate transition to full observance of all legislation
governing land allocation and management;
* Improve the investment climate for private investment in real
estate;
* Establish land allocation as part of public policy, with
requirements of government to balance interests of various groups in the
community in order to meet development and social equity goals, and
* Increase budget revenues from land sales and leases and establish
the practice of earmarking capital revenues from land sales for capital
investment.
The fiscal objective of increasing local budget revenues through
realizing full market value of municipal land was considered very
important because cities in Kyrgyzstan are poor and the taxes assigned
to local governments are mostly insignificant and subject to de facto
control by the central government. There were various indications that
revenue-generating potential of municipal land was underutilized;
moreover the increased revenues by law should not be subject to
reallocation as was the case with most key local taxes. It should be
noted, however, that local officials often did not believe that their
governments would benefit from increased revenues due to the range of
central government controls over the local budget process prior to
fiscal decentralization reforms in 2007. These controls included
requirements for centralized confirmation of revenues and expenditures,
which in practice included even individual line items, and a centralized
treasury system that was selectively responsive in administering local
budgets. Local officials expressed fear that increased revenues from
land would de facto be offset by cuts in other revenues, as the State
would seek to retain as many revenues as possible. Part of our
team's task was to use our involvement in order to raise awareness
about the detrimental effect of the threat of offsets and advocate for
national legislative changes providing local budget autonomy to
eliminate the controls that allowed for such offsets.
Land is the most valuable asset that local governments in
Kyrgyzstan own--they are "income poor, land rich." Demand for
land in many Kyrgyzstan's cities is manifested in relatively high
and quickly growing land prices on the private land market. Also, there
is high interest to land sites occasionally auctioned in big cities, at
least in cases when sale conditions where reasonably formulated.
Finally, international experiences pointed to the high revenue potential
of municipal land in an increasing number of cities in various countries
that were able to leverage their land to achieve remarkable development
(Peterson, 2006, 2007).
The new approach to land management, which was proposed in
Kyrgyzstan cities, involved a strategic rather than ad hoc approach.
This means that municipal land was to be acquired, held, used, and
disposed of based on relevant information and explicit policy, in a
systematic (planned) and transparent way. An important milestone of
implementing such an approach would be adoption by local government of
"Strategic Land Management Plan" (SLMP). Furthermore, this
adoption should ideally be codified as a local normative act that is
therefore legally binding for all parties, above all the local
government.
3.2. Framework
The obvious starting point was information. None of the above
objectives could be achieved without local governments having explicit,
reviewable, current, and reasonably complete information about municipal
land. Therefore, creating an inventory of municipal land at Municipal
Property Departments was a core task. Even in developed countries, s