CASE STUDY LAND READJUSTMENT IN JAPAN Source: City of Yokohama. The author of this case study is Minoru Matsui, Manager, Overseas Project Office, Tamano Consultants Co. Ltd. Mansha Chen, Shigeyuki Sakaki and Mara T. Baranson from the World Bank edited the paper. Yuko Okazawa from the World Bank facilitated the overall production of this paper. CONTENTS 1. Introduction................................................................................................................................. 1 History.......................................................................................................................................... 1 Key Achievements......................................................................................................................... 2 Other Related Urban Development Tools: Urban Redevelopment (UR).............................................. 2 2.  Legal and Institutional Framework............................................................................................... 5 Overall Legal Framework............................................................................................................... 5 Urban Planning System.................................................................................................................. 6 3.  Objectives and Characteristic of Japanese LR............................................................................... 9 Objectives and Scope..................................................................................................................... 9 Characteristics............................................................................................................................... 9 Typologies of Japanese LR Projects .............................................................................................. 14 4.  Profiles of Selected LR Projects................................................................................................... 19 New town development in peri-urban areas: Nagakute Nanbu LR Project in Aichi prefecture........... 19 Post-earthquake reconstruction: Shin-nagata Ekikita Post-earthquake Reconstruction LR Project in Kobe City........................................................................................................................... 23 Station area redevelopment: Akihabara Station Area LR Project in Tokyo........................................ 27 5. Conclusion................................................................................................................................. 33 Annexes Annex 1: History of LR in Japan......................................................................................................... 34 Annex 2: Legal Procedure of LR Project in Japan................................................................................. 36 Annex 3: Project Frame of Nagakute Nanbu LR Project........................................................................ 37 List of Figures Figure 1.1: Conceptual Model of UR...................................................................................................... 2 Figure 1.2: Conceptual Model of LR and Integration with UR.................................................................. 3 Figure 2.1: Legal Framework of LR and UR in Japan.............................................................................. 5 Figure 2.2: Urban Planning System in Japan.......................................................................................... 6 Figure 2.3: Zoning Plan in Nagakute City.............................................................................................. 7  fficial Map for Designation of Urban Facility (Road)............................................................ 8 Figure 2.4: O  fficial Map for Designation of LR Project............................................................................ 8 Figure 2.5: O  ew Town Development in Peri-urban Area........................................................................ 15 Figure 3.1: N Figure 3.2: Post-Earthquake Reconstruction LR Project......................................................................... 16 iii iv Case Study: Land Readjustment in Japan Figure 3.3: Station Area Redevelopment.............................................................................................. 16 ntegrated LR with Railway Developmentv......................................................................... 17 Figure 3.4: I Figure 3.5: Methodologies of Integrated LR with Railway Development ................................................ 17 Figure 3.6: Improvement of Congested and Wooden Residential Area ................................................... 18 Figure 3.7: Small-scale LR for Land Consolidation in an Urbanized Area............................................... 18 Figure 4.1: Location of LR Projects in Nagakute City............................................................................ 19  and Use Plan of Nagakute Nanbu LR Project..................................................................... 20 Figure 4.2: L Figure 4.3: Site Condition Before and After the LR project ....................................................................21 Figure 4.4: Collective land replotting for commercial area.....................................................................21 Figure 4.5: House and Open Space with Planting................................................................................. 22 Figure 4.6: Community Events in Project Area..................................................................................... 23 Figure 4.7: Location of Shin-nagata Ekikita Post-earthquake Reconstruction LR Project.......................... 24 Figure 4.8: Land Use Plan of Shin-nagata Ekikita Post-earthquake Reconstruction LR Project................. 24 Figure 4.9: Model of total land value decreasing and the balancing by land acquisition.......................... 25 Figure 4.10: L ocation of Joint Apartment Development........................................................................ 26 Figure 4.11: Collective Land Replotting for Joint Apartment Development............................................. 26 Figure 4.12: A kihabara Station Area (Before construction in 1997)........................................................ 28 Figure 4.13: Route Map of Tsukuba Express......................................................................................... 28 Figure 4.14: B asic Design of Public Facilities of Akihabara Station Area LR Project................................ 29 Figure 4.15: Private Urban Developments in Akihabara Station Area..................................................... 29 Figure 4.16: U rban Renaissance Urgent Redevelopment Area of Akihabara and Kanda........................... 30 Figure 4.17: Project Scheme of Akihabara UDX.....................................................................................31 List of Tables Table 3.1: Number and Area of LR Projects in Japan (as of March 2013)................................................11 Table 4.1: Joint Apartment Development in Shin-nagata Ekikita LR Project........................................... 26 1 INTRODUCTION HISTORY number of landowners, which increased the neces- sity of LR. The origin of Land Readjustment (LR) in Japan dates back more than 100 years. The modern land manage- In 1949, the ALC Law was repealed and the Land ment system and Agricultural Land Consolidation Improvement Law, focused on agricultural land (ALC) were established in the late 19th century. ALC development, was established. This resulted in the was an agricultural land development tool to reorga- conflicting situation that LR followed the repealed nize agricultural lands and develop passage and irri- ALC Law, even though the Land Improvement Law gation channels to improve agricultural productivity. also covered LR. To resolve the situation, the LR In the early 20th century, ALC was applied to residen- Law was established in 1954. It aimed to foster tial area developments in large cities facing rapid completion of the post-war LR projects as well as population growth. Because ALC required land implementation of large-scale LR projects for new owners to pay cash for construction, it was difficult town development in response to socio-economic to involve poor land owners in the target area. To recovery and increased housing demand. recover part of the project cost, “surplus lands”—which In the period including rapid economic growth can be created from private lands under the provi- during the 1950s to 1990s, large-scale LR projects sion of ALC law—were sold on the market. The idea had been implemented in the major metropolitan of surplus lands gave way to the “reserve lands” of areas. Through the experiences of a large number the LR Law, which was established in 1954. of LR projects, the LR system improved in terms of The Urban Planning Law established in 1919 was the approval process, land replotting techniques, incorporated with provisions of LR, establishing the and financing; this contributed to quicker and legal basis of LR. Provisions of the ALC Law were smoother implementation. applied as the implementing procedures of LR. After the collapse of the bubble economy in the early During the period of the 1920s to 1950s, LR—imple- 1990s, decreased housing demand contributed to mented mostly by the central and local govern- financial issues in private LR projects that depended ment1—was applied to several objectives such as on sales of reserve lands. At the same time, the post-earthquake reconstruction in the Tokyo region, urban renovation in large cities, industrial city 1  There were also cases of LR projects by cooperatives. However, it construction nationwide, and post-war reconstruc- seems that under the ALC Law, it was popular to undertake land tion after World War II. Through those experiences, consolidation projects for projects in peri-urban areas even after establishment of LR by the Urban Planning (UP) Law, due to the LR techniques were improved and refined. Also, the availability of financial support from government for land Agrarian Reform of 1947 to 1950 had increased the consolidation. 1 2 Case Study: Land Readjustment in Japan Figure 1.1: Conceptual Model of UR UR Building Sales to recover Reserve construction Exchange of real estate Floor budget Floor for original land owners Before After Source: Author. government changed its policy to promote LR for • city planning roads with a total length of urban renovation in city centers, areas around approximately 11,500km (accounting for one- transit stations, and other urban areas. quarter of the total length of all city roads desig- nated on urban plans); Although the number of on-going LR projects has • green parks with a total area of 150 km 2 decreased nowadays, 2 LR has been playing very (comprising one half of the total area of commu- important role in urban development in Japan nity parks, neighborhood parks and district through supporting various development purposes. parks across the entire country); and The detailed history of LR in Japan is shown in • station plazas with a total number of 950 facil- Annex 1. ities (one third of station plazas at stations with more than 3,000 passengers per day). KEY ACHIEVEMENTS OTHER RELATED URBAN LR is one of the popular urban development methods DEVELOPMENT TOOLS: URBAN in Japan. It has been used for various development REDEVELOPMENT (UR) purposes around the whole country. The develop- ment purposes include not only residential area In this paper, a broad definition of LR is taken. In development in peri-urban areas, but also urban this context, urban redevelopment (UR) is consid- renewal in urbanized areas, and post-disaster recon- ered to be an application of LR. UR in Japan3 converts struction and integrated urban development with land rights in a project site to a part of building urban transport facilities. To date, LR has created rights by using land right conversion. For approval and redeveloped urban areas with a total area of of the project and to apply for the national subsidy, approximately 3,700 km 2, occupying 30 percent of the project area must be designated4 as an urban the total urban area in the whole country. 2  Currently there are about 900 projects covering a total area of 363km 2. Furthermore, LR has developed urban public facil- 3  The Urban Redevelopment Law in Japan was established in 1969. UR aims to promote high-intensity land use under the UR Law. ities such as roads, green parks, and station plazas, 4  In the urban planning context, “designation” means decision and with achievements including the following: public notification by local government. Introduction 3 Figure 1.2: Conceptual Model of LR and Integration with UR Land Re-plotting Share development profit Land Contribution Land Value increase (create public land Park and reserve land) Before After land re-plotting Sales to Participants to UR recover construction budget Road Reserve Floor Reserve Land Floor for Before After original land owners Development UR building by land right conversion Source: Author. redevelopment promotion area in urban planning LR with UR can be applied for the purpose of or must satisfy several other conditions such as: building development for high-intensity land use. designation as a high-intensity land use area, vulner- Land rights which participate to UR are replotted ability to fire hazards, and improving the efficiency into specialized urban redevelopment blocks of land use. These conditions focus utilization of UR within the LR project site. After replotting, the land on urban redevelopment in urbanized areas—distin- rights are converted to UR building rights and a guishing the UR objectives from those of LR. The share of the joint ownership of the plot of the UR conceptual model of UR is illustrated in Figure 1.1. building. In the case of LR projects for city center redevel- The conceptual models of LR as well as integrating opment and station area reconstruction, integrating LR with UR are illustrated in Figure 1.2. 2 LEGAL AND INSTITUTIONAL FRAMEWORK OVERALL LEGAL FRAMEWORK The LR Law is a procedural law mainly stipulating the rights and obligations of LR implementers and LR in Japan is an urban development tool with legal stakeholders in the approval and implementation basis in the LR Law.5 The legal framework for LR processes. Annex 2 shows the approval process for consists of the LR Law, other related laws such as two categories of implementers: (a) LR cooperatives t he Urba n Pla n n ing Law a nd t he Urba n and (b) local governments. Other related laws func- Redevelopment Law, and the related regulations and tion as the legal basis for specific activities in the guidelines. Figure 2.1 illustrates the overall legal framework of LR and UR in Japan. 5  Law No.119 of 1954. Figure 2.1: Legal Framework of LR and UR in Japan National Constitution Basic Laws for Land and National Land Use • Basic Act for Land • Law on National Spatial Plan • Law on National Land Use Plan, etc. Urban Planning Law Land Readjustment Law Urban Redevelopment Law Related Laws • Objectives of LR • Objectives of UR • New Housing and Urban • Approval procedures by • Approval procedures by Development Act types of implementers types of implementers • Environmental Impact • Implementation procedure • Implementation procedure Assessment Act and replotting by types of UR • Land Expropriation Law • Funding • Funding • Real Estate Registration Law • Supervision • Supervision • Law concerning the Sectional • Penalty • Penalty Ownership of Buildings, etc. • Government ordinances • Government ordinances Related Ordinance and Regulations • Ministerial ordinances • Ministerial ordinances • National subsidy programs • Guidelines • Guidelines • Compensation regulation • Road structure standard, etc. Source: Author. 5 6 Case Study: Land Readjustment in Japan Figure 2.2: Urban Planning System in Japan National-level National Spatial Plan/National Land Use Plan Urban Planning Area Prefecture-level Metropolitan-wide Plan (including city designated by ordinance*) Urbanization Promotion Area Urbanization Control Area City Master Plan City-level (including plans and projects, can Zoning Plan Urban Facilities Plan Urban Development Projects be decided by prefecture) 12 zone categories, road, park, utility, school, land readjustment project, and 9 policy zones/district public service facilities, etc. urban redevelopment project, etc. Source: Author. *City designated by ordinance: Large city, with population of 500,000 or more, which is designated by ordinance under the Local Autonomy Law. approval and implementation procedure, such as: aims to strategically promote urbanization as a coordination with the urban planning process (and priority. It covers existing urbanized areas and related activities), compensation, and real estate future urban areas to be urbanized within about registration. 10 years. On the other hand, in the urbanization control area, development and building activities In the case of LR projects integrated with UR, the are basically prohibited based on the policy to UR Law functions as the legal basis for the urban preserve agricultural areas and natural resources. development project in the designated block within the LR project area. City master plans are intended to decide the funda- mental policy for urban development of the city area. They usually provide vision, development URBAN PLANNING SYSTEM goals, urban structure, a conceptual land use plan, and development policies of each sector (e.g., trans- The urban planning system in Japan (illustrated in portation, center area, housing, city scape control, Figure 2.2) consists of three levels: (a) national level, and disaster management). Remarkably, city master (b) prefecture level, and (c) city level. The prefec- plans in Japan do not show detailed land use plans. ture- and city-level urban planning play a main role Zoning plans, urban public facilities plans, and in urban management. urban development projects designated in the urban planning process are based on the city master plan, The urban planning area designated by the prefec- control building and development activities. ture government is divided into two zones: (a) urban- ization promotion area and (b) urbanization control The zoning plan in Japan (see Figure 2.3 for an area, based on development policy in the prefec- example) consists of 12 zone categories, and nine ture-wide plan. The urbanization promotion area policy zones and districts. The zoning plan divides Legal and Institutional Framework 7 the urbanization promotion area into the zone cate- Figure 2.3: Zoning Plan in Nagakute City gories such as low-rise residential zone, middle and high-rise residential zone, commercial zone and industrial zone. These zones are provided with control items regulating building use, building coverage ratio (BCR), floor area ratio (FAR), building height and other aspects related to building profile. Urban planning is institutionally the upper-level plan of LR. LR must follow what the urban planning map shows, including the zoning. Regarding alteration of zoning plans in the LR project site, local govern- ment revises the zone category, BCR and FAR, etc. to meet the land use plan of the LR project through Source: Nagakute City, Japan. discussion with the LR implementer and land right holders. In cases where more details or relaxation of building controls are required for township right holders within the site. In addition, the LR management (e.g., historical cityscapes, unified project can apply for national subsidy equivalent with streetscapes, and high-rise development) at the compensation cost for the lands and buildings in a district level, municipalities lay down a District Plan. hypothetical case where land acquisition is made. The Plan shows not only the future vision of the district but also provides the regulations relating to The procedure for the designation or alteration can detailed matters, such as site, use, construction and be executed for each facility as necessary. Each facil- building. The Plan also shows individual features ity’s basic parameters, such as size and boundary, that reflect the views of the local community. are decided through discussions at public meetings and through the Urban Planning Advisory Under the Urban Planning Law, each “urban facility” Committee in the city or prefecture government. is to be designated with its location and boundary This flexibility is useful for rapid urban develop- on the urban plan. Urban facilities are cateagorized ment as well as LR project implementation. An into 12 types: (a) transportation facility, including example of the designation map for a road as an road; (b) public open space; (c) utility and its plant; urban facility is shown in the Figure 2.4. (d) river and canal; (e) educational and cultural facility; (f) medical and social service facility; In the Urban Planning Law, LR and UR are defined (g) other medical and social service facility; as urban development projects to be designated on (h) market, slaughterhouse and crematory; (i) collec- the urban plan. In the designation process, the tive housing facility; (j) collective government and necessity, function and scale are decided through public office facilities; (k) distribution business discussions at public meetings and through the park; and (l) other facility, such as disaster preven- Urban Planning Advisory Committee in the city or tion and mitigation facility. prefecture government. In addition, the project must be located within the Urbanization Promotion Area.6 According to the LR Law, the LR Implementation Plan must follow designated urban facilities. Roads and green parks are typical urban facilities included 6  There are many cases where Urban Planning Areas are not divided into Urbanization Promotion Areas and Urbanization Control Areas. in LR project. Lands for urban facilities in LR proj- In such cases, LR can be implemented if the project area is not ects are secured by land contribution from the land located within an Urbanization Promotion Area. 8 Case Study: Land Readjustment in Japan  fficial Map for Designation of Figure 2.4: O  fficial Map for Designation of LR Figure 2.5: O Urban Facility (Road) Project Designated City Planning Source: Kiyosu City, Japan. Source: Urasoe City, Japan. If a development through LR is planned within an activities are restricted in the designated area under Urbanization Control Area, the following procedures the Urban Planning Law.7 This restriction system are required: (a) the Urban Planning Area Master aims to facilitate implementation with respect to Plan and City Master Plan must include the devel- the negotiation with the land right holders and opment; (b) the Urban Promotion Area needs to be reduction of the compensation. Meanwhile, land expanded to include the proposed LR site; and right transaction is not prohibited; land rights can (c) The LR project needs to be designated—and (b) be sold and bought after the designation. Figure 2.5 and (c) must take place simultaneously. provides an example of a designation map for an LR project. The urban planning designation map must provide clarity about the project location and boundary, so that landowners can judge if their land is included 7  Both the Urban Planning Law and the LR Law stipulate building in the area of the LR/UR project(s). After the public restrictions. The Urban Planning law enforces restrictions until the announcement of the designation, building implementation plan for the LR project is approved. 3 OBJECTIVES AND CHARACTERISTIC OF JAPANESE LR OBJECTIVES AND SCOPE replotting and urban redevelopment, converting the replotted lands to building rights under the UR Law, LR in Japan is an urban development method; its or cooperative rebuilding without special legal basis. fundamental objectives are as follows: (a) develop- ment and improvement of public facilities and Regarding social housing development, the Japan (b) enhancement of land usability. Based on these, Housing Corporation (JHC)8 has played a major role the LR scopes and functions have flexibility to since the 1950s. JHC was established in 1955 in order enable applicability to multiple development objec- to implement new town developments and to tives according to changing social-economic situa- develop, sell and rent social housing. JHC purchased tions and urban management policy. LR addresses private lands and state lands in the LR project area a range of scopes and functions, such as: before LR implementation. After LR, JHC constructed social housing on the replotted lands that were gath- • land replotting to reorganize and reshape land ered into the site for the social housing develop- plots; ment. Through this method, JHC was the • land contribution to create public spaces and implementer as well as a land right holder in the reserve lands to recover development cost; LR project. The social housing was constructed out • development of public facilities; and of the scope of the LR project. • promotion of public and private participation. CHARACTERISTICS Most LR projects in Japan do not include new Japanese LR has contributed to better-managed building development in their scope. New buildings urbanization achieving various objectives across are developed by land right holders and the the whole country. The projects are controlled and purchaser of reserve land. However, there are some promoted through the urban planning system and cases where the development objective of LR proj- various subsidies under the governmental urban ects include building development (e.g., high-rise management policy. Characteristics of Japanese LR building development in underutilized areas and are summarized as follows: social housing development in large-scale new town development). As previously described, high-rise buildings can be developed by integrated use of collective land 8  Now it’s called Urban Renaissance Agency (URA). 9 10 Case Study: Land Readjustment in Japan Coordination with urban planning. As previously The public sector has implemented LR projects of described, LR projects implemented by public imple- high urgency and social needs, such as post-disaster menters, or subsidized by central government, are reconstruction, new town development and city required to be designated within the urbanization center reconstruction. On the other hand, the private promotion area on urban plans in the preparation sector has tended to implement profitable LR proj- phase of the LR project. This coordination system ects generating high land value increases. LR coop- ensures that LR projects generate positive social eratives are organized by land rights holders within and economic impacts under the urban planning the LR project site, and have implemented most LR policy of the local governments. LR has also been projects in Japan. The number and project area of an implementation tool to realize the polycentric LR projects in Japan are shown in Table 3.1. spatial development patterns of large cities through construction of urban facilities such as city centers, Agreements from land right holders.11 Private new town areas, and transit corridors in coordina- implementers are required to collect land right hold- tion with urban planning. er’s agreement in the approval procedure. In the case of individual-implemented projects having Various LR implementers. The LR Law provides several land right holders, a representative land for three categories of public implementers: (a) local owner must collect agreements from all of the other governments (prefecture and city), (b) central land right holders (i.e., an agreement ratio of 100 government, and (c) government corporations; as percent is required for individual-implemented LR well as three kinds of private implementers: (a) indi- projects). In the case of implementation by LR coop- viduals (i.e., a land owner or land owners group eratives or LR corporations, agreement of two-thirds with several persons or entities), (b) LR coopera- of the land owners and two-thirds of the land lease tives,9 and (c) LR corporations.10 In addition, the holders is required. The agreement ratios are calcu- outsourcing agent for LR cooperatives is stipulated lated both in terms of the number of land rights in the Law. This is one of the methods for private holders and land area. Although the requirement developers to participate in LR projects. Private of agreement ratio is two-thirds under the LR Law, developers, as the outsourcing agent, invest in the local governments as approvers generally suggest LR project and receive the reserve lands stipulated to collect the agreement of 80–90 percent in consid- under the contract with the LR cooperative as return eration of the project risk, since the larger the on their investment. After LR, the private developer percentage of people who oppose or misunderstand carries out real estate development using the reserve the project, the more difficult the implementation lands. may become. In addition, it is worth noting that the agreements are sought on the Implementation Plan Notable differences between public and private implementers include that public implementers are limited to implementing LR projects designated in 9  LR cooperatives are organized by land rights holders within the urban planning. In other words, LR projects of LR project site. To establish the LR cooperative, the applicant group public implementers are required to have necessity (comprising seven or more land right holders) is required to have agreement of more than two-thirds of the land right holders. After in urban management policy under local govern- establishment of the cooperative, all land right holders are regis- ment. On the other hand, private LR projects basi- tered as the cooperative members. cally are not required to have necessity—whether 10  LR corporations are a type of special purpose company organized by land rights holders and a private company. This provision was or not it is designated within urban planning; added to the LR Law in 2005. To establish the LR corporation, land however, LR projects subsidized by central govern- rights holders must invest more than 51 percent of the capital of the LR corporation. ment must be designated in urban plans even if 11  Public implementers are not required to collect agreement from they are private projects. land right holders. Objectives and Characteristic of Japanese LR 11 Table 3.1: Number and Area of LR Projects in Japan (as of March 2013) Completed Under Implementation No. Project Area No. Project Area Category/Implementer of Project (ha) of Project (ha) LR under the former Urban Planning Law 1,285 67,862 — — LR under the LR Law 9,624 261,386 928 36,297 Public sector Local government 2,244 102,012 504 20,925 Central government 83 4,150 — — Government corporations 385 26,969 35 4,462 Sub-total 2,712 133,131 539 25,387 Private sector Individual 1,293 17,512 51 890 LR cooperative 5,618 110,738 337 10,016 LR corporation 1 5 1 3 Sub-total 6,912 128,255 389 10,909 Total 10,909 329,249 928 36,297 Source: Urban Regeneration and Land Readjustment Association, Japan. and the articles of incorporation of LR cooperatives increase must be recouped into the project revenue and LR corporations. The Implementation Plan is through the sales of reserve lands.13 In other words, not required to include detailed plans relating to the development profits that land rights holders can land replotting and compensation for each land right obtain are limited to less than half of total develop- holder. These detailed plans are only formulated ment profits in the LR project supported by a central after the project approval. governmental subsidy. This subsidy system has promoted implementation of LR projects as well as Central government subsidy. Central government development of urban infrastructure such as roads subsidy can be used for development of city plan- and parks while balancing public investments and ning roads in the LR project site. The maximum land rights holders’ profits. amount of subsidy is calculated by: (a) estimating a hypothetical cost of land acquisition, then adding Governmental technical and financial support for (b) the compensation costs for the buildings and private LR projects. A private LR project can receive structures within the area of city planning roads, technical and financial support from central and and also adding (c) the construction cost of roads. local governments. A person or group who tries to This is to provide comparability with the other implement a private LR project can apply to local subsidy programs for road construction. Since LR government for technical support for preparation implementing bodies secure public lands for city and implementation. Local government dispatches planning roads through land contribution and not LR experts to support preparation activities such as through land acquisition, but nevertheless have to land owners’ meetings, feasibility study and spend (b) and (c), the amount for (a) can be used for other purposes, such as project management cost and compensation cost in areas outside the 12  This ratio has been the practice, while never formally stipulated. urban planning roads. In subsidized LR projects, 13  There are the exceptions in cases where the LR projects did not more than 50 percent12 of the total of land value increase the total land value. 12 Case Study: Land Readjustment in Japan formulation of Implementation Plan, and provides before and after the LR project—is formulated subsidies for implementation activities and construc- through a ‘project frame’ as shown in Annex 3. tion of public facilities under the local government’s Based on this framework, land exchange of indi- bylaw. This support system effectively promotes vidual land plot is calculated. In LR, there are three private LR projects under the local government’s calculation methods for the size and location of jurisdiction. LR cooperatives and LR corporations replotted land: (a) land valuation-based method, can obtain other public financial support, such as (b) area-based method, and (c) mixed method using no-interest governmental LR funds. (a) and (b). Currently, the land valuation-based method is widely used. Under this method, the Tax exemption for LR implementers and land valuation is not based on the land price, but on the owners. LR implementers can receive exemption intrinsic value of each plot. As such, the results of and reduction of taxation. Tax exemption is granted the valuation are indicated by ‘points’, not ‘Yen’ in for the real estate registration tax for replotting lands order to exclude external factors that affect land and for the sale of reserve lands, and for corporate prices. The value of a land area after the project is tax and income tax on the LR cooperative and calculated by multiplying the value of the existing government corporations.14 Also, land owners whose land by the value-increasing ratio of the LR project. land is expropriated or acquired receive a reduction For each replotted area, value is obtained by divi- in the income tax on the income they receive from sion of the land value after the project by the unit compensation and land expropriation. These tax land value of the replotted location. For instance, incentives motivate land right holders to apply and existing land with area of 1,000 square meters (m2) cooperate in LR. These supports are intended to and value of 500,000 is provided with after-project foster future increases in social and economic value land value of 750,000 (resulting from multiplica- and tax revenue from real estate developed in LR tion of 500,000 by the value-increasing ratio of 1.5). projects. If the land is replotted in the area with the unit value of 1,000 per m 2, the replotted area is calcu- Sales of reserve land. Reserve land is a major finan- lated as 750 m 2. cial resource for LR projects. The LR Law provides that reserve lands can be sold by LR implementers Regarding land valuation, although there are several to recover LR project cost and to be used for the kinds of land evaluation methods, the land value purposes prescribed in the LR articles. The LR Law assessment based on accessibility, established in also provides the upper limit of value of reserve 1950, is widely used due to ease of use, which facil- land: the total value of reserve lands must not itates fast evaluation of many plots of land. If a land exceed the increase in total value of the lands in plot has better access by road, the unit value is the project site. These provisions secure benefits of higher. Based on this method, the total points in land right holders regardless of their agreement or the area will be first calculated before and after LR disagreement regarding project implementation. and the value-increasing ratio is obtained. All the land parcels are entitled to be replotted so that the Land exchange methods and land valuation. The value for each parcel will be increased at the same main principles of land exchange under LR are value-increasing ratio. It is inevitable to have small securing the existing private land value and main- differences (i.e., value more or less than this taining fairness among land rights owners. The land exchange and land valuation are targeting the private lands in the LR project. The fundamental 14  When the cooperative sells the reserve land, the sale income is framework—regarding average land contribution tax exempt. Note: this exemption also applies to individual-imple- ratio, total land areas, and average land prices mented and corporation-implemented LR. Objectives and Characteristic of Japanese LR 13 entitled value), and that difference will be settled promoting high-intensity land use and protecting through an adjustment payment. owners of small land parcels. By comparison, UR is basically carried out based Adjustment payment. The LR Law provides an on the principle of keeping the value of the existing adjustment method through monetary payment to real estate, including buildings, the same before correct for differences between the calculated and after the project. The value of each building replotted area and the measured area after devel- unit which is provided through the UR project must opment. The LR implementer pays or collects money be equivalent to the value of the real estate before to/from the land right holders based on the final the project. replotting plan. This method can resolve minor differences in the values that could not be avoided Land right protection by designation of land replot- in designing the replotting plan. ting plan. Securing of land rights at any point throughout the repolotting process is most impor- Special treatment for small land parcels. In the tant both for the land right holders participating in land replotting planning, small land parcels can be an LR project and for the implementing bodies. In provided with special treatment, such as: Japanese LR, the land replotting plan—indicating (a) exchanging land for money; and (b) designation the location, figure, and area of replotted land of minimum size of replotted land. Exchanging land rights—is officially designated before the LR for money is carried out through the adjustment construction stage. This is called “tentative desig- payment in lieu of receiving the replotted land, nation of replotted land” because it is not final based on the land owner’s request. Land contribu- replotting until the survey after construction is tion for small lands can be reduced by adhering to done. Each replotted land parcel is legally connected a minimum size designated by the LR implementer.15 with the original land right by the designated replot- To make up for the reduced contribution from small ting plan. During implementation, land right holders land parcels, land contribution for other larger land keep their certificate of original land right. If neces- parcels may be increased. sary, the replotting plan can be altered. After the completion of the construction work, each of the Restriction of building activity. Building restric- replotted land parcels will be registered all at once tion in the LR project area is enforced by two stages based on the final replotting plan. This designation of the planning and implementation process. In the system secures land rights both of original and planning stage, before approval of the LR project, replotted lands during project implementation. Even the restriction under the Urban Planning Law is in the case of complicated land replotting in urban- enforced (as described in the section on urban plan- ized areas, this protection measure can smoothly ning). Under the LR Law, after approval of the LR transfer original land rights to new land rights. project, permission from the approver of the LR project is needed for any land development, new In addition, the LR law provides the correlation prin- building, rebuilding, and/or extension of building ciple in land replotting so that replotting land shall that could possibly interfere with the LR project be correlated with the original land in terms of loca- implementation, and any installation of unmovable tion, area, soil condition, water utilization, land use, structures. This provision functions to foster smooth environment, and so on. This provision secures the implementation of LR projects. similarity of conditions between replotting land and the original land. The LR Law also provides for exception to the above principle based on the land 15  These land right owners still have to pay an adjustment fee in such owner’s requests for specific purposes such as cases to ensure equity among the land rights holders. 14 Case Study: Land Readjustment in Japan Temporary relocation. In order to undertake construc- Combining LR and other land value capture tools. tion activities during the implementation stage, usage In LR, a part of land value increase shall be contrib- of specific land parcels by the holders of land rights uted to reserve lands through land contribution. in the project area is temporarily terminated by noti- The remaining value belongs to private lands. fication from the LR implementer. For houses and Although Japanese LR doesn’t have any tool to shops, the users temporarily rent other houses and directly capture the remaining value from the shop buildings while they are unable to use their project in order to use for other public purposes, own. The cost, including rental fee and moving, is administrative bodies can capture part of the compensated by the LR implementer. In public LR remaining value through the levying of the real projects in urbanized areas, there are some cases estate tax for all properties and urban planning tax16 where the LR implementer constructs apartments for for properties in urban areas. In addition, it is temporary relocation of the existing residents. expected that revitalization of land use and activi- ties will increase other tax revenues, such as corpo- Forced relocation on site. LR implementers can relo- rate tax, income tax and consumption tax. This is cate or demolish buildings and structures any time one of the incentives of governmental support for after expiration of the period stipulated on the relo- general urban development and redevelopment proj- cation notification. In case of LR projects imple- ects including LR in Japan. mented by private implementers, once they have the required approval of the mayor of the munici- pality. This forced relocation is not a regular method, TYPOLOGIES OF JAPANESE LR and is recognized as a last resort due to the time PROJECTS and costs associated with obtaining the approval and supervising of the relocation work. In fact, there Given its flexibility, Japanese LR has been used to are many cases to solve by negotiation before achieve multiple development objectives. The types executing forced relocation. of Japanese LR projects are categorized as follows: Dispute resolution. Regarding dispute resolution, • new town development in peri-urban areas; the implementer’s implementation activities (e.g., • post-disaster reconstruction; designation of replotting plan) are defined as admin- • city center and station area redevelopment; istrative disposition, which is eligible for request • improvement of congested and wooden residen- for examination under the Administrative Complaint tial areas; Investigation Law. Persons and legal entities can • integrated LR with railway development; and submit a request for examination to the prefecture • small-scale LR for land consolidation in urban- Governor or Minister of Ministry of Land, ized areas. Infrastructure, Transport and Tourism (MLIT), depending on the type of the implementer. In case New town development in peri-urban areas. The of dissatisfaction with the Governor’s decision, the most typical LR projects in Japan are those that aim person or legal entity can submit a request for to develop large- and medium-scale residential areas re-examination to the Minister of MLIT. in agricultural land and vacant land areas. During the period of huge housing demand in the 1950s to Penalty. The LR Law provides for penalty—for indi- 1990s, LR supplied numerous housing lands. LR viduals, land right holders, executives of LR coop- eratives and LR corporations and stakeholders—for bribery, concealments, obstructions and violations 16  One kind of real estate tax imposed by some municipalities in of governmental orders and inspections. Japan. Objectives and Characteristic of Japanese LR 15  ew Town Development in Peri-urban Area Figure 3.1: N Cadastral map before LR project Land Re-plotting Plan Source: Memorial Bulletin of Hirate Nanbu LR Project, Hirate Nanbu LR cooperative, Nagoya City. cooperatives are often adopted as the implementing implemented by local governments due to urgency, entity due to profitability and ease of operation. high-priority, complication of existing land rights Most of the LR cooperative project have utilized and financial constraints,17 but is also implemented sales of reserve land as the major financial resource. by railway companies and the Urban Renaissance Figure 3.1 illustrates an example of new town devel- Agency (URA). In this type of project, land replot- opment in a peri-urban area. ting is effectively used for consolidation of vacant lands and private lands for the improvement of the Post disaster reconstruction. LR has been applied land use, and for creating spaces for urban facili- for urban reconstruction after WWII and after the ties such as arterial roads and station plazas. Great Kanto Earthquake of 1923. In recent years, Simultaneously with the LR project, other related post-earthquake LR projects have been imple- projects—such as commercial complex develop- mented after the Great Hanshin Earthquake in 1995 ment, station building reconstruction and railway and the Great East Japan Earthquake in 2011. In elevation—are implemented by local government, Kobe City (see Figure 3.2), 13 LR projects with a private companies and the railway companies. total area of 145 ha have been implemented for post- earthquake reconstruction. In these projects, effec- Integrated LR with railway development. Under tive use of collective land replotting into a this category, there has been only one special case large-scale site has supported apartment develop- so far—the Tsukuba Express Railway (see Figure ment, and land right exchanging with money has 3.4). Tsukuba Express connects Akihabara in Tokyo provided support for livelihood restoration of the and a suburban research and development area and disaster affected people. has total length of 58km with 22 stations. To secure the right of way for the railway facilities, a special City center and station area redevelopment. To methodology—using a combination of prior-LR land meet the objective of urban redevelopment for city acquisition and land replotting—was established center and station areas (see Figure 3.3 for an example), LR is applied for land and infrastructure development. This type of LR project is mostly 17  Because there is little space available to create reserve lands. 16 Case Study: Land Readjustment in Japan Figure 3.2: Post-Earthquake Reconstruction LR Project After earthquake Land use plan Source: Rokkomichi North Station LR Project and Rokkomichi Western Station LR Project, Kobe City. Figure 3.3: Station Area Redevelopment Before After LR project Source: Akihabara Station Area LR Project, Tokyo. Objectives and Characteristic of Japanese LR 17 Integrated LR with Railway Developmentv Figure 3.4:  Source: Kashiwa Hokubu East LR Project, Urban Renaissance Agency, Japan. under the Law on Special Measures Concerning the Parts of the section of the right of way were secured Promotion of Integrated Urban Development with through this method and 15 station areas were Railway Development in Metropolitan Area. developed by the LR project. This method aims to widely cover target lands Improvement of congested and wooden residen- which are easy to acquire. The outline of the meth- tial areas. This type of LR aims to improve the odology is shown in Figure 3.5. sa fet y a nd d isaster prevent ion of u rba n Figure 3.5: Methodologies of Integrated LR with Railway Development 1: Step 1: Step 2: Step 2: Step 3: Step 3: Step • Designate • Designate ROW of urban ROW of railway urban railway • replotting of Land replotting • Land of acquired acquired lands lands • Railway • construction Railway construction • Prior-LR • Prior-LR land acquisition in land acquisition LR project in LR project area area into the into ROW of the ROW railway of railway • Urban • Urban development development by LR project by LR project project area LR project LR area of railway ROW of ROW railway lands Acquired lands Acquired Source: Author. 18 Case Study: Land Readjustment in Japan Figure 3.6: Improvement of Congested and Wooden Residential Area Before After LR project Source: Suehiro Minami LR LR Project, Kadoma City, Japan. infrastructure and buildings in existing congested the usability of private lands and vacant lands in residential areas with wooden structures (see Figure urbanized areas. The major objectives of this type of 3.6 for an illustration). The LR project has the LR are land consolidation and replacement of existing specific objectives such as: (a) securing evacuation roads. This type of LR does not require increasing routes and public spaces to prevent fires from the amount of area for public facilities; hence, land spreading; (b) promoting reconstruction of old contribution is not always necessary. In addition, buildings having high risks of collapsing and where appropriate, application of exceptional or burning down; and (c) land consolidation to support reduced standards for road width and park areas is collective reconstruction for apartments. encouraged, based on the LR Management Guideline published in 2001. Through land replotting, the land Small-scale LR for land consolidation in urbanized owners can receive a collective land lot to be used areas. This type of LR has been used for maximizing for large-scale building construction (see Figure 3.7). Figure 3.7: Small-scale LR for Land Consolidation in an Urbanized Area Source: Land Readjustment Promotion Agency, Umeda 2-chome LR project, Osaka. 4 PROFILES OF SELECTED LR PROJECTS NEW TOWN DEVELOPMENT IN 1969, new town development using LR was promoted PERI-URBAN AREAS: NAGAKUTE by the city government. NANBU LR PROJECT IN AICHI PREFECTURE To date, nine LR projects have been implemented by phases in the city area. The total project area is Background. Nagakute City is a city adjoining 599 ha, which covers 80 percent of the urbaniza- Nagoya, which is the third largest city in Japan. As tion promotion area. Among the nine projects, eight of 2015, the city has an estimated population of projects were implemented by LR cooperatives. As approximately 58,000, and total area is 21.6 square a result of the well-controlled urbanization, kilometers. Until the 1960s, the city’s population Nagakute city was chosen by the City Data Pack in was approximately 10,000 and most of the city area 2015 (published by Toyo Keizai Inc.) as the third- was covered by farm lands and forests. After best livable city in Japan. The locations of the nine opening a terminal station of the urban railway in LR projects are shown in Figure 4.1. Figure 4.1: Location of LR Projects in Nagakute City Nagakute Shimoyama No. 1 Shimoyama Yazako No.1 Nagakute Chubu Kouen Nishi Station Nagakute Seibu Nagakute Chuou Nagakute Tobu Nagakute Nanbu Completed Under construction Source: Nagakute City. 19 20 Case Study: Land Readjustment in Japan incorporated into an urbanization promotion area, OVERVIEW OF THE NAGAKUTE NANBU LR and the LR project, urban facilities and zoning plan PROJECT: were designated on the urban plan. Through the legal procedures, the LR cooperative and the • Project Area: 98.2 ha • Implementer: Nagakute Nanbu LR cooperative Implementation Plan were approved in 1998. • Number of Land Right Holders: 780 • Project Period: 17 years (from 1998 to 2015) Overview of the LR Project. The Nagakute Nanbu • Total Expenditure: 20.8 billion JPY (208 million USD) LR project aimed to develop a new town with resi- • Average Land Contribution Ratio: 39.86% dential area, commercial and business area, a • Planned Population: 5,000 people primary school and a nursery school, and green parks and cemetery areas, under the concept of “People and Nature-friendly Town”. The project included development of four roads designated on Preparation of the Nagakute Nanbu LR project the urban plan. The project was implemented by started since 1990. At that time, the project area an LR cooperative organized by the land right was mostly covered by farm lands and forests within holders in the project area. The project cost of 20.8 the urbanization control area. Motivation for the billion JPY (208 million USD) was covered by central project came from the land owners who were government subsidy, municipal subsidy and sales concerned about environmental deterioration from of reserve land. The sales of reserve land were the increasing dumping of garbage and lack of public major financial resource accounting for 67 percent infrastructure. The land owners’ group conducted of the total revenue. Around 40 percent of the total study meetings and surveys to discuss the need for area of private lands was used for both public facil- town development. For two main reasons—diffi- ities and reserve lands through the land contribu- culty of land acquisition and importance of land tion. The project was completed in 2015. owners’ participation—they chose the LR scheme. In 1993 the preparatory meeting was held to formu- The land use plan is shown in the Figure 4.2 and late the Implementation Plan and establish the LR Figure 4.3 shows the site conditions before and after cooperative, with technical support provided by the the LR project. The project frame abstracted from municipality. In 1997, the project area was the approved Implementation Plan is described in Annex 3. Notable features. For the enhancement of the conve- Land Use Plan of Nagakute Nanbu Figure 4.2:  LR Project nience and amenity as a new town area, and promo- tion of the project finance, the LR cooperative applied special techniques and programs as described below. (a) Request-basis land replotting. For the commer- cial area development in the center area, collective land replotting based on the land owners’ request was used (see Figure 4.4). Lands for which the owner wanted to join the lease business were collec- tively replotted into the large-scale commercial block. The shape of each replotted land parcel was Source: Nagakute Nanbu LR Cooperative. designed to be long and narrow in order to avoid Profiles of Selected LR Projects 21 Figure 4.3: Site Condition Before and After the LR project in 2000 in 2010 Source: Memorial Bulletin of Nagakute Nanbu LR. its individual land use.18 After the replotting, the (b) District plan and cityscape guideline. A District land owners collectively leased their lands to a Plan, which controls land use and building profiles commercial developer to build a shopping center. in more detail than the zoning plan, was designated In addition, the project included an eco-friendly residential area in the southern area with natural 18  The LR law does not allow conversion of a group of individually owned land parcels into a jointly-owned parcel in order to protect and hilly landscape. This was also carried out property rights of individual landowners, except for special cases through a request-based land replotting. for small land parcels. Figure 4.4: Collective land replotting for commercial area Source: Nagakute Nanbu LR Cooperative. 22 Case Study: Land Readjustment in Japan Figure 4.5: House and Open Space with Planting Source: Tamano consultants Co. Ltd. in the project area. The plan regulates minimum covers a part of the cost for the project’s activities land size, construction line, advertisement, struc- (e.g., establishment of LR cooperative, securing ture of fences, building height, and specific land public land for a part of the road exceeding the use. In addition, a cityscape guideline was formu- width of 12 m, drainage, green park, and adminis- lated to control wall and roof color, size and illu- tration costs). This helped to secure profitability for mination of advertisement, and to promote planting the LR cooperative and promoted the LR coopera- in open spaces (see Figure 4.5). The plan and guide- tive’s project. line had an effect not only in terms of improving the living environment, but also increasing land (e) Establishment of town management associa- value which is important for cost recovery through tion. The LR cooperative implemented not only the the sale of reserve lands. LR project, but also nature-friendly activities for the community including new residents. The LR coop- (c) Promotion for sales of reserve land. With the erative had conducted several community events stagnation in the housing market in Japan, the sale for planning, agricultural experience tour, and wild- of reserve lands is key to successful implementa- life preservation activities in the green area in the tion of an LR cooperative project. In the replotting project site (Figure 4.6). However, the LR coopera- plan, priority was given to having the reserve lands tive had to be dissolved at the end of the project at good and commercially attractive locations before according to the LR Law. For the continuation of assigning lands for replotting. In addition, promo- the LR cooperative’s mandates, a town management tion targeting housing companies started in the association, Nagakute Minami Satoyama Club, was beginning stage in order to incorporate the opin- established by the members of the LR cooperative. ions of the housing company (as the buyer) in terms The town management association continues to of the land use plan and replotting plan. Through implement those community-based activities, collab- those efforts, the reserve lands were sold earlier orating with the municipality, universities and than expected. private companies. (d) Local government subsidy. The LR cooperative Key results of LR project: received financial support from Nagakute City in The development effect of the LR project is summa- accordance with the municipal bylaw. The subsidy rized as follows: Profiles of Selected LR Projects 23 Figure 4.6: Community Events in Project Area Source: Tamano consultants Co. Ltd. • city road network was developed, connecting to wooden houses along narrow passages, and small other neighboring cities and public green park; factories and workshops of shoe manufacturers. The • creation of new town brought convenience and local industry had been on the decline due to the defined the cityscape; aging workforce and intensification of international • promotion of private buildings (such as resi- competition. For urban reconstruction, Kobe City dences, apartments, and shops) constructed by urgently designated the Shin-nagata Kita area land right holders and buyers of reserve created (42.6ha) as an LR project on the urban plan in March new uses of land; and 1995. The project plan of the LR was approved in • the number of residents in the LR project area July 1996. In addition, the Takatori Kita area (17 ha) increased from 30 to 5,000 people. was incorporated into the LR project in 1997. Figure 4.7 illustrates the location of the LR project area. POST-EARTHQUAKE Overview of the LR Project. The project area RECONSTRUCTION: SHIN-NAGATA consists of two areas: (a) Shin-nagata Kita area, a EKIKITA POST-EARTHQUAKE congested area with many wooden houses; and (b) RECONSTRUCTION LR PROJECT IN Takatori Kita area, part of a huge factory land parcel KOBE CITY owned by the railway company. The LR project’s objectives were to reconstruct the urban facilities Background. The Shin-nagata Ekikita area is one of and improve land use as well as the livelihoods of the enormously damaged areas affected by the Great the disaster-affected residents in Shin-nagata Kita Hanshin Earthquake that occurred on the 17th of area. Takatori Kita area was incorporated into the January 1995. The earthquake brought about 4,600 LR project to develop a new housing area with deaths, with 15,000 injured in Kobe City only. disaster-prevention function and providing commer- 123,000 buildings collapsed or were partially cial and cultural facilities. The LR project was imple- destroyed, and 7,000 building were burned. In the mented by Kobe City. The project cost of 103 billion project area, around 80 percent of the buildings were JPY (1.03 billion USD) was covered by public funds demolished or partially destroyed by the earthquake such as central government subsidy, contribution and fire. Before the earthquake, Shin-nagata area for urban park construction, and municipal general was a congested urbanized area with many small, budget. Reserve land was not secured due to a 24 Case Study: Land Readjustment in Japan Figure 4.7: Location of Shin-nagata Ekikita Post-earthquake Reconstruction LR Project Source: Kobe City. Figure 4.8: Land Use Plan of Shin-nagata Ekikita Post-earthquake Reconstruction LR Project Source: Kobe City. decrease in total land value. The average land contri- OVERVIEW OF THE LR PROJECT: bution ratio for both areas was 15.07 percent. Within Shin-nagata Kita area, the average land contribution • Project Area: 59.6 ha (Shin-nagata Kita Area: 42.6ha, Takatori Kita area: 17ha) ratio was set at 9 percent in consideration of existing • Implementer: Kobe City small land lots with an area of around 40 m 2. In • Number of Land Rights: approximately 2,400 addition, land contribution for small plots with an • Project Period: 17 years (from 1995 to 2011) area of 60 m 2 or less was reduced to 0–9 percent as • Total Expenditure: 103 billion JPY (1.03 billion USD) • Average Land Contribution Ratio: 15.07% a special treatment. The project was completed in 2011. The land use plan is shown in Figure 4.8. Profiles of Selected LR Projects 25 Figure 4.9: Model of total land value decreasing and the balancing by land acquisition Public land Private land After Land Acquisition Land Price: 300,000 JPY/ m2 6ha 14ha (3,000 USD/m2) 6.8ha 13.2ha Before (30%) (70%) (34%) (66%) Total Land Value of Private Land: 42 bill. JPY (420 mill.) Decreasing: 2.4 bill. JPY Total Land (24 mill. USD) Value: 39.6 bill. Land Acquisition: JPY Land Price: 330,000 JPY/ m2 8,000 m2 x 300,000 8ha 12ha (3,300 USD/m2) JPY/m2 (3,000 USD/m2) After (40%) (60%) Total Land Value of Private Land: 39.6 bill. JPY (396 mill.) Balance Notable features. For the reconstruction of urban acquisition supported the speedy resettlement of facilities and livelihoods in disaster-affected areas, the disaster-affected peoples. the LR project applied special techniques and programs as described below. (b) Joint apartment development using collective land replotting. In the project area, many of land (a) Land acquisition as a means of compensa- right holders lost their houses due to the earth- tion due to decrease in total land value. Most LR quake and fire. The reconstruction faced a number projects aim to increase land value; however, in of challenges, such as: (a) under the current some cases, in urbanized areas, the total land building code, it was impossible to secure the same value of private land after the LR project is lower living spaces as before the disaster; (b) land right than it was before the LR project. The decrease in holders lacked their own budget due to old age and private land value is a result of a combination of “double loan” problem.19 To address this, joint land contribution from private to public land and apartment development was proposed. Through small increases in land unit price due to the the coordination and participation of the land right already high unit price of existing land. According holders, eight apartment projects were imple- to the LR Law, the LR implementer must compen- mented in the LR project site (see Table 4.1 and sate if there is a decrease in land value. In reality, Figures 4.10 and 4.11). it is commonly practiced that the public LR imple- menter acquires lands before LR instead of paying Those apartment projects were ordinary building the compensation after LR. The purchased lands projects—not following the UR Law, in order to are defined as public lands, which decreases the avoid losing time to the legal procedures. Land pre-LR total value of private land. As the result, rights holders who joined the apartment develop- the total value is balanced between before the LR ment were replotted into the apartment project project and after. The calculation model is shown site. After designation of the land replotting plan, as Figure 4.9. the apartment developer temporarily purchased the participants’ land rights, under a contract that In the Shin-nagata Ekikita LR project, the land value was estimated to have decreased by 27 billion JPY (270 million USD). Kobe city purchased lands instead 19  Households already had a loan for the house they owned. When their house was demolished or burned by the earthquake and fire, of paying the compensation later, and reclassified in order to re-build they needed to take out another loan -- while the purchased lands to public land. The land they still had the original loan as well. 26 Case Study: Land Readjustment in Japan Table 4.1: Joint Apartment Development in Shin-nagata Ekikita LR Project Land Participated land Apartment Plan Area (m2) right holders Total housing (unit) Housing for sale (unit) Shop (unit) 1 2,072 42 99 67 15 2 1,639 25 93 63 3 3 1,033 19 35 21 7 4 1,669 45 88 56 22 5 1,226 20 73 48 2 6 651 19 18 12 - 7 728 17 34 20 2 8 195 5 11 5 1 Source: Kobe City. described the condition for returning the rights  ocation of Joint Apartment Figure 4.10: L Development with an apartment unit. After development, the developer sold a part of the apartment building to the market to recover the development costs. Then, the original land right holders received the remaining apartment units. This process supported livelihood recovery as well as disaster prevention of housing, and also promoted high- intensity land use while keeping the existing community intact. (c) Proposal of land use plan from Residential Source: Kobe City. Town Planning Committee. Shin-nagata Kita area Figure 4.11: Collective Land Replotting for Joint Apartment Development Source: Kobe City. Profiles of Selected LR Projects 27 consists of more than 20 urban blocks with an area STATION AREA REDEVELOPMENT: of approximately 1 ha each block. Kobe City decided AKIHABARA STATION AREA LR to establish twenty-one units of the Residential Town PROJECT IN TOKYO Planning Committees in each community after the designation of the LR project on the urban plan. The Background. Akihabara station area is located at the activities of the committees were supported by town city center of Tokyo, just 2km north of Tokyo Station. planning experts such as university professors and It has an important transport hub function in Tokyo consultants who were dispatched by Kobe City. Each and is also one of the world’s largest shopping areas committee formulated a local land use plan for each for electrical product, with both big vendors as well urban block, with technical advice provided by the as many medium- and small-size shops. Previously, town planning expert, and proposed it to Kobe City. the area had huge vacant lands along the railway Based on the proposal, Kobe City adjusted the land tracks that were used for a public vegetable market use plan of the LR project. In addition, the committee and a freight depot. The market land (area of 2.7 ha) discussed joint apartment development, as previ- was owned by the Tokyo Metropolitan Government. ously described, and also proposed an increase of The freight depot land (area of 3.2ha) was owned by the designated FAR, to improve feasibility of the the former Japanese National Railway Settlement apartment development. Then, Kobe City adjusted Corporation. In 1993, a decision was taken to build a part of the Zoning Plan and formulated the District a new urban railway, the Tsukuba Express, which Plan in order to support the joint apartment provides a 58km-long connection between Akihabara development. station and a research and development area in Ibaraki prefecture. Key results of the LR project: The development effect of the LR project is summa- The Tokyo government included redevelopment of rized as follows: the vacant lands in the Akihabara station area in the 3rd long-term development plan in 1990, and formu- • disaster prevention of the project area was lated the conceptual plan for the urban redevelop- improved through widening city roads, creating ment in 1992. In the conceptual plan, LR would be community roads and open spaces, newly-built implemented by the Tokyo government for the rede- buildings with aseismic and fireproof struc- velopment due to the necessity to reorganize land ture, and construction of a fire prevention water rights of the huge vacant land parcels and surrounding tank; small private lands. Furthermore, urban control and • livelihood rehabilitation of disaster-affected people was aided by the exchange of money for existing land rights through land acquisition before approval of the LR project, and joint OVERVIEW OF THE LR PROJECT: apartment development using collective land • Project Area: 8.76 ha replotting. • Implementer: Tokyo Metropolitan Government • the population in the project area increased • Number of Land Right Holders: 35 (as of project from 7,587 persons before the earthquake in approval) 1994 to around 9,400 persons after completion • Project Period: 19 years (from 1997 to 2015) of the LR project in 2011; and • Total Expenditure: 34.6 billion JPY (346 million USD) • Average Land Contribution Ratio: 35.10% (34.22 % for • the cityscape in the project area was improved public land, 0.88% for reserve land) by development of underground power lines and Source: History of Akihabara Station Area LR Project, Tokyo cityscape guidelines formulated by the Metropolitan Government. Residential Town Planning Committee. 28 Case Study: Land Readjustment in Japan urban planning in 1996. The Implementation Plan  kihabara Station Area Figure 4.12: A (Before construction in 1997) of the LR project was approved in 1997. Overview of the LR Project (see Figures 4.12 and 4.13). The LR project’s objective was to redevelop the Akihabara station area, including the huge vacant lands, for urban land use with commercial, office, residential and cultural facilities. It also aimed to achieve synergy with urban transportation and enhancement of urban function utilizing the existing characteristic as an electrical shopping town. The development concept targeted to introduce three urban functions: (a) innovation hub for digital media Source: Tokyo Metropolitan Government. and next-generation industries; (b) communication and information function; and (c) living and accom- modation function. The LR developed four city roads Figure 4.13: Route Map of Tsukuba Express designated in the Urban Plan, including two station plazas, and community roads and a park. The project cost of 34.6 billion JPY (346 million USD) was covered by a central government subsidy, Tokyo government’s general budget, and sales of reserve land (600 m 2 of 2.3 billion JPY (23 million USD)). The average land contribution ratio was 35.10 percent, and was mostly used for securing of public facility land. The basic design of public facilities is shown in Figure 4.14. The replotting plan was designated in 1998. After land rights registration for replotted lands in 2011, the project was completed in 2015. Figure 4.15 illus- trates the private urban development that has taken place in the Akihabara Station area. Notable features. To achieve the project objective, the LR project applied special techniques and programs as described below. (a) Designation of Urban Renaissance Urgent Source: Japan Railway Construction, Transport and Technology Agency. Redevelopment Area (URURA). The URURA is a central government program to support creation of urban centers in large-scale cities through public- integrated land use were to be achieved by applying private collaboration under the Act on Special the District Plan and guidelines. The LR project and Measures Concerning Urban Renaissance, estab- the related urban facilities were designated in the lished in 2002. In the area, designated urban Profiles of Selected LR Projects 29  asic Design of Public Facilities of Akihabara Station Area LR Project Figure 4.14: B Source: History of Akihabara Station Area LR Project, Tokyo Metropolitan Government. development projects can receive special measures Akihabara and Kanda Area, with an area of 157ha such as: deregulation of land use control, private including the LR project urban area, was designated proposal of urban planning, expediting of legal procedure, and Minister’s permission for financial support 20 and tax reductions.21 In addition, relevant 20  Long-term loan with stable interest rate for middle-risk invest- government offices and local government strongly ments for private urban renewal projects. 21  Tax reduction is applied to (a) real estate acquisition tax on land promote projects and programs for urban renewal acquisitions by the certified project implementers; (b) income tax, under the development policy decided by the Urban corporate tax, registration and license tax, real estate acquisition Renaissance Headquarters of the Prime Minister’s tax, real estate tax and urban planning tax on building construc- tions by the certified project implementers; and (c) income tax and Office. At present, 63 areas with a total area of corporate tax on land transaction from land owners to the certified 8,372ha are designated as URURA in Japan. project implementers. Figure 4.15: Private Urban Developments in Akihabara Station Area Source: Chiyoda Ward Office, Tokyo 30 Case Study: Land Readjustment in Japan as an URURA in 2002 (Figure 4.16). The develop- Urban Renaissance Urgent Figure 4.16:  Redevelopment Area of Akihabara ment policy aims to create an urban core of IT and Kanda industry through land use renewal using huge vacant lands. In the Akihabara and Kanda Area, the special measures of the URURA related to: (a) financial support and tax reduction for a private urban reconstruction project in the LR project area; and (b) deregulation of the maximum floor-area- ratio for UR projects and private urban reconstruc- tion projects—which are designated as a Special Urban Renewal District in the area outside of the LR project (but still within the URURA). (b) District plan. The District Plan was designated in the project area. The plan designates urban facil- ities, such as roads and open spaces, and regulates land use and building in detail in terms of land size, FAR, construction line, advertisement, structure of fences, building height, specific land use and eco and green technologies. In particular, deregulation of the FAR is provided for two urban blocks to promote large-scale urban development projects . (c) Special Purpose Company for Commercial and Source: Prime Minister’s Office, Japan. Office Complex. For the development of a commer- cial and office complex in the LR project area, a special purpose company, UDX, was established by investment companies. The UDX developed the Akihabara UDX Building and leased its floors to OUTLINE OF AKIHABARA UDX: tenants. In the beginning of the establishment of • Project Area: 1.1 ha the UDX, the project cost was funded from the sale • Building: 22 stories and 3 stories of basement of preferred equities issued by the investment • Floor area: 161,600sqm companies and project finance aiming to achieve • Floor use: office, shops, event space high profitability. For the development, UDX • Construction Period: 3 years (from 2003 to 2006) purchased replotted land owned by Tokyo govern- Source: Chiyoda Ward Office, Tokyo. ment. The project scheme is shown in Figure 4.17. (e) Effect of the LR Project22 In the History of Akihabara Station Area LR Project, the development effect of the LR project is summa- rized as follows: Source: History of Akihabara Station Area LR Project, Tokyo 22  Metropolitan Government. Profiles of Selected LR Projects 31 Figure 4.17: Project Scheme of Akihabara UDX Land purchasing Funding Tokyo Financial organs Metropolitan Government (Project Finance) Return Preferred Tokyo UDX equity Construction (Special Purpose Company) Construction company Government Investment Companies Dividend Sale of preferred equity Lease Tenants Investors Tenant fee Source: Author based on information from UDX. • convenience for shopping, pedestrian safety, • the total economic multiplier effect of the LR and cityscape were improved; project was 10 times the investment: (i) building • in the surroundings of the LR project area, the relocations in the LR project area triggered private number of offices related to the IT industry has construction investment equivalent to 6.4 times increased 30 percent (194 offices) over six years the compensation cost; and (ii) construction for (since 2000); the LR project and related private development • 121 new apartment buildings (total floor of created economic activities, such as procurement 480,000m 2) were developed and the population of construction materials and other consumption, increased 27 percent (681 people); and amounting to 2.55 times the construction cost. 5 CONCLUSION LR in Japan has been used quite successfully for • clarify the need for and objectives of applying various kinds of urban development countrywide over LR in terms of its contribution to social and a long period of time. LR realizes reorganization of economic benefit in the major cities and fragmented land parcels and supports development countrywide; of public facilities through land contribution. This • clarify the process for LR and its relation with can be achieved while firmly protecting land rights urban planning, incorporating the definition of throughout the replotting process. Two main factors LR into the urban planning system while main- have contributed to the need for LR in Japan: (a) taining consistency with the government’s highly fragmented patterns of land ownerships urban management policy; resulting from establishment of the modern land • have clarity, with as much detail as possible, in management system in the 19 th century and the the decision making procedure; Agrarian Reform in 1940s; and (b) low share of • make available governmental technical and publicly owned land in urbanized areas. At the same financial support in order to promote effective time, a number of factors have contributed to the undertaking of LR and to provide incentive; success of LR as a community-based development • establish other land-based financing mecha- tool in Japan, including: (a) strong land ownership nisms such as property taxation to generate rights, secured by the modern land management resou rces to suppor t susta i nable system since the 19th century; (b) general trend of development; increasing land price; (c) provision of framework to • establish effective uses of land replotting, such support community-based LR; (d) good governance, as: collective replotting for large-scale land use, with government’s consistent urban management converting land rights to building floor area policy; (e) local governments have political and finan- rights, special consideration for small land plots, cial autonomy, including taxing power which gener- and responding to land use demand and accom- ates budget for local government to support LR; modating specific purposes; (f) capacity at prefectural and municipal governments • secure land rights and ensure fairness in land as well as the private sector; (g) comprehensiveness replotting and land valuation in order to promote of urban planning system covering all aspects of land consensus building among land right holders; uses, urban development and infrastructure into one • delineate appropr iate requirements for integrated system; (h) people’s recognition of the agreements; value of land and awareness about the advantages of • consider the compulsory relocation clause as a town improvement; and (i) provision of government last resort; and subsidies and incentives with respect to taxation. • ensure that measures are in place to prevent activities such as land development and building To effectively apply LR in developing countries, it construction that would otherwise harm LR is important to: implementation. 33 34 Case Study: Land Readjustment in Japan Annex 1: History of LR in Japan Year Topics Explanation 1872–1899 Establishment Certificates of land title had been published since 1872, and the cadastral maps of modern land covering the whole country, without Hokkaido and Okinawa, were completed in management system 1885. The Real Property Registration Law was established in 1899. 1899 Establishment of ALC was established for agricultural land development. The ALC projects were Agricultural Land implemented by landowners’ cooperatives, and the expenses were raised by Consolidation Law landowner’s own budget and subsidy of local government. 1919 Establishment of Provisions of LR were added into the Urban Planning Law. Institutionalization of LR under the Urban LR is understood to have been with reference to a German LR Law.a Provisions Planning Law of the ALC Law were applied to the implementation procedure of LR. 1923 Application of LR LR was applied to the post-earthquake reconstruction of Tokyo region after to post-earthquake the Great Kanto Earthquake. For the smooth implementation in financing, reconstruction replotting and compensation, the Special Urban Planning Law was established in 1923.b After the completion of the LR projects, the Law was repealed in 1940. 1933 Formulation of design Based on the experiences of LR, the design guideline for LR was formulated by guideline for LR the Government. 1946 Application of LR was applied to urban reconstruction in war-damaged cities across the LR to post-war whole country. For implementation, the Special Urban Planning Law was reconstruction after established again in 1946, and the rule of LR was improved to allow for World War II national subsidy for local governments and to protect small land plots in consideration of the serious economic and land situation. 1947–1950 Implementation of The central government expropriated agricultural lands from huge landowners Agrarian Reform and distributed those land rights to the tenant farmers. As a result, the increasing number of agricultural landowners prompted the need for LR. 1949 Repeal of ALC Law The ALC Law was repealed, and the Land Improvement Law was established, focused on agricultural land development. As a result, LR lost the legal basis for its implementation procedure. 1954 Establishment of LR The LR Law was established by utilizing the experiences of LR projects and Law related old laws such as the Urban Planning Law, the Special Urban Planning Law, and the ALC Law. 1950s- Implementation Large-scale LR projects had been implemented for housing supply to address of large-scale LR huge population growth in the major metropolitan areas. For the promotion of projects in rapid LR projects, the central government established financing programs, such as economic growth the national subsidy, by using the Special Account for Road Construction and no-interest loans for LR cooperatives. 1955 Establishment of JHC was established to implement new town developments and develop, Japan Housing sell and rent social housing. In new town LR projects, JHC secured lands for Corporation (JHC) construction of social houses in the LR project site. 1968 Establishment of the The new Urban Planning Law was established to control rapid urbanization. Urban Planning Law The LR project was defined as one of the urban development projects under the Law. 1995 Application of LR LR was applied to urban reconstruction after the Great Hanshin Earthquake. to post-earthquake In the LR projects, a land replotting system was effectively used for integration reconstruction with apartment development—and the exchange of land rights to money helped with livelihood restoration for the earthquake-affected land owners. (continued on next page) Conclusion 35 Annex 1: History of LR in Japan (continued) Year Topics Explanation 1990s Struggles of private After the collapse of the bubble economy in the early 1990s, private LR projects LR and shifting the depending on the sale of reserve lands stagnated. For financial recovery, purpose of LR some counter-measures—such as additional land contribution to increase reserve lands and additional charges—were required of land owners in the project site. In addition, the project plans were revised to reduce cost and local governments increased their subsidy to help LR’s financial problems. The purpose of LR was shifted from new town development to urban renovation, such as station area redevelopment, integrated urban development with commercial complex, and small-scale LR for land consolidation in urbanized areas. 2001 Formulation of the The LR Management Guideline was formulated by reorganizing past LR Management governmental and ministerial circulars relating to LR. In addition, the guideline Guideline presents the governmental policy to utilize LR for urban renovation. 2005 Addition of LR Provision of LR company as LR implementer was added into the LR Law company in order to promote private investment in LR projects. The LR company is organized by land right holders and a private company (such as developers and construction companies). 2011- Application of LR Post-earthquake LR projects are currently being implemented for to post-earthquake reconstruction after the Great East Japan Earthquake in 2011. reconstruction a Adickes Act. Der Gesetzentwurf Betreffend Stadterweiterungen Und Zonenenteignungen (lex Adickes, 1894). Frankfurt am Main). b The major objectives of the Special Urban Planning Law were: (a) allowing inclusion of lands with buildings into LR; (b) cost allocation to local government; (c) land contribution with 10 percent without the compensation; (d) organizing the Inspection Committee for compensation; and (e) tentative land replotting to allow land use before the registration of replotted lands. 36 Case Study: Land Readjustment in Japan Annex 2: Legal Procedure of LR Project in Japan Type of LR Cooperative Local Government Preparation Establish preparatory meeting by land owners group Apply for local government’s technical support Develop draft land use plan with land right holders Designate LR project on urban planning Formulate Implementation Plan and Formulate Implementation Plan and articles of LR cooperative implementation rule Approval Approve public facilities plan by the administrative agencies Collect land right holder’s agreement Public inspection of Implementation on Implementation Plan and articles Plan and collect public opinions Apply for establishment of LR Apply for Implementation Plan Public inspection and collect public opinions Approve establishment of LR Approve Implementation Plan and cooperative by prefectural governor or implementation rule by prefectural governor mayor of major city designated by Implementation General meeting for election of Establish advisory committee executive members of LR Survey, facility design, replotting design Approve provisional replotting plan Relocation, compensation, construction Completiona Approve final replotting plan and the public notification Registration of replotting lands, adjustment money for re-plotting lands and transfer of public facilities Dissolution of LR cooperative and the liquidation Source: Author. Conclusion 37 Annex 3: Project Frame of Nagakute Nanbu LR Projecta (a) Land Classification Original Plan (Before Project) (After Project) Items Area (m2) Rate (%) Area (m2) Rate (%) Public Facility lands Road 25,824.49 2.63 194,587.30 19.82 Park 652.87 0.07 30,003.14 3.06 Green — — 64,473.71 6.57 Drainage 12,313.23 1.25 22,302.00 2.27 Sub-total 38,790.59 3.95 311,366.15 31.72 Private lands and non- administrative lands Private land 825,382.86 84.07 541,346.80 55.13 Non- administrative lands owned by 38,504.29 3.92 25,801.77 2.63 municipality* Sub-total (A) 863,887.15 87.99 (B) 567,148.57 57.76 Reserve lands — — (R) 103,332.01 10.52 Difference between registration and (s) 79,168.99 8.06 — — measurement** Total 981,846.73 100.00 981,846.73 100.00 Note: * Lands for nursery school and cemetery, which to be obliged with land contribution. ** Difference in area between total of land registration and result of measurement of project boundary. a Abstracted from the Implementation Plan, 8th amended in 2012. (b) Land Contribution Total Private Land Area Total Private Land Area (After Project) Total Private Land Area including Difference (Before Project) (m2) (m2) Incl. reserve land (m2) Excl. reserve land (m2) A A’ = A + s D=B+R B 863,887.15 943,056.14 670,480.58 567,148.57 Total Area of Land Contribution Land Contribution Ratio For public For public facilities land For reserve facilities land For reserve Total average (m2) land (m2) Total (m2) (%) land (%) (%) P=A’ – D R E=P+R P/A’ R/A’ E/A’ 272,575.56 103,332.01 375,907.57 28.90 10.96 39.86 38 Case Study: Land Readjustment in Japan Annex 3: Project Frame of Nagakute Nanbu LR Project (continued) (c) Reserve Land Total Land Value Average Land Price Before project After Project Increasing Before Project After Project (JPY) (JPY) (JPY) (JPY/ m2) (JPY/ m2) V=Axa V’ = D x a’ ΔV = V’ - V a a’ 75,464,528,840 93,062,704,504 17,598,175,664 80,000 138,800 Reserve Land Maximum area for reserve land Planned reserve land Ratio of planned reserve (m2) (m2) land (%) Rmax =ΔV /a’ R R/Rmax 126,788.01 103,332.01 81.50 (d) Expenditure Items Unit Amount Cost (JPY) Public Facilities Arterial roads m 3,358 974,404,124 Community roads m 61,793 1,114,521,976 Pedestrian roads m 2,258 129,202,700 Park and Green L.S. 1 0 Drainage L.S. 1 1,645,393,509 Sub-total 3,863,522,309 Relocation and Reconstruction Relocation of existing building building 12 1,621,000,000 Reconstruction of existing utilities L.S. 1 181,689,034 Sub-total 1,802,689,034 Utility Water supply L.S. 1 650,188,488 Gas supply L.S. 1 216,083,331 Sub-total 866,271,819 Land reclamation L.S. 1 6,034,000,000 Miscellaneous L.S. 1 2,626,862,563 Allocated charge L.S. 1 1,173,000,000 Survey and design L.S. 1 2,193,000,000 Compensation L.S. 1 130,000,000 Loan interest L.S. 1 175,654,275 Administration Year 17 1,945,000,000 Total 20,810,000,000 Conclusion 39 Annex 3: Project Frame of Nagakute Nanbu LR Project (continued) (e) Revenue Items Revenue (JPY) Remarks Subsidy Central government subsidy 4,324,798,000 Local government subsidy 2,207,000,000 Sub-total 6,531,798,000 Sales of reserve land 13,919,600,000 103,332 m2x 134,700 JPY/ m2 Others 358,602,000 Total 20,810,000,000 1818 H Street, NW Washington, DC 20433 The Tokyo Development Learning Center (TDLC), The World Bank 10F Fukoku Seimei Building 2-2-2 Uchisaiwai-cho, Chiyoda-ku, Tokyo, 100-0011 Japan