The Assessment of the Public and Private Conveniences in the Urban
Transformation Interventions: An Optimization Model for the Value
Recapture Adoption
PIERLUIGI MORANO1, FRANCESCO TAJANI2, DEBORA ANELLI1, EMMA SABATELLI2
1Department of Civil, Environmental, Land, Building Engineering and Chemistry,
Polytechnic University of Bari,
Via Orabona 4, 70125 Bari,
ITALY
2Department of Architecture and Design,
Sapienza University of Rome,
Via Flaminia 359, 00196 Rome,
ITALY
Abstract: - In the field of urban transformation interventions, the “privatization” of the potential indirect benefits is
a crucial issue. In fact, if not adequately recaptured and managed they can favor the private developers or owners
by reducing the share of acquirable public resources intended for the realization of new infrastructures and services.
For this reason, the Extraordinary Urbanization Contribution (EUC) was introduced in Italy in 2014 with Art. 16,
co.4 of DPR n. 380/2001 to allow an equitable redistribution - between the public and private subjects involved - of
the surplus value generated by urban variant interventions. The lack of univocal guidance for determining this
contribution has made its application difficult, therefore the work aims to provide a rational and methodological
rigorous decision support model intended for the public administration for assessing the surplus value generated by
complex urban variant intervention. Its methodological structure is based on goal programming optimization
principles. In particular, the innovative contribution of the model is to provide the assessment of the surplus value
of “complex” urban variant interventions, or those for which the inclusion of the “time” factor could affect the
results and the conveniences of the parties involved. For these reasons, different discount rate values are assumed.
The main findings regard the possibility of being used for supporting the public administrations in the correct
application of the national regulations, also consistent with the value recapture and value sharing research streams,
and for identifying the extra-profit margins and conveniences of the private subject involved.
Key-Words: - Extraordinary Urbanization Contribution, PPP, Assessment Model, Value Recapture,
Optimization Model
Received: March 24, 2023. Revised: June 25, 2023. Accepted: August 25, 2023. Published: September 13, 2023.
1 Introduction
Urban transformations are one of the main strategies
conducted to improve urban quality, understood as
the appropriate endowment of equipment and
infrastructure, which should be adequate for the
related demand, [1]. The actual context is
characterized by a high dynamism of the community
needs and therefore urban planning should be
structured to meet the novel needs and provide
essential infrastructures. For these reasons, the
adoption of Public Private Partnership (PPP) has
become widely used in urban transformation
interventions for reasons related to improving urban
quality despite the scarcity of public financial
resources.
The involvement of private subjects in this type of
operation allows the PAs to take advantage of private
managerial and entrepreneurial skills, as well as
financial availability. The use of PPP is an alternative
financing solution that offers a series of benefits
related to the increase in the potential of
infrastructure endowment for the same public
resources used, the rationalization of the process of
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2023.19.82
Pierluigi Morano, Francesco Tajani,
Debora Anelli, Emma Sabatelli
E-ISSN: 2224-3496
863
Volume 19, 2023
investment identification, and the allocation of risks
and revenues according to the possibilities and needs
of the project participants. However, there are also
critical issues related to the complexity of the process
and the proper identification of stakeholders to whom
to allocate risks. In particular, it can be noted that
urban regeneration interventions generate several
indirect effects, such as changes in property values
(increase and decrease) that benefit private subjects,
leading to the issue of privatization of these benefits,
[2].
In recent decades the avoidance of privatization
has played an increasingly important role in the
structuring of PPP interventions, to the point of
creating what in the literature is called value
sharing/value recapture/land value recapture, whose
principles are based on the appropriate redistribution
of the benefits derived from urban transformation
interventions. The forms of value sharing and value
recapture range from fiscal regulations to urbanistic
regulations (betterments and windfalls for wipeouts)
up to the recent institution in Italy of the
Extraordinary Urbanization Contribution (EUC) with
the letter d-ter to co.4 of Article 16 of the
Consolidated Construction Act (D.P.R. n. 380/2001),
introduced by Law No. 164 of 2014 and amended by
Law No. 76 of 2020.
This is a contribution to be paid by the private
subject to the PA in an amount not less than 50% of
the surplus value generated by the interventions on
areas or properties in urban planning variant or in
derogation; this amount is calculated by the
municipal administration and is reserved for the
realization, in the context in which the intervention
falls, of public spaces, infrastructures, and services,
[3]. The transposition of the normative at the regional
and then at the municipal scale appears fragmented,
non-transparent, and confusing, especially about
consistency with the dictates of Estimation: in fact,
the application of the regulations provides for the
substantial determination of the transformation value,
which therefore should be conducted, both on the
methodological and on the operational profile,
respecting the cardinal principles of estimative
methodology. Moreover, when the complexity of
urban transformation interventions requires the
analysis of the time factor, the regulations do not
provide provisions on how to determine the surplus
value. In a situation of scarcity of public resources, it
is necessary, in addition to a rationalization of
collective public spending, to give the possibility to
access to funding sources through processes of
equitable sharing between the public and private
sectors that can assess the complexity of such kind of
interventions, [4].
In this sense, Italy stands in line with other more
virtuous European countries such as Spain and
England by giving the possibility to apply the
principles of better distribution between public and
private subjects of the surplus value that can be
generated. In this way, the correct determination of
the EUC can support the acquisition and allocation of
more resources to initiate virtuous city development
that can meet the new and dynamic needs of citizens
by avoiding the "privatization" of benefits but
supporting the sharing of costs, [5].
There are several forms of PPP oriented towards
social and environmental issues, to reduce the
privatization of benefits. Indeed, the tendency of
investors to make investments with objectives
different from the exclusive maximization of profit,
therefore in line with the Sustainable Finance
principles, has led to the spread of new forms of PPP
that strongly depend on the effective and measurable
social and/or environmental impacts achieved.
The principles that guide these novel PPPs pertain
to the ones of Impact Finance, born after the
economic crisis of 2008 into which the limits of the
maximization of the profits have been highlighted.
Moreover, the growing environmental and social
critical issues that the governments must face after
the requirements set within several official
disclosures, such as the Paris Agreement, Kyoto
Protocol, Green Deal, and Sustainable Development
Goals, have contributed to the formation of PPP
forms that both achieve the established
environmental/social impacts by guaranteeing the
conveniences of the public and private subjects
involved.
Among the most innovative PPP forms, there are
the Social Impact Bonds (SIB) which consist of
bonds intended for the implementation of public
utility interventions with remuneration for investors
only in case of actual generation of positive social
impacts. These are bilateral contracts between the
parties involved to achieve certain measurable social
impacts, in which the risk of failure is borne by the
entity funding the initiative, [6].
Other instruments have been created to guarantee
investments in projects that have a positive impact on
the environment. The most used are the Green
Bonds, or debt instruments issued in the renewable
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2023.19.82
Pierluigi Morano, Francesco Tajani,
Debora Anelli, Emma Sabatelli
E-ISSN: 2224-3496
864
Volume 19, 2023
energy sectors, sustainable waste and water
management, biodiversity protection, and energy
efficiency. These instruments are used to finance
projects with a positive impact on the environment
and to increase the availability of capital needed for
the transition to a more sustainable economy, [7].
With regard to the focus on the equitable
distribution between the benefits of the private
investor and the positive impacts for the community
resulting from urban transformation interventions,
there are tools related to the recapture of surplus
value, such as value recapture, value sharing, and the
land value recapture.
The principle underlying these PPP forms refers
to the recovery, in favor of the community, of the
increases in the value of the land generated by
actions other than those of the landowner, as public
investments in infrastructure or administrative
actions causing changes in rules and regulations to
draw on these added values to improve the
performance of land management and to finance
infrastructure and provision of urban services, [8].
The principle of these policies agrees with the
Vancouver Plan of Action, the founding document of
the United Nations Human Settlements Program
(UN-HABITAT), which states that increases in land
value should be subject to appropriate community
recapture, [9].
For interventions carried out in PPP, it is therefore
essential, in addition to a regulatory recapture of
value, a fair distribution of this value, also called
surplus value. In this context, the negotiating activity
of the PA must allow regulation of the privatization
of the value generated by creating conditions of
equity in its distribution, identifying win-win
solutions between the public and private sectors,
[10].
Adequate taxation and distribution of the surplus
values allow to: i) obtain resources to dedicate to the
maintenance of the city and a qualitative and
quantitative improvement of the public spaces; ii)
spread of social housing policies that will bring the
profitability of this sector closer to that of the pure
market and reduce the earnings expectations of real
estate operators; iii) reduce the capacity for
corruption within the real estate sector, [11].
In Europe, the use of land value acquisition tools
is widespread, for example in Spain the local
contributions to building activities to cover the
construction costs of infrastructures and/or public
spaces connected to real estate development projects
are called cargas de urbanizaciòn; in San Francisco
Bay (USA), "Public Benefit Zoning" provides a
system whereby owners destined to enjoy the surplus
land from the planned development works acquire
limited income and engage in interventions for the
benefit of the community.
Italy is inserted in this context with the
introduction of the EUC with the aim of regulating
the capture and redistribution between the public and
private sectors of the surplus value generated by
interventions on areas or buildings in variant urban
planning or in derogation to existing instruments.
The allocation of this contribution is left to the local
authorities, highlighting issues related to the
procedures for estimating the surplus value generated
by interventions carried out in variance and the exact
percentage of EUC to be used, [5].
2 Aim
The aim of the work is to provide a mathematical
optimization model for defining the main urban
planning parameters that can i) make PPP urban
variant interventions financially feasible and
convenient for private subjects and, at the same time,
ii) allow the PA to acquire further public resources
by correctly applying the EUC regulations to the
surplus value generated by the urban variant. The
research analyzes both the “ante” and “post” urban
variant situations for determining the surplus value in
compliance with the income approach method of the
Discounted Cash Flow Analysis (DCFA), to detect
the “time” effects through the discount rate values on
the main urban parameters from which the
conveniences of the public and private subjects
involved depend. The analyzed intervention concerns
the private subject who requests the PA to change the
permissible volumes to be built in an urban area.
With reference to the “ante” and “post” variant
situations, the DCFA is used to evaluate the
transformation value of the initiative. The work
represents the further development of a previous
study carried out by, [6].
The model can be a valuable support for the
development of the public city through the activation
of urban regeneration interventions in compliance
with Sustainable Development Goals (SDGs). This
model can support the definition of urban planning
policies that can put private entrepreneurs in a
condition for which, without affecting the financial
feasibility of the initiative, they can guarantee to the
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2023.19.82
Pierluigi Morano, Francesco Tajani,
Debora Anelli, Emma Sabatelli
E-ISSN: 2224-3496
865
Volume 19, 2023
PA the adequate payment of urbanization charges
and additional contributions related to the
implementation of interventions of social utility (e.g.,
social housing, green spaces, cultural spaces, etc.). In
particular, the model can provide support in the
negotiation stages during which it can be used to
determine the construction parameters and additional
costs of urban redevelopment operations to identify
their benefits.
The research is structured as follows. The
"Model" section illustrates the proposed model with
the identification and explanation of the variables,
constraints, and objective functions. The
"Discussion" section reports the potential and
limitations of the proposed model. Finally, the last
section exposes the conclusions of the work and the
possible future developments of the research.
3 Model
The proposed optimization model is aimed at
determining the optimal morphological and financial
structure of the urban variant for which the EUC
should be calculated. To achieve this goal, the DCFA
is applied for determining the transformation value
referring to the “ante” variant situation. For the
determination of the Net Present Value through the
DCFA, the following assumptions are used:
-The distribution of the cash flows takes place
over 7 years, subdivided into 14 semesters;
-The total costs are the sum of the realization and
management costs, which comprise the urbanization
charges (residential, commercial, and offices), the
technical expenses, the green surfaces construction,
the car parking, the residential buildings, and the
commercial/offices units and marketing
expenditures;
-The expected revenues of the private subject
involved are the ones generated by the saleable GFS
on the free real estate market;
The discount rate values are assumed to be
different to try to detect the variations produced by
the “time” factor on the urban variant balance sheets.
The discount rate values vary according to the
3.00%, 7.50%, 10.00%, 12.50%, and 15.00%. It is
important to highlight that the discount rate
represents the expected return on investment for the
private subject, therefore in the present research
different values are proposed for analyzing the
variation and the effects produced on the urban
variant’s parameters, therefore also its financial
structure.
The combinations of the urban parameters that
define the morphological and financial features of the
urban variant are provided by the model. Moreover,
the obtained outputs also help to identify the surplus
value intended for the PA and the private developer
involved. With reference to the canonical assessment
of the most likely transformation value of the
intervention in both the “ante” and “post” urban
variant condition, the inclusion of the “time”
influence, i.e., that each item is distributed over time
within the considered period, is performed to detect
the risk and the related complexity of the project. In
the present research, the assumptions for the
calculation of the transformation value regard an
urban variant project that provides for the realization
of several building units, therefore, the revenues and
the costs of the urban variant transformation are
represented in Eq. (1):
Vt=
𝑉
mt – (
𝐾
c + Kps + Kpg + Kupsc + Ktf + Kmg + Kmk
+Kfloan)
(1)
Where: Vt is the transformation value of the urban
variant of which the surplus value is under
assessment; Vmt is the market value of the
transformed units that represents the total revenues
generated by their sale on the market; Kc is the
buildings’ construction cost; Kps: parking spaces’
realization cost; Kpg is the cost linked to the private
green spaces’ realization; Kupsc is the urbanization
charges (primary, secondary and of construction); Ktf
is the technical fees for the professional workers
involved; Kmg is the management expenses of the
intended uses; Kmk is the commercialization costs of
the building units; Kfloan is the assumed interest on the
capital loan of the private developer for the
implementation of the intervention.
More specifications on the variables, the
morphological and financial constraints, and the
objective function that define the algorithm of the
model are below described.
4 Variables
The model is based on four variables that constitute
the main urban parameters related to the land use
distribution of the intervention and its financial
structure. The mentioned variables are:
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2023.19.82
Pierluigi Morano, Francesco Tajani,
Debora Anelli, Emma Sabatelli
E-ISSN: 2224-3496
866
Volume 19, 2023
The share of the total Gross Floor Area (GFA)
of the building units [m2] that the private
subject realizes and sold on the local real
estate market (GFApp);
The share of the total surface of the land plot
on which the private building units [m2] will
be realized (Sprivb);
The share of the total surface of the land plot
on which the private green spaces [m2] will be
created (Sprivg).
The share of the total Gross Floor Area of the
buildings [m2] for the social housing units
(GFAshu).
In fact, by imagining dividing the entire land plot
of the urban variant into two main shares - the first
related to the public works and the second one where
the private developers will realize the building units
according to the established intended uses - the
variables related to the Gross Floor Area (no.1 and
no.4) represent the most important urban parameters.
Variables no.2 and no.3, respectively Sprivb and Sprivg,
are strongly affected by the GFA variations. To better
explain how all the variables are connected and what
they represent it is important to highlight that Sprivb is
the surface resulting from the sum of the gross
surfaces of all floors, above and within the ground
that, for all the intended uses, it shall be measured on
the external perimeter of the floor, including the
horizontal projection of walls, fixed and mobile
stairs, lifts and elevators rooms, technological
services, and system; whereas Sprivg is the surface of
the private housing units made by the private
developer and intended for the planting of native tree
species capable of increasing the amount of CO2
absorbed, as well as increase the permeable surface
area to reduce the consumption of natural soil and the
risks associated with it, such as floods and landslides.
Therefore, the quantification, in terms of extension,
of the variables Sprivb and Sprivg can vary according to
the m2 intended for the GFApp and the GFAshu. In
other words, the GFApp and GFAshu surfaces identify
the urban parameter of the “post” urban variant
situation around which the bargaining between the
private subject and the PA takes place because is
from their extension that derives the respective
conveniences.
The percentage value of the Extraordinary
Urbanization Contribution (EUC) is imposed as
known data of the model due to the application of the
art. 16, co.4 of DPR n. 380/2001 and it is assumed to
vary between 50% (minimum value set by national
legislation) and 100%. The threshold of 100%
represents the value of the EUC beyond which the
private developer would have no margin of benefit,
in terms of extra profit, because all the surplus value
generated by the urban variant would be given to the
PA.
5 Constraints
The assessment of the surplus value generated by the
urban variant involves the consideration of the
financial terms that characterize the intervention and
its morphological structure for providing an efficient
evaluation of all the potential benefits. Therefore, the
proposed model is based on two types of constraints.
The first one concerns constraints arising from the
morphological structure and land-use subdivision of
the area involved in the operation and the second
type concerns the financial terms of the intervention.
The first type of constraint is shown in Table 1.
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2023.19.82
Pierluigi Morano, Francesco Tajani,
Debora Anelli, Emma Sabatelli
E-ISSN: 2224-3496
867
Volume 19, 2023
Table 1. Morphological and land use constraints of the model
MORPHOLOGICAL AND LAND USE CONSTRAINTS
OF THE MODEL
Stot = Spriv + Spub
(1)
Spriv = Sprivb + Sprivg + Spark
Spub = Spr + Si
(2)
GFAtot = Ibuild · Stot
(3)
GFAtot = GFApp + GFAshu
(4)
GFApp = GFAres + GFAcom + GFAoff
GFAres = α · GFApp
GFAcom = β· GFApp
GFAoff = γ · GFApp
(5)
Spub ≥ δ · Stot
(6)
Sprivb ≤ Rc · Stot
(7)
GFAtot / Sprivb ≤ Nf,max
(8)
Spg ≥ ε · Sprivb
(9)
Spr = η · Stot
(10)
Spark = Voltot / 10 = (GFAtot · 3) / 10
(11)
Constraint no. 1 refers to the division of the total
plot area (Stot) into the private area intended for the
developer's construction of building volumes (Spriv)
and the public area (Spub) for infrastructure and public
structures.
The explanation of these two components into
which Stot is divided is given in constraint no. 2.
Specifically, Spriv is expressed as the sum of the
surface of the buildings (Sprivb), the private green
spaces (Sprivg), and the area for private parking (Spark);
the Spub is defined as the share for public streets (Spr)
and the area dedicated to the implementation of
urban standards (Si).
Constraint no. 3 shows the calculation of the
achievable GFAtot according to its buildability index
(Ibuild) established by municipal regulations, which
makes it possible to determine how much is allowed
to be built on the total surface of the intervention
area. Constraint no.4 shows the subdivision of GFAtot
into its components dedicated to the GFApp and the
social housing GFAshu. For GFApp is proposed a mix
of uses that consists of a housing (res), commercial
(com), and office units (off). In constraint no. 5 this
distribution is expressed as a variable percentage of
the GFApp, according to three coefficients: for
residential units (GFAres) α = 70%, for commercial
units (GFAcom) β = 20%, and offices (GFAoff) γ =
10%. Constraint no. 6 shows the calculation to
determine the minimum size of the public area, or as
a percentage (δ) equal to 70% of the Stot. In constraint
no. 7 and no. 8 are reported respectively the data
relating to Rc, or the ratio between the surface area
covered by the buildings and the land area of the plot
in which it falls, and Nf, max or the maximum number
of floors allowed by the municipal regulations. With
the introduction of two percentage coefficients ε
(10%) and η (10%), respectively the extent of the
private green area (Sprivg) and the public road area
(Spr) are calculated (constraints no.9 and 10). The
private parking area (Spark) is determined with
constraint no. 11 and is determined as established by
Law No. 122/1989 for which it is planned to build 1
m2 of parking for every 10 m3 of new construction,
assuming an average height of 3 m for each floor.
The type of constraints concerning the financial
conditions of the convenience of the construction of
the urban variant for the private investor and the PA,
compared to the “ante” situation, needs to be
carefully analyzed. It should be noted that in the
“post” variant situation there are unknown
parameters, and they are represented by the 4 model
variables (GFApp, GFAshu, Sprivb, Sprivg). For the
determination of these variables, it is necessary to
establish the benefit conditions of stakeholders. In
particular, for allowing the PA to obtain more
revenues from the “post” variant situation, consisting
of the costs of urbanization (ΔKurb) and the effective
share of the EUC (cextra (Vtpost - Vtante)) compared to
the loss of urbanization standards (ΔSi) arising from
the realization of the urban variant intervention. For
the private subject, the convenience is represented by
a greater volume, in particular, GFA to build and sell,
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2023.19.82
Pierluigi Morano, Francesco Tajani,
Debora Anelli, Emma Sabatelli
E-ISSN: 2224-3496
868
Volume 19, 2023
by increasing the extra-profit margins compared to
the “ante” variant condition.
The financial constraints of the model are
expressed for the PA in Eq. (2) and for the private
developer in Eq. (3):
ΔKurb + cextra · (Vtpost - Vtante) ≥ ΔSi (2)
Vtpost (GFApp, GFAshu, Sprivb, Sprivg) > Vtante (3)
For the determination of the transformation values
that refer to the “ante” and “post” variants, the
necessary cost and revenue items are in Table 2
show.
Table 2. Financial constraints of the model
K_build = cbuild,res · GFAres + cbuild,com ·
GFAcom + cbuild,off · GFAoff + cbuild,shu ·
GFAshu + cbuild,park ·
GFApark
(12)
K_p = cp · Spark
(13)
K_privg = cprivg· Sprivg
(14)
K_urban = curban · GFApp
(15)
K_tech = 4% · (K_build + K_park + K_privg)
(16)
K_management = 5% · (K_build + K_park +
K_privg)
(17)
K_marketing = 1% · Vmt
(18)
K_loan = 5% ∙ (K_build + K_park + K_privg +
K_urban
+ K_tech + K_management + K_marketing)
(19)
K_transf = rres · GFAres + rcom · GFAcom + roff
· GFAoff + rshu · GFAshu + rpark · GFApark
(20)
Constraint no.12 expresses the construction cost
of buildings (K_build) determined on a parametric
basis (cbuild) in €/m2 considering the different
allowable functions defined in the urban variant
(residential, commercial, offices, parking, and social
housing units). The construction cost of parking
(K_park) and private green spaces (K_privg) (co.13 and
co. 14) is calculated by considering the unit costs
(€/m2), cpark and cprivg, derived from the costs of
recently realized similar works. The co.15 reports the
primary, secondary, and construction urbanization
costs (K_urban) established in accordance with Article
3 of Law No. 10/1977, applying to the private areas
of new construction (GFApp) the values in €/m2
indicated in the appropriate municipal tables
according to the intended use and the type of
intervention to be carried out. The co.16 describes
the technical expenses (K_tech) which include the
expenses for the technical commitments required by
the transformation intervention and are considered in
this case as a percentage of 4% of the total
construction cost (K_build + K_park + K_privg).
Overhead expenses (K_management) are shown in co.
17 and are the expenses arising from the management
of the entire operation; these are calculated as a
percentage (set at 5%) of the total construction cost
(K_build + K_park + K_privg).
The co.18 expresses the marketing costs
(K_marketing), which include the amounts required for
advertising and marketing the buildings of the
operation, equal to 1% of the estimated and
obtainable revenues (Vmt).
The financial charges (K_loan) in co. 19 refer to the
hypothetical capital borrowed by the private subject
to carry out the intervention. In this case, the loan
capital is assumed to be used for the entire operation
and is determined as a percentage of the incidence
(assumed to be 5%) of the total cost items (K_build +
K_park + K_privg + K_urban + K_tech + K_management +
K_marketing).
Regarding transformation revenues (K_transf) these
are reported in co. 20 and represent the market value
of the transformed area after the realization of the
variant. This value is derived from the revenues of
the sale of the areas for each of the uses, from the
unit sales prices (€/m2) found in the local real estate
market and are applied to residential (rres ∙ GFAres),
commercial (rcom ∙ GFAcom), office (roff ∙ GFAoff),
social housing (rshu ∙ GFAshu) and parking (rpark ∙
GFApark) areas.
All equations refer to a specific i-th time of the
analysis period for the DCFA application, i.e., each
cost will be different at each i-th time based on the
expenses related to the same time.
6 Objective Function
The model makes it possible to transform in
mathematical terms the possible and different
objectives that the PA would achieve with the
approval and realization of the urban variant. In this
case, by indicating with w the relative importance of
each aspect, it is possible to express the sub-
objectives pursued by the PA that concern the
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2023.19.82
Pierluigi Morano, Francesco Tajani,
Debora Anelli, Emma Sabatelli
E-ISSN: 2224-3496
869
Volume 19, 2023
environmental, social, and economic spheres. From
the environmental point of view, the reduction of
natural land consumption through the increase of
green areas is followed (Max! w_privg - Sprivg); the
other one concerning the social sphere is expressed
by the increase in demand for social housing through
the allocation of part of the GFA to social housing
units (Max! w_shu - GFAshu). The economic sphere
relates to the financial convenience of the private
developer through the increase in extra-profit
margins resulting from the GFA to be built and sold
(Max! wpp - GFApp).
Therefore, according to the work’s purposes, the
objective function of the model is represented in Eq.
(4):
Max! (w_privg · Sprivg + w_shu · GFAshu + wpp · GFApp)
(4)
7 Discussions
The present research would try to fill the existent gap
in a rational procedure for assessing the surplus
values that a complex urban variant can generate.
Therefore, by starting from a canonical
assessment of the transformation value, a
methodology based on the optimization principles is
proposed by also including the “complexity” issues
of those transformation interventions that take place
over several years. Different values of discount rate
could contribute to efficiently detecting the effects of
the time and the risk on the potential surplus value
that the urban variant can generate.
In this way, the PA can use the proposed model
for efficiently assessing the surplus value and the
possibility of acquiring more public resources
through the EUC percentages, whereas the private
subject can adopt it for verifying its extra-profit
margins and carry out effective negotiations
regarding the extensions and amount of the urban
parameters on which its convenience depends.
The main limitation of the proposed model could
concern its high level of technical and mathematical
programming skills that are required for its
structuring and implementation. However, future
developments of the work could concern the
improvement of this aspect by creating a model that
is more simply usable in any context and practical
need.
8 Conclusions
The pursuit of SDGs, in particular, goal no. 11
“Smart Cities and Communities”, requires the
activation of new urban planning strategies; the
complexity that characterizes these operations and
the contraction of financial resources currently
affecting the public sector makes it necessary for
public and private entities to collaborate in the
implementation of these interventions, [12], [13].
Such complex operations are generally carried out in
PPPs, so it is crucial to establish, during the
negotiation phase, the conveniences that stakeholders
can draw from these interventions.
In fact, in addition to the advantages offered by
the use of alternative financing solutions such as
PPPs for the activation of complex interventions on
the territory, there are also critical issues concerning
the indirect effects generated by these operations that
benefit private subjects, leading to the issue of the
privatization of these benefits.
To regulate the privatization of the benefits from
land transactions, there are a series of rules
internationally regarding the capture and
redistribution between the public and private sectors
of the surplus value generated by urban
transformation operations, which are based on the
principles of value recapture and value sharing,
whose founding concept refers to the recovery of
increases in land value generated by interventions
other than those of the landowner, for the benefit of
the community. These tools allow managing the
phenomenon of differential urban rent for the benefit
of society, using the capital resulting from complex
interventions and investments on the territory, for the
realization of public works.
In this context, the EUC was introduced in Italy in
2014 with the aim of regulating the capture and
redistribution between public and private of the
surplus value generated by interventions on areas or
buildings in urban variants or in derogation from
current instruments. However, this rule leaves it up to
the regions and municipalities to determine how to
estimate the surplus value and the percentage to be
considered; the lack of univocal guidance regarding
the determination of this value generates a confusing
framework that makes the application of this rule
difficult.
The purpose of this work was to outline a rational
calculation model for evaluating the surplus values
generated by complex urban transformation
interventions that the PA can adopt for determining
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2023.19.82
Pierluigi Morano, Francesco Tajani,
Debora Anelli, Emma Sabatelli
E-ISSN: 2224-3496
870
Volume 19, 2023
the EUC. This model has allowed the prefiguration of
the optimal combination solutions of the main urban
parameters for the balance of public and private
subjects while respecting morphological, urban
planning, financial and market constraints. A
rigorous methodological procedure was proposed for
assessing the transformation value of the intervention
in both the "ante" and "post" urban variance
situation, by considering the inclusion of the time
factor through the DCFA application with different
discount rate values. Indeed, the consideration of this
factor makes it necessary to consider the accurate
choice of an appropriate discount rate and EUC
percentage according to the different possible
objectives to be pursued.
With this model, it is possible to express
mathematically, through the objective function, the
aims that are to be pursued with the activation of
interventions in the urban variant, considering
aspects related to environmental, economic, and
social spheres.
The model can provide support, both to the PA
and the private decision-makers, in the negotiation
stages since it allows to the determination of possible
solutions that ensure the balance between the needs
of both parties, according to the determination of the
urban parameters and the financial structure.
Future developments in the proposed research
could regard the application of the proposed
methodology to a real case study by also comparing
the data obtained with other assessment and
optimization models for the same variant to
determine the transformation value and the surplus
value.
References:
[1] L. Della Spina and F. Calabrò, LaborEst 5, 5-
11 (2010).
[2] C. Agnoletti; C. Bocci; S. Iommi; P. Lattarulo;
D. Marinari, European Planning Studies 23(6),
1146-1168 (2015).
[3] P. Morano; F. Tajani; D. Anelli, “An
Evaluation Tool of Public–Private
Conveniences in the Definition of Urban
Planning Variants” in Urban Regeneration
Through Valuation Systems for
Innovation (Springer, Cham, Switzerland,
2022), pp. 57-73.
[4] R. Camagni, Italian Journal of Regional
Science 13(2), p.29-44 (2014).
[5] P. Morano; F. Tajani; D. Anelli, Valori e
Valutazioni 24, p.163-179 (2020).
[6] P. Morano; F. Tajani; D. Anelli, Valori e
Valutazioni 28, p.31-48 (2021).
[7] F. Savoia; F. Bandini; D. Bolzani; E. Grassi,
Finance Research Letters 56, 104080 (2023).
[8] M.O. Smolka, Implementing value capture in
Latin America (Lincoln Institute of Land
Policy, Cambridge, 2013)
[9] L.C. Walters, “Are property-related taxes
effective value capture instruments?” in Value
Capture and Land Policies, edited by G.K.
Ingram and Y.H. Hong (Lincoln Institute of
Land Policy, Cambridge, 2012), pp. 187-214.
[10] P. Morano; F. Tajani; V. del Giudice; P. De
Paola; D. Anelli, “Urban Transformation
Interventions: A Decision Support Model for a
Fair Rent Gap Recapture” in Computational
Science and Its Applications–ICCSA 2021:
21st International Conference, Cagliari, Italy,
September 13–16, 2021, Proceedings, Part VI
21 (Springer, Cham, Switzerland, 2021), pp.
253–264.
[11] R. Camagni, Note di U3 2, p.15-25 (2019).
[12] M. Grimaldi; C. Giordano; G. Graziuso; S.
Barba; I. Fasolino, WSEAS Transactions on
Environment and Development 18, p.247-254
(2022).
[13] F.U. Rahim; T. Niaz; S. Shaheen; M. Asma; L.
Almas, WSEAS Transactions on Environment
and Development 18, 873-883 (2022).
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2023.19.82
Pierluigi Morano, Francesco Tajani,
Debora Anelli, Emma Sabatelli
E-ISSN: 2224-3496
871
Volume 19, 2023
Contribution of Individual Authors to the
Creation of a Scientific Article (Ghostwriting
Policy)
The authors equally contributed in the present
research, at all stages from the formulation of the
problem to the final findings and solution.
Sources of Funding for Research Presented in a
Scientific Article or Scientific Article Itself
No funding was received for conducting this study.
Conflict of Interest
The authors have no conflict of interest to declare.
Creative Commons Attribution License 4.0
(Attribution 4.0 International, CC BY 4.0)
This article is published under the terms of the
Creative Commons Attribution License 4.0
https://creativecommons.org/licenses/by/4.0/deed.en_
US
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2023.19.82
Pierluigi Morano, Francesco Tajani,
Debora Anelli, Emma Sabatelli
E-ISSN: 2224-3496
872
Volume 19, 2023