Land Swaps

A land swap is a tool that empowers a city to trade a municipally owned site with a privately owned site. Governments can resort to land swaps to enable development and urban regeneration on land that faces other restrictions (for instance, endowment land or land with restrictions such as areas controlled by the military). The city of Rio de Janeiro resorted to land swaps to be able to assemble the waterfront land it needed for a large-scale development as part of its urban regeneration plan for the 2016 Olympics. The city acquired some waterfront parcels that the Brazilian navy controlled through an exchange or land swap process with other parcels the city owned elsewhere and that were deemed of equivalent value. This land swap approach was used because the Brazilian navy is not allowed to transfer its land. Similarly, Awqaf (an Islamic endowment) land is not permitted to be transferred, so land swaps were identified to enable the government in Egypt to acquire strategically located land needed for land assembly and redevelopment.

Urban regeneration efforts generally focus on the qualitative transformation of an existing part of the city, perhaps a formerly vibrant but now largely abandoned business district or a once flourishing industrial waterfront area whose allowable land uses no longer match the market. Existing building forms may be slow-changing due to inertia (for instance, perhaps a site has a passive owner who may no longer live in the area) or disinvestment.

Assuming that a city wants to totally transform a targeted area, a sufficiently large scale area or block of land is required in order to do so. As such, sometimes a city (or project sponsor) has to undertake land assembly in order to amass sufficient land that can be redeveloped to significant scale to enable the achievement of goals related to increased density or the transformation of uses. Land readjustment methods are covered in chapter 2.

In a land swap scenario, a municipality might negotiate with the site owner located within the target urban regeneration area to swap this site for the negotiated fair market value of a city site located elsewhere. This, obviously, would be a one-time, negotiated transaction in which either (a) the existing owner does not want to sell the site but is open to a land swap for the negotiated fair market value of the existing site, or (b) the city does not want to or cannot afford (or legislatively is unable) to pay cash to the existing site owner for the value of the land. In some instances, a swap might be less costly for a municipality than having to come up with precious capital funds.