Urban Renewal of the Lagoinha Region (OUC Centro Lagoinha)

N/A

Amount Raised

N/A

Total Investors

Project Overview

This project consists of a Syndicated Urban Operation – the delimitation of an area where urban renewal is expected to be self-financed through the sale of building rights and other urban benefits. The area described in this project is heavily degraded in some parts, while it shows enormous potential for real estate development in others, where the purchase of building rights is already attractive for developers. The idea is that each round of building right sales provides the funds for urban improvements.

Sectors

  • Affordable Housing
  • Roads & Bridges
  • Informal Settlements Upgrading
  • Transport & Mobility
  • Urban Infill & Public Space
  • Water & Sanitation
US$116,500,000
Funding Goal
Brazil
Country
Latin America and the Caribbean
Region

Objectives

  • To improve quality of life for local dwellers;
  • generate economic improvement through real estate development;
  • to implement a zero-impact construction and usage policy for 100% of the constructions in the area, ensuring social, economic and environmental sustainability.

Progress Tracker

Phases

  • Phase 1 (Completed)

    The first phase consists of broad, multidisciplinary urban studies that allow for the delimitation of a specific area.

  • Phase 2

    The second phase, currently underway, is the participatory process, through public hearings and workshops, where rules are discussed, opportunities are identified, and priorities are set for the investment of expected revenues.

  • Phase 3

    On the third phase, expected to take place before May of 2020, a bill is submitted to the city council. The bill is expected to be approved and turned into law between 3 and 6 months after it is received by the city council. During this phase, a large urban park of about 20 thousand square meters, for which preliminary studies are ready, will be crated with public funds to generate interest in the area.

  • Phase 4

    The fourth phase is the operation itself, comprised of many different phases. It is expected to begin once the bill is turned into law. A managing committee is formed and the sale of building rights begins shortly after that.

  • Phase 5

    The fifth place is the continuous measurement of impacts and the proposal of adjustments for the general rules of the operation. The operation is expected to last 20 years.

Current Stage

Concept Stage: Specific projects are identified and conceptualized. There exists a basic economic model.

Timeline

Yes, there is a timeline.

Project Milestones

  • December of 2020 – public hearings and workshops for the final stage of the bill
  • March of 2020 – appreciation and approval of the bill by the city’s Urban Policy Council
  • April or May of 2020 – submission of the bill to the city council
  • Between July and October of 2020 – approval of the bill by the city council and signature by the city mayor, turning it into law
  • November of 2020 – formation of the managing council of the operation
  • January of 2021 – beginning of the first public works in the region – a project currently underway promoted by the city with public funds (independently of revenues of the operation) as a way of generation attraction to the region February of 2021 – first real estate development projects submitted for approval by the city and the managing council, and first revenues from the sale of building rights.

ESG Impact

It is expected that the Syndicated Urban Operation will serve as a catalyst to iterative improvements in the selected region. Proposed initial investments in the area serve the purpose of announcing the upcoming operations to different stakeholders. An initial wave of real estate investors acquire plots of land and begin the process of licensing for new buildings, buying building rights at initially low costs. Investments in the region – both initial and expected – generate interest even in partially or totally unused buildings. Tax incentives are put forth to further attract new business. After this initial wave of investments, commerce and services begin operating in the region, generating a secondary interest in dwellings at or near the region. New businesses create job offers, and the increased interest in the region kick-starts a process of increasing land and real estate value. The risk of gentrification is mitigated by reinvesting part of the public revenue in social housing policies, such as social rent and direct production, associated with existing social housing programs. This ensures that the local population, usually socially fragile seen as the region is currently in a degraded state, enjoys the benefits of the operation without sharing the costs. There are also significant social benefits to the general population, since part of the public revenues is reinvested in upgrading, reactivating and ensuring the operation of public infrastructure such as bus corridors, urban train line and stations and different public services.

Beneficiaries

The local population consisted of 37965 inhabitants in 2010 – currently projected to be slightly over 40 thousand people. These are the main stakeholders, and they are expected to benefit from a marked increase in quality of life from the renewal of the area. Public rent and social housing policies are designed to avoid gentrification and ensure that the population currently living in the area reap the benefits of the operation. Real estate developers and buyers of the newly developed real estate are also expected to benefit from the operation. The operation is expected to double the density of the area, meaning another 40 people will benefit from it. The population in the vicinity, of around 250 thousand people, are expected to benefit from newly offered goods and services in the area. A Zero Impact policy is proposed to every building developed in the region, with 100% mitigation of negative externalities (waste, garbage and pollution production, heat island effect mitigation, an improved drainage system and the generation of 100% of the newly consumed energy in the area with renewable sources. This means the city as a whole (2,4 million) and the greater area of Belo Horizonte (5,5 million) will be indirectly benefit from the operation.

SDG Goals

SDG 1: No PovertySDG 2: Zero HungerSDG 3: Good Health and Well-beingSDG 4: Quality EducationSDG 5: Gender EqualitySDG 6: Clean Water and SanitationSDG 7: Affordable and Clean EnergySDG 8: Decent Work and Economic GrowthSDG 9: Industry, Innovation and InfrastructureSDG 10: Reduced InequalitySDG 11: Sustainable Cities and CommunitiesSDG 12: Responsible Consumption and ProductionSDG 13: Climate ActionSDG 14: Life Below WaterSDG 15: Life on LandSDG 16: Peace and Justice Strong InstitutionsSDG 17: Partnerships to achieve the Goals

Rationale

SDG 3 – Good Health and Well-being

Ensured by urban improvement with the creation of public spaces for sports and leisure.

SDG 5 – Gender Equality 

Included the assurance that women, especially the elderly, are included in every phase of the project. There is, besides, a support center for vulnerable women in the region (Centro Integrado de Atendimento à Mulher), and it is expected to be doubled in size with revenue from the operation.

SDG 6 – Clean Water and Sanitation 
SDG 7 – Affordable and Clean Energy
SDG 11 – Sustainable Cities and Communities
SDG 13 – Climate Action

They aare related to the zero impact policy of the operation, ensuring that 100% of the impacts generated by the construction and usage of the newly developed buildings are mitigated, inside each larger building and through joint efforts among smaller ones. Among these policies are 100% goals for clean energy production, sewage treatment, recycling (circular economy), water drainage systems, heat island mitigation (through vertical gardens and green roofs). TOD is also an important part of the project.
Item 8 is ensured by the creation of economic development with the construction process, at first, and with commerce and services that are to be implemented in the region through different policies, including city tax exemption for sustainable initiatives and startups.
Item 17 is at the core of a syndicated urban operation, as established by the federal law that outlines it.

SDG 8 – Decent Work and Economic Growth

Ensured by the creation of economic development with the construction process, at first, and with commerce and services that are to be implemented in the region through different policies, including city tax exemption for sustainable initiatives and startups.

SDG 17 – Partnerships to achieve the Goals

This is at the core of a syndicated urban operation, as established by the federal law that outlines it.

Risks and Limitations

What are the key risks, constraints and dependencies related to the project?

  • The first risk, currently expected to be low, regards the approval of the bill by the city council. There is political consensus that the operation is desired by the city in general and by the affected region in particular, which means the council is likely to approve the bill.
  • A second risk is related to the effective adhesion of the operation by real estate developers. This is also expected to be low, since the cost of building rights is tied to the current, low prices of land in the area, and are tied to it. This means that the cost of building rights are expected to dynamically decrease (or increase) according to attractive interest rates for development.
  • A third risk identified is the possible resistance of the local population towards the operation. Participatory processes have taken place and are expected to be a permanent part of the management of the operation, ensuring a positive sum of social impact through all phases.

Risk mitigation and continuity

Once the Operation becomes law, inside the current legislature, any elected officials are required to continue the operation. Any change or termination has to be proposed and passed by the city council.

Financing

Type of Investment

Equity

Financing Structure

Public Private Partnership

Secured Investment

About 25 million dollars for public works in the area are currently secured, with another 12 million expected to be earmarked in the next few months. These are public works that aim at mitigating existing problems, independently of the operation, but are also expectated to generate interest in the operation. This has been or will be funded by the City.

Committed Government Funding

Yes. $37,000,000.00

National and Subnational Investors

USD 25 million for the "Meta 3" part of public works around the Lagoinha complex - currently under way, funded by the city (municipal level). USD 12 million for the Lagoinha Park expected to be announced in the coming months, funded by the city (municipal level).

Committed Private Funding

No

Support

Technical Support Required

The Syndicated Urban Operation has a duration initially set at 20 years. The bill that defines the initial priorities, conditions and opportunities for the region is drawn by the City’s technical staff through its different departments and taking public hearings and workshops into consideration. The project is coordinated by the Department of Urban Policy (SMPU). Some of the departments directly involved are the Traffic and Transit Company of the city (BHTrans); the Housing Development Company (Urbenl); the Environment Department (SMMA); the city’s Urban Development Agency (SUDECAP); and the Department of Social Assistance, Food Safety and Citizenship (SMASAC). After the bill passes into law, a Managing Council is formed with members of the public and private sectors, including local citizens, and it is responsible for managing and adjusting the developments of the Operation throughout its duration. The City staff is part of the Managing Council and provides technical and legal expertise to make investments possible. The Planning staff also works continually to propose and update the basic and executive projects related to the priorities defined by the Council and validated through public hearings. Private investments – real estate developed by agents that buy building rights – are privately conducted, bound to parameters such as maximum FAR, height and setbacks, that are defined specifically for the region and overlay the region’s usual rules.

Stakeholders

Governmental Buy-in

Yes. Subnational/regional level, National Level

Other Forms of Governmental Support

The City is the promoter and will manage and provide infrastructure for all parts of the project, except where the Managing Council is expected to take over once the operation is in progress.

National Ministries Involved

Ministério do Desenvolvimento Regional - Higor Guerra (Coordenador-Geral de Ações Estratégicas)

SubNational Ministries Involved

City of Belo Horizonte - Dra. Maria Fernandes Caldas, Secretary of Urban Policy

Other Entities Involved

Subsecretariat of Urban Planning - Rafael Lemieszek Pinheiro, Director of Research

Licenses and Permits

No

Updates

  • 10th February 2020

    Cities Investment Platform in progress - updates pending

  • 10th February 2020

    Project featured on the Cities Investment Platform, which was launched at the Tenth Session of the World Urban Forum (WUF10)

Supporting Documents

No supporting documents included.

FAQs

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *