Negotiated developer obligations in a regulatory planning system: insights from Istanbul

Abstract

The use of negotiated developer obligations (NDOs) has been very common in countries such as the United Kingdom (UK), where a discretionary planning system is adopted. NDOs serve several purposes: (1) to facilitate the execution of development projects; (2) to address or offset the negative effects of a development project; and (3) to secure a portion of the increased value generated for the community's benefit. In other words, the general idea behind NDOs is that they are an instrument that ensures 'development pays its way, mitigates the harms it causes, and provides benefits to the communities it burdens.' With the intensification of neoliberalization, which led to increased deregulation and privatization as well as higher reliance on the private sector for the provision of public services, not only the number of NDOs increased but also their scope expanded so as to include not only hard infrastructure but also soft infrastructure and affordable housing. Planning has long been a process that was legitimized by its ability to decide whether or not a development scheme is appropriate on nonfinancial grounds; however, the increased influence of the market in planning represents 'a significant shift in the purpose of planning' and imposes pressure on planners to negotiate agreements. The increased use and changing nature of NDOs reflect broader shifts in the planning paradigm and the evolving role of planners. Historically, planners took on roles such as technocrats, mediators, and advocates. However, with the rise of neoliberal policies, the state's focus shifted towards prioritizing private capital, thus granting private developers more influence over the planning process. As a result, planners have had to increasingly act as facilitators of development. Simultaneously, NDOs have become an integral part in both discretionary (project-led) and regulatory (plan-led) planning systems. Land use planning and development control in Turkey is governed by a hierarchical, statutory planning system, which has a rational comprehensive character. There exists a strict hierarchy between the plans within the system whereby each plan must conform to the provisions and principles outlined in any upper-scale plan in effect. Plans define and restrict the development rights in a strict and definite fashion, and development control is legally the consequence of the approval of a plan. While non-negotiable developer obligations (n-NDOs) is a widely used value capture tool, no such concept as NDOs is defined in the current planning legislation in Turkey. However, local authorities have been capitalizing on certain provisions in the legislation that grants mayors with the authority to accept donations and to enter into agreements/protocols upon the approval of relevant municipal bodies. Thus, NDOs are typically made by using this authority in a rather ambiguous, variable and unregulated fashion. Local planning authorities in Turkey have been entering into such agreements, particularly since the 2000s when development activities were prioritized as a driver of economic growth. In this context, NDOs function as a 'workaround' to the de jure planning legislation that has a strict and hierarchical nature. In a similar fashion to the special-purpose plans, NDOs provide a certain level of flexibility to enable the planning system to catch up with the pace of the real estate industry for the sake of jeopardizing the conformity between the plans within the predefined hierarchy. NDOs are tools that fall into the realm of private law rather than public law, and they are typically negotiated in spite of the land use plans that are in effect. Once the negotiations are finalized, the land use plans are changed according to the provisions of NDOs, thus resulting in drastic changes that are not compliant with what was found in the land use plans before the change. Ultimately, they lead to the emergence of a de facto hybrid planning system. Against this backdrop, this research explores the specifics of NDO-making in Turkey, which are a very popular yet an under-researched tool in Turkey. The use of NDOs proves to be an interesting topic of research on the basis that they require planning (as practiced by planners) to consider market dynamics, and they have been a de facto tool that brings about a hybrid character to the highly regulatory planning legislation in Turkey, thus enabling the planning legislation in Turkey catch up with the pace of the real-estate industry. In Turkey, NDOs are made on very ambiguous terms in a rather confidential fashion on a case-by-case approach. Therefore, matters such as the steps of the NDO-making process, the key players that are involved in negotiations, the involvement of planners in the making of NDOs, and the power relations between parties need to be illuminated. Accordingly, this research sheds some light on this intricate topic by drawing on the findings of 40 semi-structured face-to-face interviews and the scrutiny of three large-scale mixed-use development projects in İstanbul (namely, Marmara Forum, Zorlu Center, and Manzara Adalar). The research is particularly focused on İstanbul because, since the 1980s, İstanbul has been in a fierce competition to become a global city, and authorities adopted policies (such as privatization, sale of public lands, mega projects, public-private partnerships) to attract global capital to İstanbul in an effort to make the city a global financial and transportation hub. Under these dynamics, an overwhelming majority of large-scale real-estate development projects have been built in İstanbul, and thus, an overwhelming majority of NDOs are made in İstanbul. The findings of the research revealed that NDOs are typically made by following two pathways: conditional donation, or voluntary donation. Both pathways prove to be workarounds that were formulated hand-in-hand by local governments and developers to circumvent the de jure planning mechanisms in Turkey. Changes in the economic and political outlook may raise the need to formulate brand-new workarounds; however, the goal remains the same: to keep large-scale development projects going. NDOs, which are made between senior administrators/executives in both local governments and real-estate development firms, prove to be tools that circumvent the rigid planning system in Turkey in order to realize large-scale development projects that are the spatial manifestation of privatization, urban transformation, globalization, and neoliberal economic policies. They are also perceived as a tool that alleviates the burden on local governments that operate with limited resources, and as a win-win game. It was striking in the findings that NDOs were usually associated with corrupt practices, and their potential as a value capture tool was not duly considered. The findings of the research also showed that lawyers – regardless of which of the parties they represent – play an active role in the NDO-making process, while the technical teams of the developer and the local government are pressured by the decisionmaking power of senior managers, senior bureaucrats, and councilors. When it comes to planners, the findings revealed that planners played four different roles in the NDO-making process with varying degrees of influence. Accordingly, planners do not make up a homogenous group in terms of their involvement in the NDO-making process. They assume different roles where some perform a limited technical duty, whereas others have more say and influence. Finally, the pro-development nature of the NDO-making process also manifests itself in the power relations between the parties involved. Pursuant to the planning legislation, local authorities in Turkey are more powerful as they hold the authority to approve plans. The findings, however, revealed that, due to dynamics such as globalization and neoliberalization, local governments and the players in the market have gone hand-in hand since the 1980s to act quickly to formulate a series of workarounds to circumvent the de jure planning legislation, thus enabling the developers infiltrate and manipulate the planning process. In short, the significant imbalance of authority and power between the parties has led to the formulation of various workarounds and informal relations, thus creating new imbalances. To sum up, the findings of this research uncover three areas of interplay that are intricately interconnected: (1) planning and the real estate industry, (2) planning and NDOs, and (3) planning and planners. The misalignment between the planning system in Turkey and the real estate industry became evident with the globalization process that began in the 1980s and deepened further with the development-oriented neoliberal growth policy adopted in the 2000s. Against this backdrop, a series of workarounds have been introduced into the formal planning system since the 1980s, resulting in spatial development not envisaged in the plans. NDOs are one of the workarounds that have emerged as a consequence of the intricate interplay between planning and the real-estate industry. They have been exploiting the gaps in the de jure planning legislation through different pathways and have paved the way for actors other than planners to influence conventional planning processes. With the increased use of NDOs, the conventional planning processes in Turkey evolved where developers/investors can infiltrate and manipulate the system, thus making critical implications on the planning system in Turkey. Under these predicaments, planners became increasingly compelled to serve as facilitators of development. One thing is for sure that NDOs hold the potential to be formulated as a comprehensive, transparent, and participatory public value capture tool; yet, there is a lot that should be done to realize this potential including but not limited to reviewing the planning education to donate prospective planners with the necessary skills; establishing behavior codes for planning professionals; reviewing the overall planning framework in Turkey to eliminate the need to use de facto mechanisms; eliminating the deliberate ambiguity in the planning legislation; introducing a comprehensive public value capture mechanism; and introducing the necessary measures to eliminate informal relations and corrupt practices.