Last week, the Taichung City Government received NT$8.62 billion (US$274.19 million) by auctioning off plots of public land in the city’s phase 13 and phase 14 zoning areas. The result was not as good as expected, with only 54 of 123 plots receiving bids, and the total amount raised being much lower than the floor price of NT$20.46 billion.
The city government’s announcement late last month that it would auction off 28,000 ping (9.26 hectares) of land in the city’s prime areas to repay debts attracted the central government’s attention and triggered discussion between parties. The Ministry of the Interior even asked to postpone the auction to help curb real-estate speculation, but to no avail.
No one is opposed to the Taichung City Government’s decision to auction off public land to repay debts. At issue are the huge areas of land to be sold at one time and the floor price being set much higher than the market expected, which might have a spillover effect, increasing land and housing prices in neighboring areas.
The ministry was concerned that setting a floor price at least 20 percent higher than the market price might further increase land and housing prices in the city. It even suggested buying the land from the city government to construct social housing. The plots at auction were not reserved for social housing and there was nothing wrong with selling them to repay debts, the city government said in response.
Should public land be put up for sale?
This issue is controversial and has persisted for a long time in Taiwan. Mayors and county commissioners have used urban planning and zoning to drive local development and obtain financial resources, which, at the same time, has made land more profitable and benefited local developers.
In theory, the central government or local governments could either raise funds from disposing of public land to bolster their finances or do it for other purposes. However, they should avoid contributing to the problem of rising housing prices. The city government did not directly respond to such worries, saying only it could not sell public land too cheaply.
In the past, state-owned land sales repeatedly hit sky-high prices, making the government a target of criticism for taking the lead in promoting real-estate speculation. In 2012, the Ministry of Finance revised laws to ban sales of state-owned plots measuring less than 500 ping in Taipei to avoid aggravating rampant property speculation and price gouging by construction firms. Last year, it started suspending sales of state-owned land measuring more than 200 ping in residential and commercial zoning areas in the nation’s six special municipalities, with priority given to the construction of social housing. The ministry only auctions off superficies rights for state-owned land instead of selling the land outright.
Unaffordable housing in Taiwan has been a top public grievance for many years. Unlike private enterprises which mostly focus on financial returns, government agencies must bear the responsibility of stabilizing housing prices and consider the impact on the market when disposing of public land. While implementing housing justice is a consensus in Taiwan, it depends on the concerted efforts of the central and local governments. After all, public land is not just an ordinary commodity that can potentially bring in a large financial return; it has embedded interests and value for the public. The allocation and utilization of public land should be in line with the principles of fairness, reasonability and sustainability.
Last week’s public land auction raised concerns about its rationality. The Taichung City Government should revisit its mechanism for setting floor prices. If the city government is still unwilling to sell the land to the central government, it should consider other options and put the interests of the public first.
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