Abstract
Land-value capture (LVC) has gained traction as a self-financing instrument for urban development. This article examines its opportunities and limits through a single case study, the Naranjal Partial Urban Renewal Plan, a large-scale, municipally led intervention in a low-income neighbourhood of Medellín. Anchored in Soja’s spatial justice, it advances a framework to identify LVC (in)justices across three dimensions: influence over spatial production, distribution of costs and risks, and the spatial allocation of socially valued resources. Case evidence shows that, in the absence of early public investment and sustained institutional–political support, LVC instruments generated revenue neither sufficient nor timely to fund infrastructure and social mitigation, ultimately shifting costs and risks onto vulnerable, lower-income groups.
Introduction
Amid mounting fiscal pressure, local governments face a dual challenge: meeting rising infrastructure and service demands while operating under tightening revenue ceilings – requiring both the strengthening of existing revenue streams and the creation of alternative own-source revenues. In this context, land-value capture (LVC) has regained prominence as a means of leveraging publicly generated land-value increments to enhance municipal fiscal capacity (Kresse et al., 2020; Smolka, 2013). Though featured in global urban agendas since Habitat I (United Nations, 1976), LVC re-emerged prominently during Habitat III (UN-Habitat, 2017), renewing international interest in its application. Celebrated in policy circles for its institutional adaptability and potential to reshape traditional fiscal models (Korngold, 2022; OECD and Lincoln Institute of Land Policy, 2022), LVC has also drawn attention from critical urban scholars, who call for closer examination of its effectiveness in addressing key urban issues – from housing and infrastructure provision for low-income groups (Gillespie, 2020) to countering top-down neoliberal urbanisation (Steel et al., 2017).
LVC’s appeal lies in its strong policy rationale: advocating for the public sector’s recovery of ‘unearned increments’ – land-value increases driven by factors other than landowners’ efforts – enabling communities to benefit from these gains (Smolka, 2013). This rationale resonates widely, as it addresses the need to strengthen fiscal capacity and bridge financing gaps for infrastructure and services amid rapid urbanisation, population growth and climate change adaptation. However, LVC’s momentum must be situated within broader shifts in the political economy of cities. No longer merely sites of commodification, cities themselves are increasingly commodified, with their spatial forms – from buildings to land-use systems – reshaped to maximise profit-making potential (Brenner et al., 2012). This aligns with a shift in urban politics, expanding beyond competition for circulating capital to a broader range of actors, including states, all seeking to tap into land development as a revenue source (Robinson and Attuyer, 2021; Shatkin, 2017).
In this context, although framed as neutral, technical tools, the core of LVC – the capture and distribution of land-value increases – can be rendered vulnerable to speculative interests and power struggles, as multiple actors vie for control over windfalls from land development (Savini and Aalbers, 2016; Shatkin, 2017). This warrants close attention in global South cities, where LVC may be superimposed onto landscapes marked by chronic infrastructure deficits, unmet social needs and complex formal–informal land markets. In such settings, LVC can drive a broad range of transformations: it holds the potential to de-risk municipal finances, ease funding bottlenecks and promote more equitable resource distribution (Kresse et al., 2020). However, because LVC frameworks rely heavily on escalating property values, in contexts where powerful interests can exploit local governments’ limited capacity to negotiate public benefits (Shatkin, 2017), public value risks being diverted to private actors, weakening public revenues, raising housing costs for low-income groups and intensifying displacement pressures on vulnerable populations (Mahendra et al., 2020; Wolf-Powers, 2023).
To date, however, empirical studies on the socio-spatial impacts of LVC in global South cities remain scarce, while critical analyses have largely centred on global North contexts. In particular, emerging US-based literature highlights the challenges that governments face in securing social benefit through value capture, with studies identifying patterns where land-value gains are allocated in ways that facilitate private rent seeking, exacerbate inequality and weaken social cohesion (Fisher et al., 2023; Weber, 2021; Wolf-Powers, 2023), prompting calls for closer scrutiny of LVC’s distributional outcomes (Wolf-Powers, 2019). In contrast, global South debates often adopt an instrumentalist, best-practice framing that detaches LVC from its socio-political context (Fermín, 2024; Kresse et al., 2020). This limits attention to the structural constraints and power relations underpinning implementation, as well as to the processes through which value is produced, captured and distributed – particularly in relation to low-income, non-property-owning populations in urban renewal contexts (see Fix, 2009; Mahendra et al., 2020; Santoro, 2019, for exceptions).
To address this gap, this article places spatial justice at the centre of LVC analysis, focusing on how land value capture outcomes manifest spatially – in distributional patterns that are inherently just or unjust – and how these outcomes simultaneously shape, and are shaped by, entrenched structures that produce socio-spatial injustices (Soja, 2013). Drawing on Soja’s (2009: 2) conceptualisation of spatial justice as ‘the fair and equitable distribution in space of socially valued resources and the opportunities to use them’, this article identifies land value capture (in)justices across three dimensions: influence over the forces shaping urban space; the distribution of costs and risks; and the spatial allocation of socially valued resources.
These dimensions are explored through the Naranjal Partial Urban Renewal Plan, one of over 36 renewal projects adopted since 2000 under Medellín’s compact growth strategy. It examines how outcomes – though outwardly similar to renewal efforts elsewhere – emerge from Medellín’s governance approach, which sought to leverage land value increases generated by public action to shift most renewal costs onto private developers at the point of construction, aiming to regulate urban development and the distribution of spatial benefits. In Naranjal – where the strategy was first piloted – two LVC instruments, land readjustment (LR) and non-negotiable developer obligations (NNDOs), were intended to underwrite both the capital budget and a social programme to mitigate adverse impacts on residents and businesses. However, the municipality’s minimal upfront capital outlay – necessary to initiate and de-risk the project – combined with weak political commitment and limited institutional capacity, led to greater reliance on private capital, embedding structural imbalances in the project’s design. This shifted costs and risks onto low-income households and traders, whose constrained resources, weaker bargaining power and limited risk-bearing capacity contrasted with those of developers – subordinating their spatial rights to imperatives misaligned with redistributive aims. Although planned for completion within a decade, the project remains largely unfinished, with only one of five phases implemented and key commitments – social housing, infrastructure upgrades and a traders’ relocation centre – still unmet.
As a pilot within one of Latin America’s most institutionalised LVC frameworks, Naranjal offers insight into how cities confront the challenges of financing public planning and how such efforts unfold in practice. While LVC holds significant regional promise, implementation frequently stalls amid legal, political and institutional constraints (Blanco et al., 2017). Colombia’s robust legal mandate and sustained political support – exemplified by Medellín’s reputation for systematic and innovative practice (Pinilla and Rodriguez Vitta, 2018; Smolka, 2013) – position Naranjal as a critical case for examining both the potential and limitations of LVC implementation in contested urban contexts.
Land value capture and spatial justice
Land value capture: Public benefit revisited
Despite extensive discussion, the definition of LVC remains open. Some adopt a broad view, defining it as any policy or legal mechanism targeting ‘unearned increments’ in land value caused by factors beyond the landowner’s control – such as demographic shifts or economic drivers that amplify land demand (Alterman, 2012). A narrower, and more common, definition ties LVC to policies capturing value directly generated by public investments or regulatory actions, such as new infrastructure or land-use changes that enhance development rights (Kim, 2020; Smolka, 2013).
LVC’s foundational principles trace back to the 19th century, particularly Henry George’s ‘single tax’ – a proposal to address poverty and inequality by taxing land value increases. George argued that such gains, created collectively by society, should be reclaimed for public benefit rather than captured solely by individual landowners (George, 1879). Although George’s single tax saw limited adoption, contemporary LVC mechanisms build on his idea of socialising land value rather than privatising it. Over time, however, the interpretation of ‘public benefit’ has broadened to include diverse objectives: strengthening fiscal capacity (Kresse et al., 2020), funding infrastructure, services, and housing (Kim, 2024; Korngold, 2022; Suzuki et al., 2015), managing land use (Hong and Needham, 2007) and, in line with George’s ideas, serving as an instrument for redistribution (Alterman, 2012; OECD and Lincoln Institute of Land Policy, 2022).
This broader interpretation introduces variation in both intent and technical application across LVC’s phases: value creation, where public initiatives such as infrastructure or regulatory changes increase land value; value recovery, where part of this value is reclaimed as cash, land or in-kind contributions; and value distribution, where value is allocated for public benefit. It is in the distribution phase that tensions around ‘public benefit’ emerge most sharply, as a single LVC instrument often addresses multiple – sometimes conflicting – objectives, creating friction over which form of ‘public benefit’ takes precedence, whose interests are prioritised and how benefits are ultimately distributed.
Despite these tensions, the distribution phase is frequently over-simplified (Wolf-Powers, 2019). Although factors driving land value increases and capture mechanisms receive substantial attention, the allocation is often portrayed as a neutral, linear process in which ‘unearned increments’ are seamlessly distributed to benefit the ‘public’ or ‘community at large’ (Blanco et al., 2017; Korngold, 2022; OECD and Lincoln Institute of Land Policy, 2022). This framing may perpetuate narratives of LVC as inherently equitable and universally beneficial, while obscuring key caveats and contingencies in the often-contested production of space in global South cities.
First, designed for private tenure systems, LVC mechanisms often prioritise formal landowners as their primary stakeholders (Hong and Needham, 2007). This approach risks reinforcing unequal power dynamics – and, by extension, socio-spatial inequalities – in contexts characterised by complex tenure continuums, where secure and insecure claims coexist (Payne and Durand-Lasserve, 2012). Here, individuals with less secure tenure, such as tenants and non-regularised occupiers, may be excluded from LVC processes, lacking pathways to gain control over the forces shaping urban space (Mahendra et al., 2020; UN-Habitat, 2018).
Second, it assumes that costs and risks fall mainly on ‘privileged’ landowners and developers, echoing the view that ‘ownership is generally concentrated in upper-income groups’ (UN-Habitat, 2016: ix) and presuming that these actors – who reap the gains from rising land values – can readily absorb the burdens. However, this overlooks the reality that, in certain contexts, the costs and risks associated with LVC implementation – rent hikes, rising property taxes and displacement – may be imposed on populations ill-equipped to bear them, including low-income households, tenants and those with insecure tenure (Mahendra et al., 2020; Suzuki et al., 2015; Wolf-Powers, 2019).
Third, it presumes universal benefits – namely, that rising land values will be captured for public use (Kresse et al., 2020) or will benefit the community at large (Korngold, 2022). Terms like ‘community’ and ‘public’ imply that benefits will flow to a homogeneous group – with uniform needs, shared consensus on resource allocation and comparable power and political influence. This, however, overlooks the reality that controlling surplus values from scarce resources like land invariably invites fierce competition between multiple claimants with unequal power and stakes in land values (Shatkin, 2017). Framing benefits as ‘universal’ may rationalise political choices that obscure whether gains are broadly shared or confined to a privileged minority.
Finally, it overlooks temporal dynamics. While the long-term effects of rising land values – such as displacement risks and the difficulty of maintaining affordability for services, rent and taxes, particularly for low-income and non-owning populations – are increasingly recognised (Mahendra et al., 2020; Suzuki et al., 2015), the interim phase between initial value capitalisation to its eventual distribution remains underexplored. Delays in distribution may not always be detrimental, but in contexts requiring land contributions, such as urban renewal or large-scale development projects, even minor delays in the flow of benefits can significantly burden those relying on land for shelter or livelihood.
Spatiality of (in)justice
Discussing LVC through a spatial justice lens can guide empirical analysis and inform social and political actions to address these limitations. While a spatial theory of justice has been extensively explored, particularly in the works of Lefebvre (1996) and Harvey (2010), the explicit use of the term ‘spatial justice’ has remained limited until more recent contributions by scholars such as Marcuse (2009), Soja (2009, 2013) and Dikeç (2009). These scholars, though united in recognising its historical and contemporary relevance, diverge in their interpretations of the relationship between social and spatial processes. Marcuse (2009; Marcuse et al., 2009), for instance, emphasises the determinative role of social forces, arguing that while addressing spatial injustice can meaningfully contribute to social justice, its impact remains constrained unless the underlying social injustices that generate spatial inequalities are also addressed. In contrast, Soja (2009, 2013; see also Dikeç, 2009) advocates a dialectical perspective, highlighting the reciprocal relationship between social and spatial causality, where each actively shapes the other. While acknowledging that spatial justice is neither a substitute for nor an alternative to other forms of justice, he insists that it is ‘not just the outcome of social and political processes’ but a fundamental force in the production and reproduction of justice and injustice over time (Soja, 2013: 2).
Soja’s emphasis on making the spatiality of justice explicit informs the perspective adopted here. LVC is inherently a spatial dynamic, simultaneously shaped by and shaping uneven geographies. The relative advantages or disadvantages of a location – reflected in varying land values – directly inform strategies for enhancing and capitalising on these values. Likewise, decisions on how and where reclaimed value is allocated, and for what purposes, critically shape the production of urban space. Far from neutral, LVC operates within historically formed socio-spatial contexts and spaces defined by often-invisible political relations to land – such as unequal access and insecure tenure – that consolidate power dynamics (Gribat and Pizzo, 2020; Haila, 2015). As a political artefact, it embodies specific social and political ideals about how space should be planned and produced, wielding the power to reshape urban spaces in ways that can be either just or unjust.
Recognising that justice is inherently specific to time and place (Dikeç, 2009), this article adopts Soja’s broader, yet non-totalising, concept of spatial justice as both an outcome and a process (Soja, 2013). This framework emphasises two key dimensions: (1) identifying spatial (in)justice by assessing whether socially valued resources are equitably distributed and accessible across space and (2) examining the processes producing these spatial outcomes, whether just or unjust. Thus, while acknowledging the importance of spatial distribution, this approach also interrogates how such spatial configurations are generated and maintained, and how they may reinforce inequalities and injustices – manifested in exclusion, marginalisation and oppression (Dikeç, 2009; Soja, 2013). Building on this, the article identifies ‘land value capture (in)justices’ across three interconnected dimensions. First, it examines who holds power – and who is excluded – in shaping decisions regarding the capture and distribution of land values. Second, it explores how costs and risks associated with LVC are distributed, with attention to the differentiated effects on disadvantaged groups. Third, it assesses how captured values are spatially distributed, specifically whether distribution addresses social issues and fosters beneficial effects, such as improved access to urban resources for the most disadvantaged.
The article draws on 35 semi-structured interviews conducted in 2021 with stakeholders, including Naranjal residents and traders, elected officials in Medellín, civil servants, urban consultants and real estate developers. To maintain confidentiality, interviews were anonymised: codes beginning with ‘1’ represent government officials, consultants and developers, while ‘2’ refers to Naranjal residents or traders (e.g. 2F-6). Secondary sources also informed the analysis, including planning documents, council minutes and media reports.
Medellín: A new planning paradigm
Over the past two decades, Medellín has emerged as Latin America’s leading urban success story, celebrated for its ‘social urbanism’ approach, which integrates large-scale infrastructure with targeted interventions in marginalised, self-built peripheral neighbourhoods. Alongside these efforts, Medellín has pursued a less publicised but equally transformative strategy: a compact city model centred on inward growth, with the Medellín River corridor as its densification axis. Its regulatory foundation was laid in the 1990s through national reforms to address the violence, inequality and corruption of the preceding decades (Jaramillo, 2020). These reforms introduced Law 388 of 1997, restructuring Colombia’s urban planning system by granting municipalities greater autonomy over development and territorial management. Central to this autonomy were two planning instruments: the Territorial Ordering Plan (POT), a long-term land-use and development framework; and Partial Plans, procedural tools within the POT for regulating land use and development in specific urban areas (Pinilla and Rodriguez Vitta, 2018).
Following these reforms, Medellín adopted its first POT as both a planning and governance instrument. As a planning tool, it promoted a compact growth model by repurposing underutilised, well-serviced areas along the Medellín River – zoned for industry in the 1950s – for urban densification, aiming to deter expansion onto the Aburrá Valley’s landslide-prone, poorly serviced slopes (Alcaldía de Medellín, 2011). As a governance tool – grounded in the principle that property must fulfil a social function (Foster and Bonilla, 2011) and that ‘urban land does not behave like any other commodity’ – the POT sought to correct market inequities by strengthening the municipality’s role in redistributing city-generated wealth, ‘steering markets towards social development objectives’ (Municipio de Medellín, 2000: 21).
As part of this strategy, 75 hectares along the Medellín River were designated for renewal, with Naranjal selected as the pilot site for the first Partial Urban Renewal Plan (Jaramillo and Montoya, 2017). The municipality envisioned a self-sustaining investment cycle in these areas through LVC: rising land values would be captured and reinvested in local infrastructure and services, shifting part of the financial burden to private developers. Scaled citywide, this model aimed to free public resources for areas where cost sharing was unfeasible, particularly impoverished zones requiring direct municipal intervention (Municipio de Medellín, 2000).
Naranjal: Land values for redistribution
Situated at the crossroads of the Medellín River’s multimodal corridor, Naranjal occupies a strategic location in the city’s core. Originally a cluster of houses on marshland, it evolved into a commercial hub through self-built efforts. By 2009, it hosted 350 small businesses across 282 commercial units (1265 workers), specialising in vehicle repair, spare parts and recycling. Most operated on large, low-density plots leased to primary tenants, who sublet to multiple occupants – many classified as vulnerable to the adverse impacts of urban renewal. Despite its commercial character, Naranjal also housed 162 families (465 residents) in 105 self-built one- or two-storey homes, most earning slightly above the minimum wage. Property ownership was limited – 38% of homes and 9.8% of commercial units – rendering it predominantly tenant occupied. Among residential units, 41 were rentals and 29 lacked formal property rights. In the commercial sector, 256 spaces were tenanted, four were informally occupied and 22 operated in public spaces (Alcaldía de Medellín, 2009; CEO, 2006).
Despite its central location, Naranjal functioned as an isolated enclave. Residents benefited from access to public infrastructure, including a metro station, and businesses took advantage of clustering and connectivity, yet the neighbourhood remained physically and functionally cut off. Surrounded by metropolitan infrastructure that failed to foster integration, prolonged neglect compounded this disconnection: crumbling streets, workshops spilling into public ways and eroded boundaries between private and communal space. Paradoxically, these very dysfunctions – paired with projected value gains from densification – made Naranjal both an attractive site for investors and an ideal candidate for an LVC scheme aimed at redressing entrenched socio-spatial exclusion.
The municipality sought to leverage these opportunities through a public–private partnership. Guided by a predefined master plan, private investors would finance and manage construction, while the municipality oversaw land management, enforced regulations and upheld principles of equity, inclusion, restoration of initial conditions and the right to remain – for both formal and informal residents and traders. To facilitate implementation, the renewal area was divided into five Urban Action Units (UAUs) – self-contained parcel clusters designated for coordinated intervention. Within each UAU, fragmented plots were to be consolidated and re-parcelled, with a portion allocated to public infrastructure and the remainder designated for higher-density, mixed-use development, replacing existing low-rise structures.
To assemble fragmented parcels, LR was preferred over acquisition or expropriation for its voluntary approach (Hong and Needham, 2007; Kim, 2024), requiring consent from 51% of property owners per UAU. Both formal and informal owners could participate – though the latter had to regularise tenure – while non-participants received cash compensation. Landowners would contribute property rights as equity, receiving new on-site units proportional to each parcel’s baseline value. A Project Announcement (Law 388/1997) was to initiate the process, triggering two mechanisms: (i) baseline valuations to establish each owner’s contribution and entitlement, and (ii) a price freeze fixing those values to prevent speculation, standardise compensation and channel post-announcement land-value increments into public works.
To uphold Colombia’s principle of equitable cost–benefit distribution – which mandates that the burdens and gains of urban development be fairly shared among stakeholders – each UAU was subject to NNDOs: one-time, binding cash or in-kind contributions towards infrastructure and services, linked to land-use regulations (Gielen and Van der Krabben, 2019). These included land cessions, infrastructure upgrades and public facilities – including a Commercial Centre designed to accommodate Naranjal’s most vulnerable traders. While UAUs could proceed independently, the plan stipulated that UAU 1 – the Commercial Centre site – be developed first, ensuring that relocation infrastructure preceded clearance, thus minimising livelihood disruption and preventing displacement. Once traders were relocated, the remaining UAUs could proceed in parallel or in any sequence, preserving the project’s social safeguards (Alcaldía de Medellín, 2000).
Under this scheme, LR and NNDOs were designed as complementary instruments. Property owners would contribute their plots as equity, thus minimising municipal cash outlays and reducing litigation risks. Developers would receive additional building rights as planning incentives, provided NNDOs were fulfilled when a UAU was granted a construction licence, thereby enabling the municipality to front-load infrastructure and social investments. In practice, however, key steps to operationalise LR were never completed. The Project Announcement – intended to trigger baseline land valuations and the statutory price freeze – was never issued, and no ex-ante formula was established to define how contributed land would translate into rights over new on-site units. Municipal officials (1B-2; 1H-8) attributed these omissions to the novelty of LR: as the first attempt to implement the instrument in both Medellín and Colombia, institutional capacity and technical expertise were limited. These gaps were bound to have immediate and lasting consequences: land prices surged in anticipation of public investment, fuelling speculation and holdouts; without a published benchmark, landowners were unable to make informed decisions on LR participation, fostering mistrust and disputes; and without the price freeze, the safeguard preventing post-announcement gains from being incorporated into compensation was effectively voided, steadily eroding the residual land value available to finance NNDOs.
Expanded NNDOs
By 2009, despite a decade-long timeline, progress remained minimal. A municipal review identified key obstacles: outdated cash-flow projections, limited private-sector interest, incomplete cartography and cadastral data and unannotated property titles that rendered LR legally unenforceable. Yet two unresolved LVC issues proved especially obstructive: without baseline valuations and amid speculative price inflation, landowners in UAU 1 refused to contribute plots via LR for the Commercial Centre, deeming it less profitable than alternative market-driven uses (1B-2). Since completion of other UAUs depended on UAU 1, the project was effectively blocked from the outset. Vague NNDOs further compounded delays: cost–benefit distribution was unbalanced; budgets and indicators for social protection were absent; responsibilities for public works were unclear; and sites for social housing were not designated (Alcaldía de Medellín, 2009).
In response, the timeline was extended to 2018 and several changes were introduced. The requirement to begin with UAU 1 was removed, allowing implementation to proceed in any sequence – a shift intended to accelerate progress, but one that weakened protections against traders’ displacement by deprioritising early construction of the Commercial Centre. Although no Project Announcement was issued – a prerequisite for initiating LR – several shortcomings in the NNDOs were addressed, including the introduction of a detailed occupancy model: 40% of construction capacity was allocated to residential use, with 10% reserved for social housing – 7592 m2 for Social Interest Housing (VIS; 138 units) and 2610 m2 for Priority Interest Housing (VIP; 68 units). 1 While off-site or monetary compliance was permitted, the municipality – responding to community demands – committed to in-situ construction. VIS units were distributed across UAUs 2–5 – each averaging 5% of sellable area and integrated with market-rate housing – while VIP units were concentrated in UAU 1, alongside commercial spaces for Naranjal’s traders and workshop operators.
As part of these adjustments, the municipality also refined the scope of physical NNDOs – land cessions, infrastructure and public facilities – and introduced a parallel set of social NNDOs, operationalised through a ring-fenced programme with a fixed budget, jointly financed by the five UAUs. The programme comprised three components: housing, aimed at upholding the right to permanence and dignified living through a social housing seed fund, temporary rent subsidies and targeted assistance; economic, focused on preserving Naranjal’s commercial fabric by retaining the Commercial Centre – relocated to municipally owned underground space beneath UAUs 2 and 3 to avoid protracted landowner negotiations and financed through pooled UAU contributions – alongside business compensation and livelihood support; and cultural, designed to foster social inclusion and to extend benefits to vulnerable groups, including street dwellers, through targeted interventions.
As shown in Table 1, a financial simulation conducted during the 2009 adjustments projected that revenues would exceed total estimated costs – including social NNDOs, which averaged 2.4% across UAUs. Based on anticipated land value uplifts, the proposed real estate projects were expected to enable land transfers, meet social and physical NNDOs and still offer attractive returns to investors under the LVC scheme.
Financial simulation.
Source: Adapted from Alcaldía de Medellín (2009).
Eroded social obligations
Despite these adjustments, implementation faced another three-year delay, partly due to the misalignment between the Partial Plans’ 10-year horizon and Colombia’s four-year mayoral terms. This disconnect fostered a preference for alternative instruments like Projects of Urban Integration, which relied on public funds for faster, more visible outcomes – overshadowing regulation-bound Partial Plans that demanded long-term political commitment (Garcia Ferrari et al., 2018). Momentum resumed with the election of Mayor Aníbal Gaviria (2012–2015), who designated the project as one of his administration’s 31 flagship initiatives, heightening pressure for delivery. This urgency prompted the Urban Development Enterprise (EDU) – the municipal authority appointed in 2013 to oversee the renewal – to fast-track implementation by addressing two core challenges: attracting private investment and resolving land management constraints, particularly those related to land assembly and site preparation.
While private capital was central to the project’s self-financing model, Naranjal’s renewal-specific NNDOs, combined with highly fragmented and informal tenure, discouraged investment interest (1B-2). In contrast, expansion zones and neighbouring municipalities, with simpler tenure structures and more permissive regulations, offered quicker, higher returns, making them comparatively more attractive (Jaramillo and Montoya, 2017). Tenure fragmentation across the five UAUs proved particularly problematic: initial assumptions that a few large landowners controlled most plots were inaccurate (1D-4) – over 193 parcels were actually held by multiple individuals (Alcaldía de Medellín, 2009), requiring protracted, multi-party negotiations.
Under pressure to deliver within a single mayoral term, EDU abandoned the time-intensive LR process – already weakened by the absence of baseline valuations and price-freeze announcements – in favour of ad hoc, plot-by-plot acquisitions to assemble land in each UAU. To expedite the process, it used municipal funds earmarked for later recovery through real estate sales, prioritising UAUs 2 and 3, where fewer landowners offered a simpler path to land assembly. Although this shift transferred legal and fiscal liability to the municipality – opening the way to disputes and litigation and allowing landowners to capture windfall profits that eroded NNDO funding, as budgets remained capped at pre-announcement valuations – it nonetheless accelerated implementation: by November 2013, EDU had acquired all 19 parcels in UAU 2 and was negotiating 34 in UAU 3 (EDU, 2013b).
With land acquisitions underway, EDU invoked provisions for alternative NNDO compliance – which permitted off-site delivery or monetary substitution, provided obligations were fulfilled in equivalent form and value – to reconfigure the project, converting space originally designated for social infrastructure into market-rate development. After several failed tenders, this strategy ultimately secured private capital, leading to a new partnership with a Colombian infrastructure firm entering the housing sector. The revised scheme, branded Nuevo Naranjal, proposed eight luxury towers comprising 416 upscale apartments, 228 offices and 137 commercial units – projected to yield COP243 billion (≈ US$130 million), far exceeding the partner’s COP30 billion investment (≈ US$16 million; Concejo de Medellín, 2018).
This reconfiguration, however, signalled a broader retreat from the project’s social commitments. To maximise the developer’s returns, EDU invoked a provision permitting off-site fulfilment of VIS/VIP quotas, relocating the 28 and 27 social housing units originally planned for UAUs 2 and 3 to the adjacent Arrabal neighbourhood – contravening municipal commitments to in-situ delivery. The approach was soon standardised across all UAUs, displacing the entire housing obligation outside Naranjal. EDU justified the decision on two grounds: first, that inclusion jeopardised developers’ financial viability; and second, that residents would struggle to afford administrative costs, property taxes and services in the upgraded area, now reclassified into a higher socioeconomic tier (EDU, 2018). In line with this shift, EDU omitted the underground Commercial Centre – intended for the relocation of traders – from the design, signalling its gradual deprioritisation, though never formally removed. Simultaneously, most traders and workshop operators in UAU 2 – mainly vehicle service providers and food vendors – were relocated to a temporary site, El Caracol, in October 2013. Framed as an interim measure (EDU, 2013a), the site soon proved inadequate: traders were placed in shipping containers on unpaved ground, with poor infrastructure and limited foot traffic – leading to significant income losses for many of the 22 relocated businesses (2D-4, 1H-8).
Undertaken without community consultation, these modifications marked a break from municipal commitments, excluding residents and traders from decision making about their homes and livelihoods. In response, community groups filed a popular action challenging the off-site housing strategy and the sidelining of the Commercial Centre, arguing that both measures erased Naranjal’s commercial identity and their right to remain (Martínez et al., 2017). Despite this, EDU began UAU 2 construction in 2014 under the unrevised plan, skipping excavation for the underground facility and retaining the off-site housing strategy, even as Arrabal stalled amid investor withdrawal and landowner resistance (EDU, 2018).
Nominal entitlements versus effective access
While EDU’s profit-orientated approach initially showed results, flaws soon emerged. By 2017, plot consolidation in UAU 3 had stalled amid disputes over ‘fair’ land values. In UAU 2, despite all 240 apartments being sold and completion set for April (EDU, 2015), only half were delivered by 2018 (EDU, 2018). Shortcomings in the social programme also became apparent when the 22 traders relocated to El Caracol were left without a long-term solution after the municipality’s short lease expired and the site was reclaimed. With no alternative provided, EDU withdrew support, triggering renewed displacement as some traders returned to Naranjal, while others were forced to restart elsewhere, relying on the unfulfilled promise of relocation to the still-unbuilt Commercial Centre (1H-8, 2B-2).
Amid these setbacks, a popular action filed by community groups led to a court ruling mandating in-situ social housing and prioritising the Commercial Centre (EDU, 2018). Meanwhile, the project’s private investor withdrew following unrelated corruption charges, while changes in mayoral leadership further disrupted continuity. In response, the plan underwent a second revision in 2018 to reactivate the stalled process. The update extended the plan’s validity, reinstated LR as the primary land assembly strategy and reaffirmed EDU’s social commitments – including expanding the social housing quota to 14,832 m2, now allocated to UAU 5 alongside 37,130 m2 of market-rate housing. EDU justified this relocation on three grounds: the unaffordability of land for VIS/VIP elsewhere in Naranjal; the concentration of residents in UAU 5; and ongoing negotiations with a grassroots organisation owning two large parcels and willing to participate in the LR. This, it argued, would facilitate integrated planning and restore financial viability for VIS/VIP delivery.
Initially welcomed, these adjustments have since drawn scepticism. Although a new public–private partnership was signed in 2021, the contract was frozen by mid-2022, leaving Naranjal once again without investor capital (Herrera, 2023). Doubts over EDU’s capacity to deliver have deepened – not only because social housing remains contingent on private financing and EDU’s ability to enforce on-site NNDOs but also due to mounting concerns over affordability and eligibility. All residents – tenants and owners alike – had expected subsidised VIS and VIP units at little or no cost, requiring only census registration and proof of residence, with owners assuming that their plot’s appraised value would cover most, if not all, co-payments (2F-6). Since 2018, however, eligibility has been tied to a 10% savings requirement towards the unit’s value and demonstrable credit capacity (EDU, 2018), leaving long-standing residents facing the prospect of having to purchase homes in the neighbourhood they have always inhabited. As one community leader remarked, ‘Why should we pay to stay in Naranjal when we’ve been here all our lives?’ (2F-6).
This gap between nominal entitlements and material access echoes Roy’s (2007) critique of property markets in informal contexts, where formal participation often masks deeper structures of exclusion. The case of Naranjal exemplifies this tension: does the promise of social housing truly guarantee accessible options for long-standing residents? So far, no such assurance exists. Residents point to vague financial commitments, with NNDO seed capital as the only guaranteed support. While all those listed in the census – owners, occupiers and tenants – are technically eligible, assistance is capped at 10% of property value and distributed unevenly through a municipal vulnerability scoring system: 2 high, medium and low categories receive 100%, 30% and 15% of that amount, respectively (Alcaldía de Medellín, 2009). Municipal (1B-2) and EDU (1G-7; 1H-8) officials have indicated that ISVIMED, the municipal housing agency, may offer additional grants, which – combined with national subsidies – could reduce or eliminate costs for the most vulnerable. Yet the scheme remains uncertain, subject to shifting policies and administrative priorities.
Amid this ambiguity, residents’ anxieties have intensified around credit access and indebtedness – particularly given expectations that, even with price caps, social housing costs will surpass their current expenditures. For those living in self-built homes or paying low rents, the prospect of incurring debt is especially daunting. As one resident observed: The renewal is great for savvy investors, but for people like me, living without debt, it loses its appeal when you factor in the extra costs. What we’re really wondering is, how long will we be burdened with these debts? High property value means nothing if it saddles us with financial stress and obligations we didn’t previously have. (2I-9)
These pressures, however, are not felt equally, as the costs and risks of permanence fall unevenly across tenure groups. Absentee landlords face relatively fewer risks and stand to gain more, as they can avoid the disruptions of relocation, exercise greater bargaining power and engage in speculative holdouts to secure higher offers (1G-7). Tenants – a sizeable demographic – are particularly vulnerable to displacement. Although legally entitled to remain, their access to social housing depends on seed capital and subsidies; without these, securing a house is severely compromised. Their eligibility for relocation support also hinges on the owner’s participation in LR. When EDU acquires properties directly – through voluntary sale – tenants are offered no guaranteed assistance (EDU, 2018). With several such plots already acquired, community leaders report that an unknown number of long-term tenants have been displaced without support (2F-6).
Owner-occupiers, both formal and informal, are less vulnerable than tenants, as LR allows them to offset housing costs with their land’s assessed value. Yet their position remains precarious, as the absence of baseline valuations and an ex-ante formula creates uncertainty over how much of a replacement unit their property would cover. Participation in LR also ties them to a project without a clear timeline or delivery guarantees, particularly given ongoing delays in UAUs 2 and 3. These uncertainties are compounded by the inadequacy of the 12-month relocation compensation, which residents say barely covers rent in Medellín’s distant peripheries. As one community leader remarked: We call Naranjal the close-by neighbourhood because we are right in the centre of Medellín. Being displaced to the peripheries means a significant loss, turning a 10-minute commute to any part of the city into an hour or more (…) Without a guaranteed return within a year, the compensation feels meaningless – akin to forced displacement. (2G-7)
In this context of unpredictable timelines, EDU’s lump-sum acquisitions – calculated using fixed municipal rates (land: 1,927,686 COP/m2,
3
construction: 667,800 COP/m2)
4
– may provide immediate relief and greater certainty compared to LR participation, but they may also incentivise residents to sell under unfavourable terms. Community leaders argue that these valuations fall short of securing equivalent housing in central areas, pushing households towards peripheral zones with limited infrastructure and services. Displacement, then, extends beyond the spatial loss of Naranjal’s centrality: it strips residents – many of whom rely on their homes as workplaces – of key financial and productive assets, while fracturing long-standing social ties, losses that are difficult to quantify or redress (Moser, 2008). As one resident (2D-4) explained: We’ve always lived and worked here, close to family on the same street. Moving out, especially leaving the city centre, will be incredibly hard. There is a chance that we will end up in a less desirable neighbourhood, but we will have to adjust.
Unmet commitments to socially valued resources
There is a growing perception among Naranjal’s residents and traders that value gains are unjustly distributed, with emerging socio-spatial configurations set to privilege external actors – effectively excluding long-standing community groups from access to socially valued resources within their lived territory. The absence of social housing, coupled with the soaring market prices of Nuevo Naranjal residential units – now averaging 5,473,204 COP/m2, well above the 2009 projection of 1,800,000 COP/m2 (3,654,540 COP/m2, inflation adjusted; Alcaldía de Medellín, 2009) – has heightened these perceptions, leaving long-standing residents increasingly at risk of being priced out.
This sense of exclusion is reinforced by spatialised disinvestment, driven by the temporal mismatch in the capture and distribution of NNDOs. With contributions contingent on private investment and construction licences – and only UAU 2 meeting these conditions – the municipality has been unable to front-load investment, leaving a landscape of fenced-off lots, decaying infrastructure and declining services. As one community leader observed, ‘Naranjal is completely abandoned, neglected to the point that even basic infrastructure is left in disrepair under the pretext of ongoing renewal’ (2F-6). The impacts extend beyond the built environment: traders report sharp drops in customers and revenues, while community leaders cite rising youth substance misuse, crime and rough sleeping (2D-4; 2B-2).
The same misalignment is most visible in delays to the Commercial Centre, to be funded through NNDOs pooled from the five UAUs – a model that effectively ties traders’ urgent need for early relocation to a sequence beginning with private capital mobilisation to activate UAUs. Any delay in this sequence pushes the Centre further out of reach and drives up overall costs. Although EDU continues to assert the Centre’s technical feasibility, it has also acknowledged that escalating underground construction expenses threaten the project’s viability (EDU, 2018). If cancelled, over 100 planned trader bays could be lost, likely displacing businesses into unaffordable market-rate units and accelerating the erosion of the area’s traditional economy (1B-2).
After 25 years, neither the social housing units nor the Commercial Centre – both intended to secure the right of residents and businesses to remain – have materialised in Naranjal. With no investor in sight, and the project still contingent on attracting private capital, the built environment has come to embody exclusion and the systematic denial of spatial rights. Community leaders warn that without reforms to the financial model, patterns of displacement, dispossession and socio-economic decline will only intensify. As one community leader observed: The primary stumbling block for us is the overriding interest of the private sector, which lies in making money without making any effort for the community … we continue to lose out due to the municipality’s lack of political will to allocate essential resources. (2G-7)
EDU officials (1G-7, 1H-8) and municipal planners (1B-2) similarly acknowledged that relying solely on LVC revenues was unfeasible, suggesting that beginning with dedicated public funds to cover social measures, and recovering these later through LVC, would have better aligned fiscal objectives with community needs.
Conclusion
In Naranjal, Medellín’s municipality adopted a self-financing renewal model premised on LVC revenues underwriting both infrastructure and social programmes, relying on LR to minimise land acquisition costs and NNDOs to transfer capital and social obligations to developers – effectively tying project viability to private capital mobilisation. However, amid institutional capacity constraints, and in the absence of early public investment to trigger the market responses needed to generate land value increments for capture, the process stalled. As delivery delays accumulated, the residual land value increments available for public capture gradually eroded, along with municipal and community groups’ influence over spatial production and the project’s intended redistributive outcomes.
Grounded in a spatial justice lens, this article analyses the outcomes of this strategy across three dimensions of land value capture (in)justice. First, it interrogates power over urban space – who shapes it, and who is excluded – highlighting how long-standing residents and businesses, despite contributing to the 2000 and 2009 plans, saw their influence erode as prior commitments were breached or indefinitely deferred. Second, it examines the distribution of costs and risks, revealing mounting threats of displacement and dispossession – particularly for tenants and small owner-occupiers – through the loss of location advantages, income and social capital. Third, it explores the spatial allocation of benefits, exposing patterns of disinvestment and the failure to deliver socially valued and accessible resources within the everyday spaces of Naranjal’s communities. The construction of luxury towers – unaffordable to most – and the prolonged uncertainty surrounding social housing and the Commercial Centre exemplify this trend. If the renewal ultimately fails to generate inclusive space, it will produce a skewed distribution of captured value: displacing low-income residents and businesses to the periphery, severing their access to the city’s material and symbolic assets (Brenner et al., 2012; Soja, 2013), while reinforcing enclaves of privilege for a select few. In this scenario, the use of LVC mechanisms would fail to deliver community benefit, instead reproducing the socio-spatial injustices that the renewal sought to address.
These findings illustrate the limitations of LVC revenue streams in fully covering capital and social budgets in large-scale urban renewal, particularly in contexts of entrenched socio-spatial inequality. While LVC should remain part of broader financing strategies, the case highlights the need for early public funding to anchor the financial base, provide upfront capital to catalyse development, bridge private investment gaps and shield low-income residents from bearing disproportionate risks and costs. Dedicated renewal funds – capitalised through public transfers and selectively reinforced by LVC instruments such as valorisation and plusvalía – may offer a more resilient financing approach. Earmarked for equity-orientated outcomes, these funds could support upfront delivery and generate a virtuous cycle: recapturing a portion of post-project land value uplift to replenish the fund and sustain future urban renewal initiatives.
More broadly, this article examines how LVC analysis can better account for its inherent contestability within socio-spatial production. Using a spatial justice perspective, it identifies dynamics that enable comparative reflection across diverse urban contexts. Recognising this as one lens among many – and the need for broader cross-context and cross-method examination – it contributes to debates that reframe LVC not as a technical toolkit of best practices but as a political instrument whose capacity to address structural socio-spatial exclusion hinges on how power over urban land and its value is negotiated, contested and legitimised.
Footnotes
Acknowledgements
I gratefully thank the Global Development Institute at the University of Manchester for supporting this research. I also thank all interviewees, residents and traders of Naranjal for sharing their experiences and challenges, as well as the officials of the Municipality of Medellín and the Urban Development Enterprise (EDU) for their openness and generosity in sharing insights into their work.
Funding
The author disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The author received financial support from the Global Development Institute, The University of Manchester, in support of the research, authorship, and publication of this article.
Declaration of conflicting interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.