Abstract
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1. Background
Over the last 10 years, in Bulgaria, substantial amounts of real estate and land have been transferred from the central government to the local authorities.
Given the severe economic crisis in Bulgaria during the 90’s, coupled with substantial increase of unemployment rate and cease of industrial activities, as a general rule municipal leadership has considered local economic development a task of the highest priority. The explicitly defined goals for city development focus on physical development. This calls for active policy in all fields, including land management. A number of project for hard infrastructure have been undertaken. Oftentimes, physical development entails acquisition of plots of land both agricultural and urban. In such a way the functioning of the land market is vitally important.
The land reform, which started in 1992, has been almost completed in Bulgaria by the late 90’s. As a result variety of landowners has emerged – citizens, private companies, co-operatives, municipalities, the national government, and other public authorities. Practically, the land plots were highly fragmented. Local government was confronted with a big challenge – how to unite many small pieces of land in possession of diverse owners, given the fact that year 2000 is considered the year when the land market started functioning actively.
Obviously, land is an important tool for economic development closely linked to the concept of "land bank" - to acquire and purchase vacant and underutilised property with the future goal of productive reuse of the land. However, creation of a land bank requires financial resources that have to be budgeted for a particular year. Long-term development perspective entails substantial investment in land plots.
Land can be also an income generating assets – it can be sold or rented. Revenues accrue directly to the municipal budget. Here the trade-off is between holding the land or selling it out, i.e. to choose between a constant financial string or a one-off revenues. Still, in Bulgaria there is no tax on land. However, the discussion about introducing it is on-going and it is important to examine all policy aspect of such a decision.
The contradictory nature of land faces local governments with a huge challenge – how and which land to acquire, how to dispose it, and how to find its best use in order to achieve optimal local development given the current scarcity of resources.
2. Expected outcomes
The proposed research will give insights into:
•Overall development - to portray the land market development in Bulgaria and to highlight the expected future trends;
•Strategy – to what extent the land management linked to the strategic municipal development plan;
•The importance of land revenues to municipal budget – the percentage of revenues generated from land in the total budget and its dynamic;
•Feasibility of introducing a tax on land – how to determine the tax base, the tax rate, and whether tax on land should be local.
3. Methodology
This study will use a number of different methodologies, building upon a range of primary and secondary sources. Three in-depth case studies will be undertaken; the selected municipalities are to be decided.
The primary data will be collected using site visits and semi-structured interviews with key informants and municipal employees. The secondary data includes a content analysis – a review of a number of documents (published summaries, prepared to inform citizens and unpublished data, collected by municipal employees for policy purposes).
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