A betterment contribution or levy is a charge levied on selected properties to cover the cost of public investments that would benefit them. It is the oldest form of land value capture and has been used in Columbia for about a 100 years, and most countries in Latin America have introduced laws to permit betterment contribution. Manizales in Columbia has experimented with experiment levies to contribute to local government’s own-source revenues for urban infrastructure financing. The levy in Manizales represented 50% of the city's property tax revenue in recent years and the city has developed at least eight projects financed through betterment contributions, primarily for road improvements and urban renewal, including the renovation of the Alfonso Lopez Plaza. All of these projects were funded by a single levy assessed on 80 percent of the city’s properties, and collections amounted to US$24.6 million. The Alfonso Lopez Plaza was designed in 2008 to renovate Manizales’s urban center, improving the quality of the city’s public space and enabling more convenient, higher volume and lower-carbon mobility between the east and west sides of the city.
Latin America and the Caribbean
Land value capture (LVC)
Project size (range)
Project size (details)
With an initial fund of USD 24.6M in Manizales, the Columbian government implemented the levy nationally and Bogota made USD 1 billion worth of investments by 2011.
Instituto de Valorización de Manizales (INVAMA)
Year of financial closure
Owners of residential and commercial properties (40,000 residential and commercial properties around the area)
Other investors and municipal budget, to cover the remaining amount.
Other transaction participants
Overcoming low revenue for local governments: Betterment levies allow cities to recover between 30% and 60% of the land value increases created by public infrastructure (i.e. parks, plazas and roads). Manizales’ experience with the betterment levy is promising for local governments exploring new mechanisms for raising additional revenue for financing infrastructure.
Manizales applies the dual appraisal method to measure benefits—a methodology used for many years in Medellín, Bucaramanga, and other cities. This method identifies cadastre valuations for real estate properties in a second area comparable in its characteristics to the area affected by the designated projects. The assumption is that land values will behave similarly in both areas. Experts make an initial appraisal of a sample of properties in the area of influence of the proposed project to determine the present market values. To estimate the land values after the project is finished, they appraise the market values in the comparison area. Initial costs for the Alfonso Lopez Plaza project were estimated at ~USD 7M (in 2008 dollars). Recognizing that renewing the plaza would increase the value of surrounding properties, the Instituto de Valorización de Manizales – the authority responsible for administering the levy – included betterment contributions as the main source for funding the project, covering 57% of total costs, the USD 17M, so an approximate average of USD 242 per lot. After assessing the costs and benefits of the project, the betterment levy was distributed among 40,000 residential and commercial properties around the area. The compliance rate was high among the residents and businesses. In just two years, 85 percent of the amount due by property owners was collected. Satisfaction with the Alfonso Lopez Plaza was also significant among citizens required to make levy payments.
Suitability for cities in low-and-middle income countries (detail)
Yes. Suitable to LMICs that have well-established levy collection services. In practice, the region should have capacity to quantify the land value increment resulting from infrastructure investments.
 Interview with GIZ / OECD / Lincoln Inst. Land Value Capture Compendium team, 10/09/2021