Known in Brazil by the name Certificados de Potencial Adicional de Construção or CEPACs, this financial instrument was used by some municipalities in Brazil, asking developers to compensate the city for the cost of infrastructure needed to support new developments. The main idea of CEPAC is to create development rights for upzoning and then sell these rights to developers to raise funds to finance infrastructure construction. The municipality regulates the number of CEPACs and are auctioned by the Federal Bank of Brazil in a designated urban operation areas targeted for public investments by city governments. After a certain level of development, CEPACs are traded in the open market publicly to be purchased by investors or developers with the requirement of a portion of raised funds loop back into historic preservation, local employments or leveraging investments towards public goals.


São Paulo, Brazil


Latin America and the Caribbean


Development-based land value capture (LVC)

Instrument category

Land value capture (LVC)

Secondary instruments


Project size (range)

> USD 200M

Project size (details)

Faria Lima and Água Espraiada UOs in São Paulo raised a large amount of money: about EUR 107.4 BN (USD 113.3BN) from 1995 to 2019, exceeding initial projections.


Municipal governments and national banks in Brazil

Year of financial closure



City governments, such as City of São Paulo. National Banks, such as Federal Bank of Brazil

Primary financer

Third-party vendors, Property developers and other investors.

Other co-financers

National Banks

Other contributors

Open market traders

Other transaction participants


Barriers addressed

Ability to access finance from the start of the construction process: CEPACs enable city governments to sell off building rights at the master planning stage, generating sufficient revenue to finance much of the required infrastructure to develop and service a site or district.

Ability to shape development policy via CEPAC financing conditions: Another barrier that can be overcome with CEPAC is the ability to incentivise urban developers to meet public goals such as cultural heritage preservation, a proportion of low-income housing or green space allocation. Although CEPAC is a neutral instrument, the social aspect of its outcome is dependant on the urban plan selected for implementation and financing.

Financing structure

The sale of CePACs allows the city to raise funds for upfront construction costs, long-term infrastructure maintenance and historic or cultural preservation. The revenue is captured in a separate fund aside from the general treasury and then dedicated to a particular urban plan. For instance, in Rio de Janeiro, the wholesale auction of CePAC to a single third-party vendors such as Caixa Economica Federal (CEF) to cover all public infrastructure improvement and future service costs for 20 years without requiring further public outlay. The CEF the placed CePACs on the open market, traded it publicly and sold it to investors or developers.

Suitability for cities in low-and-middle income countries (detail)

Somewhat. Several challenges may render a CePAC type system currently unfeasible for many LMICs. First, certificate holders may bear high financial and regulatory risks due to changes in the certificate prices and land use regulations. Second, a secondary market for trading certificates could take a long time to develop. Third, selling development rights can be lucrative only for cities whose property markets are buoyant. Fourth, considerable financial expertise is required to administer the system. Lastly, CePACs can compound existing inequalities in a city by prioritising gentrification.


Kim, J. (2018) CePACs and Their Value Capture Viability in the U.S for Infrastructure Funding. Lincoln Institute of Land Policy.


[1] Stroher, L. (2020) The Brazilian Experience of Financialization Through Urban Redevelopment: The Case of "Urban Operations". Metropolitics.

[2] WRI Brasil. (2020). Financing Low Carbon Infrastructure in Urban Areas in Brazil. Felicity Accelerating investments for low carbon cities.

[3] Interview with representatives of the LVC Compendium Team from OECD, Lincoln Institute and GIZ, conducted 10/09/2021


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