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This paper describes and critically reviews an important but under-theorized value capture mechanism that we have termed “vertical allocations” (or vertical exactions). This mechanism enables cities to capture value vertically by allocating floor space for public utilities in privately owned, mixed-use, vertical development. As a value capture tool, vertical allocations allow the government to tap value uplift to supply the nearby neighborhood, and the city as a whole, with much needed public services. The owner or developer is required to make in-kind contributions in the form of spaces provided for a range of public facilities such as schools, preschools, community centers, and public medical clinics. While focusing on vertical exactions in Israel we explore how a certain share of land/floorspace can be allocated for public amenities in a given project. There are several legal pathways for securing public floorspace including negotiated agreements, land readjustment and expropriation. The findings show that unclear policies and regulations could create frictions between developers and municipalities, and these raise the nexus question as well as debates about construction costs and financial contributions developers have to make. Specifically, the paper finds that while developers often argue that cities should cover the costs of constructing public floorspace, city officials assert that the costs should be borne by the owners and developers.

The restrictions and requirements imposed by historic preservation regulations bring about many changes to the rights of property owners. They might impose additional costs, most notably by prohibiting the demolition of designated buildings and thus decreasing property-development opportunities. The objective of this study is to examine what happens following world heritage designations; specifically, if and how such designations impact the property values of historic buildings. Using the hedonic price method, we measure the value of the option to demolish and rebuild that is denied to owners of designated buildings. We also measure the value of preservation regulations, expressed in the prices of apartments in designated buildings. The study area is the “White City” of Tel Aviv, which UNESCO designated as a world heritage site. The findings suggest that the market price of a designated building is on average 12.5% lower than its theoretical value if the building was not subject to historic preservation regulations. Moreover, a premium of approximately 14% was found in the price of apartment units in designated buildings if the building underwent preservation. These findings could have a direct impact on public policies designed to promote the preservation of historical buildings in world heritage sites.