Growth coalition in redevelopment project

 2.1 Growth coalition in redevelopment project:

Urban villages’ second development is very complicated, and it is a typical a case of the interrelationship between the varying parties. Before analyzing urban village redevelopment strategies, it is necessary to understand each player’s intention and conflicts among them through redevelopment process. This following section attempts to answer how the main stakeholders, which are government, developers, and landlords in urban village, contend for the benefits fulfill the redevelopment process by introducing the conceptual theories extracted from “The interplay between the main actors in urban village redevelopment” (Hao et al, 2011).

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Figure 1: The interplay between the main actors in urban village redevelopment

(Source: Hao et al, 2011)

 

Government: Government is major force in urban village redevelopment. In the terms of government, urban villages can be described as ‘urban governance problems are more than social economic problems’ (Hao et al, 2011). They believe the redevelopment can bring economic benefits, improving infrastructure and eliminating the problems of society, related to re-image the city in order to get sustainable development. Especially alleviating negative impacts are always considered as the starting point of urban village redevelopment by local authorities and planners. Therefore, governments always instituted some policies to developers, and provided compensation to landowners (Luo, 2005). When analyzing the power structure of redevelopment projects in Shenzhen, Li and Li (2011) found that China’s local governments are more powerful and active than their counterparts in western countries, which allows them to have a more important position and authority in the power alliance.

Developer: Main focus of the developer is substantial economic profits. Especially some good location of urban villages that are close to commercial areas or parks, normally generate a higher profit. The potential land value will attract developer’s to engage in the redevelopment activities. In other way, due to the limit government financial supplements, developers always need to bear the compensation of landlords. In terms of general compensation regulation, the developers compensate the landlords by total building area. Therefore, developers always ask local government to provide some preferential policies to mitigate the costs of redevelopment.

Regarding the urban regeneration process, it tends to have two sides: The first was beginning under the cooperation between the public sector and private sector (Guo, 2005). The cooperation between the government and the private sector is a primary form in the market reform era from the early 1970s to 1980s. The state provides the city construction policy and land use standards, which are operated by the personal sector. The second side is the solely personal model. It often includes cooperation between developers at national side and abroad, which are the majority of development companies in the current market (Guo, 2005). However, public authority still involved in the initial state. Occasionally, public authorities might act the part of developers and implement the development again from the top to the bottom in the capacity of other companies. It is conducive to avoiding the general restrictions on private enterprise development plans and other regulatory controls (Li, 2015).

Landlords: Rent is one of the main income resources for the majority indigenous residents in village. Urban village redevelopment means for most of them to lose their living incomes. Thus, compensation negotiation becomes a vital process (Hao et al, 2011). Since the rental price would definitely impact by surround infrastructure improvements and environments, landlords are tending to do transaction on their wealth hesitantly in order to get extended property value. In addiction, future resettlement and social security are another issue, which are associated with the feasibility and rationality of urban village redevelopment 
(Luo, 2005). If the compensation fee offer by government or developers is disagreeable for landlords, it is difficult to persuade the people to support the redevelopment project.

Chung (2009) mentioned that urban villages have their personal joint-stock companies, which represent the “common benefits” of the aborigines and have active functions in some village-related activities. The joint-stock company claims to own the village’s land and usually has a large fund from the rent and money for managing that collects from the village. This financial force enables joint-stock companies to negotiate with government sectors in the redevelopment because they can use their own resources to promote development or the second development.

In the urban village redevelopment process, the three main entities, the local government, landowners and developers, both have the opportunity to become investors in the transformation. Zhao (2005) analyzed the pros and cons of each actor as an investor. In general, due to the huge amount of compensations, the local government will use market forces to encourage developers to invest in these projects as we mention before. However, some redevelopment projects, such as conservation projects, do not have the potential to attract developers. So the government must invest by themselves. Sometimes, if the original indigenous residents have strong economic supports, they will take the initiative to undertake redevelopment funds, such as renovation projects or maintenance projects (Zhao, 2005).

However, some scholars have found that in urban renewal, local states and real estate agent are often seen as working together to slow down problems and prevent disputes. The whole community and the landowners oppose the potential collaborators to allow themselves more powerful because the community parts are removed from the city developing plans (Cheng, 2012). Only when all parties are satisfied with their share of the benefits will the redevelopment be accomplished (Zhuang, 2014).

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