December 01, 2015 Urban Lawyer

The Political Economy of Land Use Governance in Santiago, Chile & Its Implications for Class-Based Segregation

by Diego Gil McCawley

Diego Gil McCawley is a Teaching Fellow for the SPILS Program and Lecturer in Law, Stanford Law School. J.S.D. Candidate, Stanford Law School. LL.B. Universidad de Chile (2008), J.S.M. Stanford Law School (2011). This article is a substantively revised version of the dissertation I completed during the Master of the Science of Law Program at Stanford Law School, 2010-2011. The research was conducted under the supervision of Professor Mariano-Florentino Cue´llar, to whom I am very grateful for his wise advice and support. I also benefited from helpful conversations with Professors Lawrence Friedman, Deborah Hensler, Rogelio Pe´rez-Perdomo, William Simon, and Stephen Haber. Many thanks to Moria Paz, Eugenio Ca´rdenas, Agnes Chong, and Guillermo Jime´nez, for their comments and advice. I presented an early version of this paper at the “Law and Society Association Annual Meeting,” in San Francisco ( June 2011), at the “2011 Doctoral Scholarship Conference,” at Yale Law School (December 2011), and at “Seminario 3,” Universidad Alberto Hurtado School of Law (August 2013), where I also received useful comments, especially from Lucas Sierra. This thesis would not have been possible without the generous gift of time of all the people interviewed. I promised anonymity to all of them, but I would like to explicitly acknowledge their contribution to this research. Finally, I would like to thank the scholarship program “Becas Chile” from the Government of Chile, and Fulbright for financial support during my Master studies. Errors are mine.

A significant part of the information I collected for this article, including all the quotes that are in the text, come from twelve semi-structured interviews carried out during January and February 2011 with leading Chilean actors involved in land use regulation and the implementation of social housing policies in Santiago’s metropolitan area. I chose interviewees that could provide a broad perspective about how the power of land use regulation is exercised in Santiago, and how public institutions use this legal structure to respond to residential segregation. I interviewed 8 public officials and 4 people from private institutions. At the time I conducted the interviews, 7 of the 8 public officials worked in municipalities, and 1 in the urban planning department of the Ministry of Housing and Urbanism. Those who worked in municipalities were chosen from different types of districts, according to the average level of income of the residents. As this research is about residential segregation along socioeconomic lines, the perception of officials working in different socioeconomic settings was very important. Some of the municipal officials interviewed worked in urban planning departments, some in the social housing division, and some in both. The private actors selected were officials from institutions that work in close relationship with the political actors involved in land use and housing policies. The criterion for the selection was to have the view of institutions that are experienced in dealing with the Ministry and different municipalities in Santiago. The idea was to contrast the information given by public institutions and the private actors.

The majority of the interviewees were contacted by email using the information available in the institutions’ websites. I also used snowball sampling to contact a few of them. As all of the interviews were semi-structured, I used a protocol of broad questions to guide each conversation. The protocol was structured around a few themes, such as: description of land use regulatory practices and their objectives; public and private actors involved; the distribution of regulatory powers among the actors; factors influencing land use practices; recognition of residential segregation as a problem; causes and obstacles to residential segregation; and legal reforms required. The semi-structured interviews were conducted over an Internet telephony ser- vice, and their length ranged from 30 to 60 minutes. All the interviews were tran- scribed and codified based on a content analysis of the material collected.

I complemented all this collected information with other sources, which are cited or quoted in the article when used. I have continued doing research in this field for my current doctoral dissertation project at Stanford Law School, for which I have also conducted interviews in Santiago. That material has also informed the analysis presented in the article.

Despite decades of economic development and the general improvement in the quality of life of its people, Santiago, the capital of Chile, presents high levels of residential segregation along socioeconomic lines. A debate about legal reforms to address this phenomenon is currently occurring.

Chile has an expansive regime of housing assistance programs based on demand-side individual subsidies especially targeted to low-income families. These programs have provided massive access to formal housing, but have routinely failed in addressing the problem of class-based segregation. These subsidies operate in a highly regulated market, where many interrelated institutions exercise urban policy powers. The objective of this paper is to analyze whether and how the land use governance regime that governs Santiago’s urban development has an impact in the pattern of social segregation.

The paper finds that Santiago’s metropolitan area presents a com- plex regulatory scenario in the realm of land use, mainly involving the Ministry of Housing and Urbanism (MHU) and its fifty-two municipalities. The research also finds that through the exercise of multiple administrative and regulatory mechanisms, municipalities are increasingly using their power to guide the urban development in their corresponding districts. However, this is largely contingent on the bureaucratic and financial situation of the local government, its social needs, and the political pressure it faces. Some municipalities are subject to intense lobbying from real estate developers, landowners, and residents’ organizations. Therefore, the regulatory possibilities among Santiago’s local governments vary dramatically.

This fragmented scenario impacts the way public officials perceive the relationship between land use governance and segregation. Some observe that the law establishes strong obstacles to residential integration. Others emphasize the lack of incentives to produce inclusionary housing projects. Finally, a third group considers that segregation is beyond the scope of their concern. This is especially observed in high-income districts.

The findings of this paper support the idea that social housing policies based on subsidies cannot be the only remedy for socioeconomic residential segregation. Without addressing the institutional choices and incentives created by Chilean land use regulatory framework and how this institutional structure operates in practice, social integration within Santiago’s metropolitan area will remain an unattainable ideal.

I.  Introduction

In 1999, a large group of families invaded a private piece of land located in a middle class district in Santiago, Chile, called Peñalolén, a district well located in terms of its proximity to Santiago’s downtown. The place was known as “La Toma de Peñalolén.”1 The families, which after a couple of years totaled 1700, took the piece of land with a strong commitment to settle there and created a slum.2 The case strongly impacted public opinion, especially because it was the biggest slum created after the return of democracy in Chile and after many years of economic development.3 The families were very well organized and rejected all the offers to move to housing projects in the periphery of the city using the housing subsidies provided by the government.4 They wanted to stay in the same district, close to their social and economic networks.

The municipality of the district and the Ministry of Housing and Urbanism (“MHU”) were under huge pressure to provide a solution to the problem.5 One option was to expropriate the private piece of land where the squatters were located, but the residents that were surrounding the land did not want this solution. Their reasoning was that they bought their properties according to certain land use rules that would have to be modified to build subsidized housing, which would impact the value of their land.6 Another alternative was to move the people to another district, but the families of the slum opposed this option. A third alternative was to buy other pieces of land in the same district to build projects for the families, which was finally the decision taken by the MHU.7

As part of this chosen solution, the MHU bought a property inside a private condominium of high-income people, called “The Ecological Community” (“La Comunidad Ecológica”), to relocate part of the families living in the slum. A strong conflict ensued between the government and the condominium’s residents.8 The residents argued that their environmental project would be completely destroyed by the installation of a large conglomerate of dwellers on their land. After a long process of negotiation and lobbying, the result of the conflict was nothing less than astonishing. A real estate corporation offered to purchase the land in “The Ecological Community” and to pay an extra bonus of money to each of the families who were waiting, in order to be relocated elsewhere in the district.9

Finally, “La Toma de Peñalolén” was subject to a variety of solutions, using different policy and legal techniques.10 A group of families was moved to a new social housing project in the same district, but far from where the slum was located. Another group agreed to be moved to another district. Other families are still awaiting the completion of construction of new projects in other territories of the district. The private land where the families placed the informal settlement was finally expropriated, and now the municipality is replacing the slum with a park.11

This case is a good example of the challenges that many metropolitan areas around the world face today; i.e., how to provide a definitive and appropriate housing solution for low-income people in well-located land, where land prices are high and where residents are potentially strong opponents of social housing projects. Public authorities have different legal instruments to promote the construction of inclusionary social housing projects. However, the practice of these legal mechanisms is highly contextual and highly political, and affects the way residents, especially those who are poor, are distributed within the city. Having to balance between technical and political considerations is inescapable for the public officials that have to incentivize the construction of affordable housing in well-located neighborhoods.

Today in Chile, as is the case in many cities around the globe, residential segregation is a policy concern, and is prompting a debate about reforms in the legal structure that governs the process of urban planning and management to promote more social integration. Recently, a multidisciplinary group of experts and personalities across the political spectrum was appointed by the President of Chile to develop a “National Policy of Urban Development.”12 One of the main topics addressed by the commission was social integration, and it proposed a series of legal and policy mechanisms to promote the construction of social housing in a more inclusionary way.13

Since the 1970s, Chile has had an expansive regime of housing assistance based on individual subsidies. Through this regime, Chile has been able to promote massive access to housing, dramatically reducing the stock of inadequate housing in the country. Hundreds of thousands of families have been able to move from the informal to the formal urban sector, and most of the irregular settlements have been eradicated — quite remarkable achievements in comparison with other developing countries.14 However, the housing subsidies programs have not been able to deal satisfactorily with the problem of residential segregation along socioeconomic lines. On the contrary, they have actually contributed to the territorial isolation of low-income families in poorly served neighborhoods, located in the periphery of Chile’s urban areas, which are usually a long distance from jobs and other opportunities.15

The aim of Chile’s housing assistance programs based on subsidies is to stimulate the market to be responsive to the residential choices of people who lack access to housing by their own means.16 But the word “choice” is problematic in the context of this highly regulated market. Many legal and policy instruments, involving several public institutions and private actors, shape urban development. This structure, which I call here the “land use governance regime,” has significant consequences on how people are geographically distributed within a city. Therefore, the legal structure and practices governing urban development cannot be taken for granted. The law governing city land use establishes strong and discretionary powers in the hands of public officials that define, in important ways, the life of the people living in metropolitan areas like Santiago.17 This also impacts the effectiveness of social policies like Chile’s housing assistance programs. Most of the literature has documented how subsidies programs have contributed to the pattern of class-based segregation in Chile, but the land use institutional dimension has been overlooked.18

This paper focuses on the institutional choices that govern urban land use law in Chile, and the political economy that shapes those institutional practices. In particular, it asks (1) what are the main characteristics of land use governance in Santiago, Chile, and (2) how does that regime affect the pattern of residential segregation along socioeconomic lines in Santiago’s metropolitan area?

The analysis is based on a case study of Chile’s land use legal practices, and focuses particularly in Santiago, the biggest (and perhaps only) metropolitan area of the country, where the problem of class-based segregation presents its most dramatic face. For the case study, I rely on several sources of information, including a series of several semi-structured interviews with public officials working in urban planning departments and in the implementation of social housing policies, both at the municipal and ministerial levels. I also interviewed people from private institutions that work closely with the type of officials mentioned.19 I complemented this information with the analysis of secondary sources, especially public databases that have information regarding the Chilean housing market, urban planning instruments, and the characteristics and administration of each municipality in Santiago.20

This article reveals that urban land use decisions are made in Santiago in an increasingly complex and fragmented political structure, where each municipality into which the metropolitan area is divided plays a significant role. The regulatory decisions made by all the institutional actors involved are not politically neutral. On the contrary, they are significantly influenced by political interests and respond to very different schemes of incentives. For some local authorities, the integration of low-income groups through housing policy is an urgent reality to which they need to respond. For others, however, this problem is beyond the scope of their concern. The fragmentation among classes is then supported by the political territorial fragmentation of the institutions with city land use regulatory powers in Santiago. In other words, the relationship between institutions, interests, and incentives embedded in Santiago’s land use governance regime makes social integration an implausible outcome, despite the fact that the government delivers a significant amount of subsidies per year to help economically challenged people find a definite home.

The issue that this paper addresses is not specific to the Chilean urban context. Indeed, residential segregation is a challenge in many parts of the world.21 Many metropolitan areas around the world are increasing their level of social fragmentation. The engine of this fragmentation, though, varies among them. While the characteristic mark of Latin American cities is residential segregation based on class,22 in the United States, the concern is mainly racial segregation in metropolitan zones.23 In Europe, the current pattern of segregation is very much influenced by the problem of massive immigration.24 Most of the countries facing this problem are trying to respond to it, using different legal and policy techniques.25 Therefore, the analysis presented below is pertinent for the reality of many countries across the globe.

The paper proceeds as follows. Part II provides a description of the two premises over which this research is built: (1) Residential segregation is a problematic phenomenon in Chilean urban areas, especially in Santiago, and (2) land use governance is an important dimension of the problem. Part III describes the legal framework governing land use law in Chile. Part IV constitutes the core of the case study and analyzes the institutional choices and practices through which land use law is implemented, the interest groups behind that institutional structure, and the incentives and attitudes generated by that institutional environment with respect to residential segregation. Part V concludes.

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