Fallacies and Revisions: Evaluation of Economic Benefits of Development Rights Transfer and Density Bonus --17th and 69th Neighborhoods in Shanghai Hongkou Historic Conservation Districts Regeneration as the Case

Abstract

Transfer of Development Rights and Density Bonus (TDR&DB) is often vaguely and implicitly used as a financial compensation tool to achieve a comprehensive cost-benefit balance in the regeneration of Shanghai's historic conservation areas. However, this is a misinterpretation and deviation of the effect of TDR&DB. This paper takes the 17th and 69th neighbourhoods in Hongkou District as an example, explains the constraints on the cost-benefit of regeneration, analyses the market mechanism of TDR&DB, and evaluates the economic benefits of TDR&DB in detail using the land value allocation rate method and the revenue reduction method. The study concludes that: 1) Local governments often have a false illusion of FAR when applying TDR&DB, they should restrain their urge to increase FAR and restore the basic attributes of public interest orientation of TDR&DB. They should explore the shift from the land expropriation model to the rights conversion model to reduce the cost of urban regeneration; 2) The idea of cost-benefit balance has obscured the essence and value of TDR, the essence of TDR is to realise the efficient use of total spatial resources through the dynamic adjustment of development rights. This provides a new way for the introduction of this system in our country; 3) market players can obtain more economic benefits by using TDR&DB, and they should make more "special public contributions" to regional development. It is suggested to introduce the concepts of "incentive coefficient" and "incentive amount" to accurately evaluate the "special public contributions"; 4) the TDR&DB should take into account their external effects on the surrounding areas, and further research should be conducted to quantify and evaluate the external effects of the receiving sites, so as to promote the practical application of TDR&DB. The above conclusions can provide useful guidance for the construction of a sustainable urban regeneration mechanism in China.