A Comparative Analysis of the Market Based Incentive Bonus for Real Estate Development in Japan and U.S: Case Studies of Tokyo, New York, and Los Angeles

The purpose of this study is to clarify the introduction process and performance results of the method of generating public contribution considering the financial viability of urban development in Tokyo, New York, and Los Angeles. The key factor to maximize the public contribution generated by urban development is securing the balance between the cost of and the value. In response to this, some cities have recently introduced a new mechanism that evaluates the level and value of public contribution per project, instead of the conventional evaluation method based on the uniform calculation formula for all projects. To promote the project of burying electrical cables, the Tokyo Metropolitan Government adopted in 2018 a calculation method for the extra floor area ratio corresponding to the construction costs borne by developers based on the discounted cash flow model. The optimal economic evaluation method for contributions depends on the type of public contribution and/or responsible organization. Therefore, respective local governments need to examine well the proposals from their developers.