The compensation amount to be paid corresponds to the increase in the land value of the respective property resulting from the urban redevelopment measure, which is due to the improvements in the quality of living.

The increase in the land value of the property results from the difference between the land value that the property would have without the implementation of the redevelopment process (so-called initial value) and the land value that results after the redevelopment (so-called final value). The reference point for both values is the day on which the redevelopment procedure is legally terminated in whole or in part.

The City of Salzgitter is obliged to levy these compensation amounts. The legal basis for this is Section 154 (1) of the German Building Code (BauGB).

Property owners who are obliged to pay compensation contributions are exempt from development contributions: they do not have to pay contributions for the development of urban redevelopment measures such as roads, paths and squares, as is otherwise the case.

The aim of the redevelopment measure is to improve the quality of life in the redevelopment area by eliminating structural deficiencies and functional weaknesses. To this end, a large number of coordinated individual measures are being implemented: for example, streets, paths and squares are being redesigned, public facilities are being created and expanded, obsolete or non-functional buildings are being removed and property owners are also being financially supported in the modernization and repair of their buildings.

All of this costs money - a lot of money, which is provided by the city of Salzgitter, the state of Lower Saxony and the federal government. The owners of the properties located in the redevelopment area share in the costs incurred by levying compensation.

The use of public funds in redevelopment areas has a positive effect on the market value of the properties. By improving the quality of housing and work in the redeveloped area, higher sales and rental prices can be achieved or stabilized. This redevelopment-related increase in value is skimmed off in the form of the equalization amount and used to co-finance the overall redevelopment.

All owners with properties in the formally defined redevelopment area are liable to pay compensation.

Co-owners are liable as joint and several debtors. In the case of apartment and part owners, the individual apartment and part owners are only liable in proportion to their co-ownership share. In the case of properties with heritable building rights, the owner of the property pays - but not the holder of the heritable building rights.

Tenants also do not pay equalization contributions: Owners are not allowed to pass on the equalization contributions to them.

The increase in the land value of the property resulting from the implementation of the redevelopment consists of the difference between the land value that the property would have without the implementation of the redevelopment measure (initial value) and the land value that results after the realization of the redevelopment (final value).

As a rule, the reference point for the valuation is the day on which the redevelopment procedure is completed and the redevelopment statutes adopted by the Salzgitter City Council are (partially) repealed with legal effect. Deviations from this are possible, for example, if the redevelopment of an individual property is declared complete in accordance with Section 163 (1) or (2) BauGB. The size of the property is the assessment basis for the property-related compensation amount.

The equalization amount only relates to the increased value of the property as a result of the redevelopment. General, i.e. cyclical, increases in land value or reductions in land value are not taken into account. Changes in the market value of a developed property due to modernization measures are also not taken into account. It is also irrelevant whether the owner has received subsidies - all owners are obliged to pay in principle.

The determination of the redevelopment-related increase in land value (as the basis for determining the compensation amount) is carried out on the basis of an exact valuation and a uniform valuation method ("Lower Saxony model") by the independent expert committee for land values, which has the necessary expertise.

For the area of the 1st partial revocation of the "SZ-Bad/Ost- und Westsiedlung" redevelopment area, the expert committee for property values determined a redevelopment-related increase in land value of EUR 3.00 per square meter for the cut-off date of 8 July 2020 (entry into force of the corresponding partial revocation statute).

Taking into account the redevelopment measures still planned in the remaining redevelopment area for the years 2021 to 2025 in accordance with the update of the integrated action plan, the redevelopment-related increase in land value is between EUR 0.00 and EUR 4.00 per square meter. The compensation amounts for the respective partial revitalization areas will be levied depending on the corresponding revitalization date; in the area of the 1st partial revitalization area, the determination and levying of the compensation amounts will begin in the 3rd quarter of 2022.

The following illustration shows an example of the value and quality of the properties at the beginning and end of the redevelopment:

The following diagram shows the steps that still need to be taken to determine the compensation amounts once the land value has been determined:

Overall falling land values do not preclude the levying of a compensation amount if an increase in land value due to redevelopment can be verified by an expert.

In times of falling prices, whether for economic reasons or due to external effects (e.g. increasing noise pollution from neighbouring traffic arteries), the redevelopment successes at least have a price-stabilizing effect or limit the fall in prices. These, too, are values to be skimmed off.

The compensation amount must be paid after completion of the urban redevelopment measure, i.e. after the legally binding (partial) repeal of the redevelopment statutes by the Salzgitter City Council or after an individual property has been released from the redevelopment procedure in accordance with Section 163 (1) or (2) BauGB.

Before the compensation amount is determined by means of a notice, each owner is given the opportunity to comment and discuss the matter.

As a rule, the compensation amount determined must be paid in one lump sum within one month of notification of the decision.

The decision can be contested by legal action. However, the action against the assertion of the compensation amount has no suspensive effect and the amount remains due.

The abolition of the "SZ-Bad/Ost- und Westsiedlung" redevelopment area in several sub-areas began in the second quarter of 2020. The further abolition will take place gradually in the sub-areas in which the redevelopment has been completed or all relevant objectives have been achieved. It is not absolutely necessary to completely eliminate the urban development deficiencies.

However, it is also possible to redeem the compensation amount early before completion of the redevelopment measure or (partial) repeal of the redevelopment statutes (Section 154 (3) BauGB).

Owners can conclude a voluntary agreement with the City of Salzgitter and redeem the compensation amount early and definitively. The redemption is regulated in a contract under public law.

The early redemption of the compensation amount permanently cancels the later payment obligation. In addition, there is no need, for example, to review land purchase prices under redevelopment law, which means that the owner can dispose of his/her land more freely.

The fact that the City of Salzgitter is free to choose the valuation procedure comes into play particularly when redeeming the compensation amount. Simplified procedures can also be used, in particular an approximate, zonal determination of the equalization amount can be made.

The final settlement of the equalization amount thus provides the owner with financial calculation security. In addition, legal certainty is created for the owner and the City of Salzgitter.

The early redemption of the equalization amount is earmarked income that is used directly in the respective redevelopment area to finance the outstanding public investments.

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City of Salzgitter
Urban Redevelopment and Socially Integrative City Department
Joachim-Campe-Str. 6-8
38226 Salzgitter

or by e-mail to: stadtumbaustadt.salzgitterde

The Building Code provides for various payment facilities, each of which is linked to certain conditions.

The redemption agreement is accompanied by a final declaration in accordance with Section 163 (3) sentence 1 BauGB. This means that the requirements for funding with urban development funds are no longer met. Funding can therefore no longer be granted.

In formally defined redevelopment areas, no road improvement contributions may be charged for road renewals carried out during the redevelopment. Instead, property and apartment owners are obliged to pay compensation contributions.

The compensation amounts paid in connection with urban redevelopment can be claimed by the owners for income tax purposes under certain circumstances.

The prerequisite for a tax audit by the tax office is a certificate of the compensation or redemption amounts under redevelopment law. This certificate is issued by the City of Salzgitter at the owner's request.

The City of Salzgitter does not make any binding statements about the possible deductible amount, as the final decision is made solely by the responsible tax authorities. Owners who wish to estimate the deductible amount in advance should consult a tax advisor.

This information on the subject of "levying equalization amounts" does not contain any legally binding statements.