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15th INTERNATIONAL PLANNING HISTORY SOCIETY CONFERENCE 1 WHO WİNS AND WHO LOSES WİTH GREAT URBAN PROJECTS? Operação Urbana Consorciada Água Espraiada evaluation in São Paulo. EDUARDO ALBERTO CUSCE NOBRE Address: Faculdade de Arquitetura e Urbanismo da Universidade de São Paulo, Departamento de Projeto, Rua do Lago, 876, 05008.080, São Paulo, SP, Brazil. e-mail: [email protected] ABSTRACT Since late 20th Century the urban policy paradigm has modified considerably due to great political and economic transformations that had occurred in the World. The strengthening of globalization and the ascension of neoliberalism have resulted in land use control change to the promotion and stimulation of the real estate market, resulting in large scale urban projects in many cities of the world. These experiences are consequence of urban deregulation in association with public-private partnership and have recently become object of research. In Brazil, it stands Operação Urbana Consorciada (Consortial Urban Operation) planning tool as the main example of this trend. This paper aims to develop a critical analysis of the use of this instrument, taking the OUCAE – Operação Urbana Consorciada Água Espraiada in São Paulo as a case study. It searches to evaluate the intervention, since its designing until its implementation by the Municipal Government, concluding that it has caused the symbolic and financial valuation of an already valorized area, favoring specific sectors of the capital, mainly the real estate and civil construction ones, in detriment of social demands of affected populations. INTRODUCTION Since late 20 th century, the urban policy paradigm has modified considerably due to major political and economic changes that had occurred in the World. The exhaustion of postwar economic expansion and the subtle rise in the oil prices due to the 1970s Oil Shocks have caused a Capitalism structural crisis (HARVEY, 1989). In order to keep profitability levels, manufacturing activities have moved to new regions, where cheap labor and the existence of infrastructure would allow greater return, causing a process of urban decline in established manufacturing cities. Traditional comprehensive urban planning gave way to strategic planning and the GUP – Great Urban Projects (ibid.). Local governments and business groups joined to stimulate the real estate market through land use deregulation and public financing of these projects in order to attract international investment. Former industrial districts, closed harbors, unused railway lines, vacant and derelict areas were converted into luxurious new developments, representing a new postmodern urban centrality in cases such as Baltimore Inner Harbor, London

WHO WİNS AND WHO LOSES WİTH GREAT URBAN PROJECTS

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WHO WİNS AND WHO LOSES WİTH GREAT URBAN

PROJECTS? Operação Urbana Consorciada Água

Espraiada evaluation in São Paulo.

EDUARDO ALBERTO CUSCE NOBRE

Address: Faculdade de Arquitetura e Urbanismo da Universidade de São Paulo, Departamento

de Projeto, Rua do Lago, 876, 05008.080, São Paulo, SP, Brazil.

e-mail: [email protected]

ABSTRACT

Since late 20th Century the urban policy paradigm has modified considerably due to

great political and economic transformations that had occurred in the World. The

strengthening of globalization and the ascension of neoliberalism have resulted in

land use control change to the promotion and stimulation of the real estate market,

resulting in large scale urban projects in many cities of the world. These experiences

are consequence of urban deregulation in association with public-private

partnership and have recently become object of research. In Brazil, it stands

Operação Urbana Consorciada (Consortial Urban Operation) planning tool as the

main example of this trend. This paper aims to develop a critical analysis of the use

of this instrument, taking the OUCAE – Operação Urbana Consorciada Água

Espraiada in São Paulo as a case study. It searches to evaluate the intervention,

since its designing until its implementation by the Municipal Government,

concluding that it has caused the symbolic and financial valuation of an already

valorized area, favoring specific sectors of the capital, mainly the real estate and civil

construction ones, in detriment of social demands of affected populations.

INTRODUCTION

Since late 20th

century, the urban policy paradigm has modified considerably due to

major political and economic changes that had occurred in the World. The

exhaustion of postwar economic expansion and the subtle rise in the oil prices due

to the 1970s Oil Shocks have caused a Capitalism structural crisis (HARVEY, 1989).

In order to keep profitability levels, manufacturing activities have moved to new

regions, where cheap labor and the existence of infrastructure would allow greater

return, causing a process of urban decline in established manufacturing cities.

Traditional comprehensive urban planning gave way to strategic planning and the

GUP – Great Urban Projects (ibid.). Local governments and business groups joined

to stimulate the real estate market through land use deregulation and public

financing of these projects in order to attract international investment.

Former industrial districts, closed harbors, unused railway lines, vacant and derelict

areas were converted into luxurious new developments, representing a new

postmodern urban centrality in cases such as Baltimore Inner Harbor, London

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Docklands, New York Battery Park City, Paris La Defense, Barcelona Olympic

Village and so on, resulting in "winners" and "losers" in this process. The main

beneficiaries were landowners, developers and tourists, while the legitimate

demands for employment, housing, health and education of low-income local

classes were not met.

In Brazil, although the urban policy has not ever managed to solve the urban

problems, there was a significant shift on the discourse from the 1980s after the

Debt Crisis that affected Latin America at that time1

. Urban planning has moved

from a sort of welfare state comprehensive model, even if not effective, to a

neoliberal strategic one much influenced by multilateral organisms such as IMF, the

World Bank and IDB (VAINER, 2000).

In São Paulo, land use deregulation and urban public private partnerships have

consolidated with the implementation of new planning tools such as the Operações

Interligadas (Interconnected Operations) and afterwards the Operações Urbanas

Consorciadas (Consortial Urban Operations).

Presently, there is already a major theoretical reflection on its use in São Paulo. This

work, rather than exhausting the subject, will outline some of these questions, taking

as a case study the Operação Urbana Consorciada Água Espraiada in the

Southwest Zone of São Paulo Municipality.

THE IMPLEMENTATION OF URBAN OPERATIONS IN SÃO PAULO

The term Urban Operation first appeared in São Paulo 1985/2000 Master Plan

proposal during Mario Covas office (1983-1985) as an urban planning tool whose

goal was to enable the production of housing, urban infrastructure, community

facilities and to accelerate urban transformations in accordance to the plan2

(SÃO

PAULO, 1985). In order to enable these interventions, the plan proposed the

establishment of PPPs - Public-Private Partnerships, as São Paulo municipality was

in financial difficulties due to the Brazilian economic crisis.

Jânio Quadros office (1986-1988), opposition to the former, did not implement this

instrument, though including it in the Master Plan. However, the PPP idea was made

possible through the creation of Operações Interligadas – Interconnected

Operations – a mechanism by which the private sector could change land use

requirements for new developments in their land occupied by favelas in exchange of

financing social housing construction for this population elsewhere (MONTANDON

1 From the 1960s to the 1970s many Latin American countries financed their economic growth

based on huge external loans since interest rates were low. In the 1970s the depression

caused by the Oil Shock hit these economies deeply.

2 The São Paulo Municipality 1985/2000 Master Plan proposed 35 urban operations in many

neighborhoods, from the central area to external periphery, from rich areas to favelas (SÃO

PAULO, 1985).

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& SOUZA, 2007, p. 86). With this mechanism many slums and favelas located in the

city center were removed and transferred to peripheral housing estates3

.

This tool was based on the “Solo Criado” idea, a Brazilian version of the French

“Plafond Legal de Densité”, much in vogue in the 1970s Urban Reform discussions

in Brazil, and originated the concept of granting building rights costly, which would

become the basis of urban operations.

Luiza Erundina office (1989-1992) continued this idea in Urban Operation

Anhagabaú, however without being very successful, due mainly to lack of interest of

the real estate market in the Historic City Center, which had become the center of

the lower-income classes.

The instrument would only take off in 1995 when Paulo Maluf office (1993-1996)

established the Faria Lima Urban Operation proposing this avenue extension in the

valued Southwest region. In fact, this operation had resulted until 2004 in R$ 309

million revenue arising from sales of almost one million square feet of additional

building, far short, however, the U.S. $ 715 million (R$ 893 million) predicted on

works (MONTADON & SOUZA, 2007). The area redevelopment was very harmful to

some neighborhoods where road infrastructure was not adequate, as in Vila

Olímpia, and it gentrified the areas affected, where there was a transformation of

middle-income residential use to high-income residential and upper services uses.

After this experience, the municipality created three other urban operations: Água

Branca (1995), Centro (1997) and Água Espraiada (2001). In 2001, the City Statute

(a Federal Law that regulates urban policy within the country) regulated this

instrument, redefining it as Operações Urabanas Consorciadas – consortial urban

operations, which is a set of urban interventions coordinated by the municipal

government with the participation of private enterprise, which aims are to achieve

"structural urban transformations, social improvements and environmental

enhancement" of a given area (BRAZIL, 2001, art. 32, § 1). In 2002, the PDEMSP -

Municipality of São Paulo Strategic Master Plan defined nine urban operations within

its perimeter (SÃO PAULO, 2002, art. 225, § 2).

PRECEDENTS TO THE ÁGUA ESPRAIADA URBAN OPERATION:

THE PROPOSED STRUCTURAL ROAD SYSTEM

The proposal of a structural road system along Água Espraiada Stream dates from

the 1968 when GEIPOT - Ministry of Transportation Policy Executive Group – based

on an existing plan for São Paulo inner ring road, proposed the creation of an

3 The Operações Interligadas were created by 10.209/86 By-law and modified by 11.773/95

By-law. They worked until 1998 when the State Attorney Office presented a charge of

unconstitutionality as the tool gave legislative function to the executive power. After the trial,

the tool was considered unconstitutional and extinguished in 2000. During its term there were

313 proposals, resulting in the construction of 11,102 social housing units (MONTANDON;

SOUZA, 2007, p. 86).

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avenue on its margins connecting Tietê and Pinheiros Rivers expressways (NOBRE,

2000). The area was a suburban middle-class neighborhood at that time.

In order to implement the ring road, the DER – Roads and Highways Department

carried out the expropriation of the area in the 1970s. However, problems of

economic viability and changes in the original design moved the ring road

construction to another area, as seen in Figure 1, leaving the expropriated area

abandoned.

Figure 1: São Paulo Metropolitan Region structural road system (Água

Espraiada Av. in red). Source: CESAD-FAUUSP, 2003 e DERSA, 1997.

Since then it had been gradually occupied by numerous favelas and by 1995 there

were 68 nuclei in the region, comprising a population of 42,347 people in 8,436

households (EMURB, 1996, p. 130). This caused the area inclusion in urban

operation proposals early in the 1985 and 1991 master plan proposals

(MONTANDON; SOUZA, op. cit., p. 85).

In 1995, the Municipality of São Paulo reviewed the avenue construction project,

linking the Pinheiros River Expressway to the Immigrants Highway, the main access

to São Paulo coast. The works were carried out very quickly between October 1995

and March 1996 with the partial removal of the slums, the stream channeling and

partial construction of the avenue between the Pinheiros River Expressway and

Washington Luis Avenue. According to reports at the time, the slum dwellers

received a financial compensation for removal made possible due to local

businessmen funding, expecting their offices and enterprises valorization (NOBRE,

2000, p. 189).

In 1996, 28 of the slums had been removed, with 20,000 people expelled (EMURB,

1996, loc. Cit.) that caused the region 30% valorization, aggravating the city socio-

spatial segregation problem. However, the municipality did not enact an urban

operation at that time. Fix (2001, p. 95) argues that the City did not want to create

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competition with the Faria Lima Urban Operation, that had started to be successful

considering the real estate market point of view.

FORMULATION AND IMPLEMENTATION OF THE OUCAE -

OPERAÇÃO URBANA CONSORCIADA ÁGUA ESPRAIADA

The proposal of an urban operation in this region was only resumed in Martha

Suplicy office (2001-2004). The Municipality enacted the 13,260 by-law that created

the OUCAE – Operação Urbana Consorciada Água Espraiada. This fact led to

some criticism by the intellectual leftist elite that supported the administration,

because of the instrument gentrifying character and because of its rapid enactment,

since the discussions of a new master plan were already well advanced and could

bring new points of view on the subject.

This by-law established guidelines for urban development within the operation

perimeter, comprising an area of 1,373.32 hectares, as shown in Figure 2. The main

interventions proposed were:

Extension of Journalista Roberto Marinho Avenue (the new name for Água

Espraiada Avenue) to Immigrants Highway along Água Espraiada stream

margins (approximately 4.5 km);

Opening of side tracks from Engenheiro Luis Carlos Berrini Avenue to

Washington Luis Avenue;

Two bridges over the Pinheiros River, linking the new avenue to the

Pinheiros River Expressway;

Fly-overs construction on the avenue junctions;

Implementation of pedestrian walkways;

Construction of 8,500 social housing units for existing favela dwellers.

Figure 2: Operação Urbana Consorciada Água Espraiada perimeter.

Source: São Paulo, 2001.

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The estimated value of the interventions was R$ 1.1 billion (almost US$ 500 million

at the time), and it was expected that most of the funds would come from the sale of

CEPAC - Additional Building Rights Certificates, bounds issued by the City which

allow the owner additional construction rights or land use change in any plot inside

the perimeter of the operation, sold at a public auction or used directly in payment

for works required for the operation (EMURB, 2004a, p. 33). The idea was to give

the operation financial independence, not repeating the mistake of Faria Lima

Urban Operation that had a financial deficit on its beginning.

It was proposed the issue of 3,750,000 CEPAC for a period of 15 years, at a

minimum initial value of R$ 300, allowing 4.85 million square meters of additional

construction. The minimum cost of CEPAC was calculated from the highest value it

could take in order to keep the enterprise lucrative (EMURB, 2004a, p. 105).

With regard to the operation management, the by-law established that EMURB4

-

Municipal Urbanization Company was responsible for its implementation and

created the Água Espraiada Consortial Urban Operation Management Group, a

consultative and deliberative organism, composed by 17 members: eight municipal

government departments representatives and eight civil society representatives,

and its EMURB coordinator (SAO PAULO, 2001, art. 19). This composition has

allowed the interests of municipal government, which do not always represent the

interests of the affected population, prevail as their representatives are in vote

majority (9 out of 17). The first meeting of the Group in March 2003 set as priorities

the implementation of a bridge linking the southern Pinheiros River Expressway to

Água Espraiada Avenue, along with the construction of 600 social housing units to

partially attend the rest of local favelas (EMURB, 2004a, p. 353).

Between 2004 and 2008 eight CEPAC auctions were performed raising about R$

440 million (US$ 260 million), consuming 589,000 square meters of the stock

(EMURB, 2008, p. 20 and 21). The bonds had valued 370%, trading at R$ 1,110.00

in February 2008. From the first auction, the City reviewed the proposed works,

focusing on the bridge over the Pinheiros River located next to a remaining slum.

The area had already suffered a strong real estate valuation until this phase, result

from the investments already made. According to a consulting firm report, between

1994 and 2003, the real estate valuation in the area had reached 300%, arriving to

R$ 3,000 per square meter of land (US$ 1,000)(AMARAL D'AVILA, 20045

, apud

EMURB, 2004a, p.103).

4 EMURB – Municipal Urbanization Company – is a public company created in 1971, which

function is to build urban development works and to develop urban renewal programs of the

Municipality of São Paulo (EMURB, 2004a, p. 63).

5 AMARAL D'AVILA ENGENHARIA DE AVALIAÇÕES. Estudo de Viabilidade da Operação

Urbana Água Espraiada. São Paulo: Amaral D´Avila, 2004.

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THE CONSTRUCTION OF THE REAL PARQUE ROAD COMPLEX

According to EMURB Development Board documents (2004b, p. 21), the decision

to build first the bridge over Pinheiros river occurred yet in 2001 and from the

beginning it was evident the choice for a cable-stayed bridge with the intention to

create a landmark for the region. The intention was to reinforce the area symbolic

power, valorizing an already valorized area in urban renewal since the 1980s, with a

high dynamic land market and concentrating transnational companies. This fact can

be seen in different circumstances found in the documents that are part of the

information provided to OUCAE investors.

In a report of 30 August 2001, EMURB Director of Development says the choice of

cable-staying came out of many factors, however it was clear that the symbolic

character of an alleged modernity was more important than the strictly technical

needs:

"The physical characteristics of the area, the region transformation process with the

emergence of numerous intelligent buildings, the works requirements to reduce the negative

impacts during the implementation, the design and works execution development and the

need to qualify the urban aesthetics through a different project that can be understood as a

reference to the city, these factors together point towards the cable-stayed constructive

option" (EMURB, 2004b, p. 21).

The technical needs of the project could have been resolved by a conventional

building system, much cheaper than the cable-stayed one, as can be seen in the

University of São Paulo Polytechnic School technical report, commissioned by

EMURB in May 2002. In this report, the landmark function was again at the first

place:

"It (the cable-stayed bridge) is the solution that best fulfills the function of a city landmark and

more easily deal with local constraints for its structural qualities, such as ease of winning large

spans with reduced heights ... This solution should be a little more expensive than the solution

in successive consoles. Considering the information given and the experience it is estimated

that the cost per m2 of a cable-stayed bridge is around 70% more expensive than the

successive consoles bridge ... it is estimated that in total value, the work will be around 20 to

30% more expensive than the solution in successive consoles" (EMURB, 2004b, p. 33).

In April 2003 EMURB hired the office that developed the bridge basic design,

coming to the solution of building two pillars approximately 110 meters high to

support the stays. In October of that year, the contractors were hired to build the

works at a cost of approximately R$ 147 million (ibid.).

When developing the executive project, the contractors argued that the two pillars

could be replaced by only one, approximately 30% higher (138 meters) at a lower

cost, creating "a landmark of great prominence and visibility for both Journalista

Roberto Marinho Avenue and the Pinheiros River channel, becoming a new symbol

for the city of São Paulo" (EMURB, 2004b, p. 135). The works began in 2004, with

budget and resources arising from CEPAC auctions.

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On February 2005, the new municipal office (2005-2008), opposition to the previous,

suspended for one hundred days the contract for value review. At that time, Mayor

José Serra said about the bridge:

"They wanted to do something pompous, expensive. This cable-stayed structure was just for

vanity, only to spend money. It does not help the traffic and costs a fortune. If we have time

and conditions, the project will change" (PAGNAN, 2007, p. C7).

In May of that year the contract was resumed without significant changes. At last,

beyond the R$ 2 million fine for the contract suspension, the Serra office (2005-

2008) ended up spending R$ 119 million more than originally planned, of which R$

48 million spent on additives and R$ 71 million on new works for the removal of high

voltage cables, construction of an access road to the Pinheiros River Expressway,

signage and special lighting, as reported by CEF - Caixa Econômica Federal, the

inspection agent responsible for controlling the CEPAC (EMURB, 2008, p. 35 and

36).

The Real Parque Road Complex (Figures 3 and 4) was inaugurated in August 2008,

costing R$ 266 million (US$ 160 million) - an increase of 81% higher than the

original price and having spent 56 months against the original forecast of 18

months.

Figure 3: Real Parque Road Complex. Source: the author, 2008.

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Figure 4: Real Parque Road Complex besides a remaining favela.

Source: the author, 2008.

By that time, the OUCAE had consumed R$ 303.5 million related to construction,

expropriation costs, taxes and fees, and of this total, R$ 60.2 million (20%) were

paid by the Municipal Treasury, and was not compensated by CEPAC sale funds,

burdening the investment capacity of the municipality itself (ibid.). From the social

housing units predicted in 2003 not even one was built, and EMURB had spent only

0.7% of the total value, corresponding to the area expropriation.

Analyzing SP Urbanismo6

most recent data (São Paulo Urbanismo, December of

2011), one can see that this trend has changed a little, as social housing units

construction has been contracted. However the amount spent with road works

continued to be the majority (R$ 361 million), representing 66.4% of total spent,

whereas social housing construction has consumed only 5.4% and expropriation for

social housing purposed has reached 16.7%.

Although there is a bid of R$ 137 million to be spent in social housing, the plan for a

linear park and a tunnel construction will probably worsen the situation with the

removal of the remaining favelas and road works cost reaching R$ 2 billion. Another

issue to be noted, is that the building typology under construction (high-rise flats as

in figure 5) is generally provided for middle-lower income families (earning from 5 to

10 minimum wages), whereas the average income of the remaining favelas families

barely reach 3 minimum wages.

6 In 2010 the EMURB was split into two new companies: São Paulo Urbanismo e São Paulo

Obras. Whereas the first is responsible for the planning of municipal urban development

works, the second is responsible for their implementation and execution.

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Figure 5: Jardim Edite housing development under construction.

Source: SP-Urbanismo, 2011.

Table 1: OUCAE amount raised and spent in R$ and % of total.

Total Auctions 1,159,921,713.00 82.5%

Total Private Placements 55,030,819.86 3.9%

Financial income 190,484,775.02 13.6%

TOTAL REVENUE 1,405,437,307.88 100%

Works – Real Parque Road Complex 361,875,520.22 66.4%

Social Housing – expropriation 90,850,206.29 16.7%

Management fees 44,291,087.36 8.1%

Social Housing 29,657,978.51 5.4%

Other expenses 18,648,200.82 3.4%

TOTAL SPENT 545,322,993.20 100%

FINAL 860,114,314,68

Source: SP-Urbanismo, December 2011.

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FINAL CONSIDERATIONS

The analysis of OUCAE case study is symptomatic and only reinforces the critique

that has been made to this planning tool.

The first question that arises is the priority of this project. Since Água Espraiada is

no longer part of the ring road, it favors the São Paulo Southwest region, where

most of high-income classes live and that have had a great number of road

improvement since the 1970s. The recent prohibition of truck traffic in this area

shows the ambivalence of this project that clearly will benefit the elite car owners.

The project reinforces one of the most negative aspects of São Paulo urban

planning paradigm: the constant emphasis on road works that generally benefits

automobiles. If the project has been different, money could have been invested in

subway expansion that would benefit a much larger population7

. On the other hand,

the proposed road will not meet the traffic impacts when the new enterprises from

the CEPAC start to being built. They will cause a demand for more road works, as

today the Pinheiros River Expressway is already jammed most of time8

.

The second very negative aspect of the project is that it actually caused the

expulsion of at least 20,000 low-income people of the region, when the favelas were

removed, worsening socio-spatial segregation in a city quite segregated already.

Despite the fact that it had occurred prior to the OUCAE enactment, for its

implementation the way it was proposed, this population would have to leave

sooner or later. The remaining low-income population is threatened by a

gentrification process going on since the land prices are skyrocketing. Worse still,

São Paulo Urbanismo present plan to build a linear park on the remaining stream

valley will definitely expel the remaining favelas. The amount predicted to be spent

with social housing up to now will definitely not solve the problem. One can also

question for whom the social housing under construction is for, as high-rise flats are

generally too much expensive for the lower income strata.

Considering this aspect, it is notorious the municipality disregard with existing low-

income population, as the investment prioritized road works, with a little amount of

social housing units being built to date (252 units), despite the initial forecast and

the existence of numerous ZEIS9

in the area. If the total revenue has been invested

in social housing construction, it would have been possible to build 10,440 units (at

a cost of R$ 52,200.00 each according to SEHAB – Housing Secretariat), enough to

allocate the entire existing favela population in the 1990s. The fact that this

population is under-represented in the Management Group and that the

government has a majority of votes there also demonstrate the government

indifference and the existing political forces composition.

7 Considering the present plan, twenty kilometers of a subway line could be built with the

amount predicted for the OUCAE, enough to carry 1.07 million passengers a day considering

São Paulo Metro present carriage performance.

8 In 1996 this avenue was working already at its capacity at peak hours with 8,415 vehicles in

the express lanes (maximum capacity of 8,800) and 6.765 vehicles in the local lanes

(maximum capacity of 6,600) (EMURB, 1996, p. 130).

9 ZEIS – Social Interest Special Zones are zones designed to urban rehabilitation, land tenure

regularization and social housing production (SÃO PAULO, 2002, art. 171).

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The amount spent on the cable-stayed bridge proved to be a large transfer of funds

for the construction industry; an exceptional spending much higher than necessary

because it has prioritized the aesthetic factor, the creation of a landmark in the area,

in detriment of technical and economic factors. The association of the government

with constructor and real estate capitals, using road works to promote an area

financial and symbolic valorization is not new in Sao Paulo and has been

considered by several authors.

However, the novelty here was that the project that favored the interests of the ruling

classes started in a leftist PT – Workers´ Party - administration (2001-2004),

historically linked to the social issues and to the working class, demonstrating the

power of neoliberalism ideology ascension.

Concluding, the OUCAE implementation in São Paulo is a perfect example of a

GUP that best represents the affirmation of neoliberalism in the urban policy,

concentrating financial resources in the construction of major road works, whose

main beneficiaries are the contractors, land owners and entrepreneurs, in detriment

of attending the legitimate demands for employment, housing, health and education

of local low-income classes affected by the project.

REFERENCES

BRASIL. “Lei nº 10.257, de 10 de julho de 2001. Regulamenta os artigos 182 e 183

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