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Performing duties and offering decent services to citizens by municipalities, calls for supply of credit and financial resources. During the last two decades, revenues generated by purchasing surplus density or in other words, revenue from granting rent licenses to urban lands has played a central role in providing income for the metropolis municipalities of the country. Financial dependence of municipalities on this source of income and lack of reliable and sustainable sources of revenue at least to meet the permanent costs, disrupt the medium and long term financial budgeting and planning of municipalities. Considering inefficient and less rational methods and illogical density sales, necessitates more efforts to be made to study income structure of municipalities and demands effective help to be provided to this pervasive and public institution by investigating the roots of rent seeking in this structure. A basic assumption in this study is that some income codes including sales densities influence the formation of the municipality rent in a large extent. Therefore, by using the statistical data in Isfahan Municipality, the share of different sources of income in total municipality revenues during the years 1983 to 2005 is investigated and the research hypotheses are analyzed. The results indicate that the income structure of Isfahan municipality is rather based on rent seeking than relying on economic potentials and structures.

Keywords: : Rent- seeking, Municipality of Isfahan, Budget allocation, sales density

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