Value Capture for Transportation Finance

Project summary:

The accessibility provided by transportation networks has a direct influence on the value of land, particularly in urban areas. Improvements to transportation networks alter the relative accessibility of places and, in turn, their land values. Capitalizing on these accessibility benefits into land value provides a source of benefits that can be extracted in order to finance, at least partially, transportation facilities and services. This practice of "value capture" is particularly useful in cases where it is difficult or impossible to finance improvements from direct user charges. This research project explored how value capture can be used to fund transportation in Minnesota. Investigators? findings were integrated into a final report that covered: value creation as a result of transportation, a review of the existing financing framework, eight practical value creation strategies (Land Value Tax, Tax Increment Financing (TIF), Special Assessments, Transportation Utility Fees, Negotiated Exactions, Development Impact Fees, Joint Development, and Air Rights), and integration and implementation considerations for Minnesota. Each of the policies was evaluated according to four criteria: 1) efficiency, which relates to how well the policies allocate scarce resources; 2) equity, which describes the fairness of resource allocation among different strata of society; 3) sustainability, which refers to the ability of the policy to serve as an adequate, reliable source of transportation revenue; and 4) feasibility, which refers to the degree of political and administrative difficulty associated with each policy. Outreach occurred through two half-day workshops at project start-up and again when the draft study synthesis was completed. Educational workshops were conducted after study completion.