Browsing by Subject "Value capture"

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Financing transportation with land value taxes: Effects on development intensity
(Journal of Transport and Land Use, 2012) Junge, Jason; Levinson, David
A significant portion of local transportation funding comes from the property tax. The tax is conventionally assessed on both land and buildings, but transportation increases only the value of the land. A more direct and efficient way to fund transportation projects is to tax land at a higher rate than buildings. The lower tax on buildings would allow owners to retain more of the profits of their investment in construction, and would be expected to lead to higher development intensity. A partial equilibrium simulation is created for Minneapolis, Richfield and Bloomington, Minnesota to determine the intensity effects of various levels of split-rate property taxes for both residential and nonresidential development. The results indicate that split-rate taxes would lead to higher densities for both types of development in all three cities.
Framework for land value capture from investments in transit in car-dependent cities
(Journal of Transport and Land Use, 2017) McIntosh, James; Newman, Peter; Trubka, Roman; Kenworthy, Jeff
Many car-dependent cities have major transit projects stuck in financial and economic assessment due to inadequate links between land use, transport, and funding. This has left most urban transport networks underfunded and requiring significant government support. During this widening transit funding gap, there has been an international increase in demand on transit systems, which is in part a response to the global peak in car use per capita. This paper demonstrates to transit proponents and practitioners how to facilitate infrastructure projects by optimizing induced and activated land-use change. A five-step framework for assessment is proposed that includes assessing the regional and local legislation and regulations to determine what alternative funding opportunities are available, undertaking accessibility beneficiary analysis, analyzing the project-induced land value uplift, developing an alternative funding strategy to implement integrated land-use and transport planning mechanisms, and preparing a procurement and delivery strategy. The proposed assessment framework enables transit business cases to extend project funding for integrated transit and land-use projects, especially in car-dependent cities. This is demonstrated through a case study of Perth, Western Australia.
Funding Surface Transportation in Minnesota: Past, Present, and Prospects
(Center for Transportation Studies, University of Minnesota, 2010-01) Zhao, Zhirong (Jerry); Das, Kirti Vardhan; Becker, Carol
Transportation systems play an imperative role in enhancing the productivity and the quality of life in the United States. The funding and financing of transportation is a complex process requiring joint efforts of federal, state, and local governments. To meet current and future transportation needs, policymakers must constantly assess the mechanism of transportation finance to ensure adequate and sustainable investment. In recent years, depleting state and local budgets and growing capital and maintenance costs related to transportation have been a common challenge. The state of Minnesota is estimated to have billions in unmet transportation needs to keep up with inflation and the increase in transportation demands. This report reviews the funding of public surface transportation systems (including highways, transit and local roads) in Minnesota. We look at how transportation projects have been funded, identify current and future policy issues likely to affect transportation funding, and go over some of the funding options suggested by other researchers. The aim is to encourage better understanding and management of issues related to transportation funding in Minnesota.
Harnessing Value for Transportation Investment: A Summary of the Study: Value Capture for Transportation Finance
(Center for Transportation Studies, University of Minnesota, 2009-06) Johns, Robert
This document summarizes findings from the Value Capture for Transportation Finance study conducted for the Minnesota Legislature. See also the report to the legislature (CTS 09-18S) at https://hdl.handle.net/11299/97658 as well as the technical research report (CTS 09-18) at https://hdl.handle.net/11299/97655.
Introduction to the Special Issue on Value Capture for Transportation Finance
(Journal of Transport and Land Use, 2012) Zhao, Zhirong Jerry; Levinson, David
This article introduces vol. 5, no. 1 issue of Journal of Transport and Land Use. This special issue includes 5 articles on value capture strategies used in transportation finance.
Joint development as a value capture strategy for public transit finance
(Journal of Transport and Land Use, 2012) Zhao, Zhirong Jerry; Das, Kirti Vardhan; Larson, Kerstin
Synthesizing relevant experiences in US and some Asian countries, this article reviews joint development as a value capture strategy for funding public transit. The review starts from the concept of joint development in transportation, its rationale, and the extent of use. We then provide a classification of joint development models with respect to ownerships and transaction methods. These models are illustrated with case examples from multiple countries. After that, we assess the efficacy of joint development with a set of criteria for transportation finance evaluation, including economic efficiency, social equity, revenue adequacy & sustainability, and political & administrative feasibility. Finally, we conclude and provide recommendations for policy consideration.
Prospects for transportation utility fees
(Journal of Transport and Land Use, 2012) Junge, Jason; Levinson, David
Transportation utility fees are a transportation financing mechanism in which the network is treated as a utility and properties are charged fees in proportion to their network use, rather than according to their monetary value as in property taxation. This mechanism connects the costs of maintaining the infrastructure more directly to the benefits received from mobility and access to the system. The fees are based on the number of trips generated and vary with land use. This paper evaluates transportation utility fees as an alternative funding source in terms of efficiency, equity, revenue adequacy and political and administrative feasibility. The experiences of cities currently using utility fees for transportation are discussed. Calculations are included to determine the fee levels necessary for transportation maintenance budget needs in three sample cities and a county in the Minneapolis-St. Paul (USA) metropolitan area. Proposed fees for each property type are compared to current property tax contributions toward transportation. The regressive effects of the fees and the effect of adjusting for the length of trips generated are also quantified.
Rail integrated communities in Tokyo
(Journal of Transport and Land Use, 2012) Calimente, John
Tokyo’s railway station areas are models of transit-oriented design. To differentiate them from transit-oriented developments (TOD), the term rail integrated community (RIC) has been created to describe these high density, safe, mixed-use, pedestrian-friendly developments around railway stations that act as community hubs, are served by frequent, all-day, rail rapid transit, and are accessed primarily on foot, by bicycle, or by public transit. Japanese private railway operators have been instrumental in creating these RICs. Though they receive little financial support from the government, private railways in Japan operate profitably by diversifying into real estate, retail, and numerous other businesses. Tokyu Corporation is used as the case study to exemplify how government policy and socioeconomic context contributed to the successful private railway model. Ten indicators, such as ridership, population density, and mode share are used to analyze two stations created by Tokyu to demonstrate how this model is manifested in Tokyu’s rail integrated communities.
Transportation Investment and Economic Development in Minnesota Counties
(Center for Transportation Studies, University of Minnesota, 2015-04) Zhao, Zhirong Jerry
This project examines the link between accumulated transportation capital stocks in Minnesota counties and their annual property tax revenues using longitudinal data in the 1995-2011 period. We separated the effects of two different transportation capital stocks, one associated with load roads and the other with trunk highways. In addition, we considered not only the internal effect of transportation investments within a county, but also the spillover effect due to transportation investments made in neighboring counties. Estimations from panel-data regressions show that local-road capital stocks within a county have a positive effect on its property tax revenues, with an elasticity of 0.093, but much of the benefits may be the outcome of a zero-sum game due to inter-local competition of property tax bases. Trunk-highway capital stocks within a county also show a positive effect, with an elasticity of 0.013. The spillover effect of trunk-highway development is even higher: The average level of trunk-highway capital stocks in neighboring counties has a positive elasticity of 0.030 on a county’s property tax revenues. Applying the estimations to the county data in FY2010, we calculated the ROI (return of investment) of additional transportation investments on property tax bases. The average ROI on the growth of EMV (Estimated Market Values) within a county is about 1.254 for local roads, and about 0.871 for trunk highways. The regional impact would be reduced for local roads due to the inter-local competition, but significantly amplified for trunk highways due to spillover benefits.
Value Capture for Transportation Finance: Report to the Minnesota Legislature
(Center for Transportation Studies, University of Minnesota, 2009-06) Iacono, Michael; Levinson, David; Zhao, Zhirong (Jerry); Lari, Adeel
As vehicles become more fuel-efficient and overall levels of travel stagnate in response to increases in fuel prices, conventional sources of revenue for transportation finance such as taxes on motor fuels have been put under increasing pressure. One potential alternative as a source of revenue is a set of policies collectively referred to as value capture policies. In contrast to fuel taxes and other instruments that impose charges on users of transportation networks, value capture policies seek to generate revenue by extracting a portion of the gains in the value of land that result from improvements to transportation networks. In this report we identify a set of eight policies that contain elements of the value capture approach. These policies include land value taxes, tax increment financing, special assessments, transportation utility fees, development impact fees, negotiated exactions, joint development, and air rights. We evaluate each of the policies 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. Since these policies are targeted toward use at the state and local level in Minnesota, we conclude by examining some legal and administrative issues related to the implementation of each policy with special reference to Minnesota.
Value Capture for Transportation Finance: Technical Research Report
(Center for Transportation Studies, University of Minnesota, 2009-06) Lari, Adeel; Levinson, David; Zhao, Zhirong (Jerry); Iacono, Michael; Aultman, Sara; Vardhan, Das; Junge, Jason; Larson, Kerstin; Scharenbroich, Michael
As vehicles become more fuel-efficient and overall levels of travel stagnate in response to increases in fuel prices, conventional sources of revenue for transportation finance such as taxes on motor fuels have been put under increasing pressure. One potential alternative as a source of revenue is a set of policies collectively referred to as value capture policies. In contrast to fuel taxes and other instruments that impose charges on users of transportation networks, value capture policies seek to generate revenue by extracting a portion of the gains in the value of land that result from improvements to transportation networks. In this report we identify a set of eight policies that contain elements of the value capture approach. These policies include land value taxes, tax increment financing, special assessments, transportation utility fees, development impact fees, negotiated exactions, joint development, and air rights. We evaluate each of the policies 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. Since these policies are targeted toward use at the state and local level in Minnesota, we conclude by examining some legal and administrative issues related to the implementation of each policy with special reference to Minnesota.
The value capture potential of the Lisbon subway
(Journal of Transport and Land Use, 2012) Martínez, Luis Miguel Garrido; Viegas, José Manuel
This paper tries to build on traditional value capture measures, to estimate the potential of some of these mechanisms for the Lisbon subway by examining their ability to mitigate the system’s operation and development costs. The study focus is on the municipality of Lisbon where this system mainly operates. This research uses spatial hedonic pricing models of the real estate of the region, calibrated on previous stages of the study, to assess the extent to which transportation infrastructure is currently capitalized into the real estate market. The paper uses a Monte Carlo simulation procedure to estimate a synthetic population of residential and non-residential properties that matches the census blocks statistics, measuring the subway valuation for each synthetic property and aggregating the results for the whole municipality. This potential value capture estimate is then used to estimate an annual tax that could be charged under different value capture measure configurations (i.e., land value tax, special assessment). The results suggest that there is significant potential for the use of this instrument to finance the subway infrastructure.
Value Increase and Value Capture: The Case of TH-610 in Maple Grove, Minnesota
(Minnesota Department of Transportation, 2014-01) Zhirong, Zhao
As a natural extension of University of Minnesota value capture study in 2009, this project demonstrates the application of value-capture strategies to supplement transportation funding for the completion of TH-610 in Maple Grove, Minnesota. Using spatial and regression analysis, we estimate that the completion of TH-610, with two additional exits, would lead to a significant growth in assessed property value, including about $12 million in land value and $5 million in buildings. The growth would result in about $4.3 million in property tax capacity, and about $1 million in annual property tax revenue. With multiple scenarios of hypothetical value-capture designs, we estimate the revenue potential of value capture would range from about $12 million to about $37 million, which could be used to supplement project finance to expedite the completion of TH-610.

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