75:. The value of any given land is determined by its proximity to various amenities (both public and private). Thus, for example, when a new subway station or highway interchange is installed, land near the new facility becomes more valuable. Investment in capital improvements to land can synergistically generate capital investment in other nearby locations, which further increases land value. Thus, even if the rate of taxation does not change, the tax revenue generated from properties which benefit goes up by way of higher land values and increased development. The effectiveness of value capture depends, of course, on a smoothly functioning ad valorem property or land value tax system, with regularly updated assessments.
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more widely benefit the city (e.g., by providing employment opportunities, shopping and other amenities, and a more robust and diverse tax base.) It can be politically useful to capture for the city treasury a share of the positive externalities of city-financed investment. This can help address public concern about the fact or perception of unfair windfalls when specific owners’ land values increase after urban infrastructure investment is paid from general city revenues.
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public investments, in order to offset the costs of the investment itself. Value
Capture strategies operate under the assumption that public investment often results in increased valuation of private land and real estate. "Capturing” the subsequent increase in value, governments are able to recuperate funds, which can ultimately be used to generate additional value for communities in the future.
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Public entities, tasked with creating and maintaining this infrastructure, are constantly in search of mechanisms which can allow for fiscal support of these investments. One such mechanism of financing is Value
Capture. Value capture schemes secure and recover a portion of the benefits delivered by
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Public investments, such as building transportation or sewer facilities, can increase adjacent land values, generating an unearned profit for private landowners. The unearned value (increases in land value which otherwise profit private landowners cost-free) may be "captured" directly by converting
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Urban planners and finance officials are often interested in value capture mechanisms, for at least two reasons: 1) because they offer a targeted method to finance infrastructure benefiting specific land, and 2) because some such investments can generate private investment in the area, which will
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Value capture strategies can be applied to developers or landowners, and they can be applied before or after a public improvement is built. In the case of new public transit facilities, the property value premium nearby can be as high as 167%. Types of value capture include the following:
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generates for private landowners. In many countries, the public sector is responsible for the infrastructure required to support urban development. This infrastructure may include road infrastructure, parks, social, health and educational facilities, social housing,
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Although it is not always talked about as such, the most common value capture mechanism is the general real property tax, with no special features other than regular assessment of market value; this is because the common real estate tax includes the less known
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Municipalities have used numerous means to capture unearned land values increased by the addition of public infrastructure. This image shows how building height and density (and therefore value) have increased near rail transit
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and mitigation tools, and more. Such infrastructure typically requires great financial investment and maintenance, and often the financing of such projects leans heavily on the government bodies themselves.
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A Decision-Support
Framework For Using Value Capture to Fund Public Transit: Lessons From Project-Specific Analyses | Mineta Transportation Institute Research Report
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190:. Abingdon, Oxon ; New York, NY : Routledge, 2019. | Series: Routledge research in planning and urban design: Routledge.
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396:, Rick Rybeck, Public Works Management & Policy Journal, Vol. 8 Number 4, April 2004, (Sage Publications) pp 249 – 260.
357:; Duncan, Michael (2002), "Transit's Value Added Effects: Light and Commuter Rail Services on Commercial Land Values",
350:, Royal Institution of Chartered Surveyors (RICS) and the Office of the Deputy Prime Minister (ODPM), London, Oct. 2002
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of public investments, allowing public agencies to tax the direct beneficiaries of their investments.
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Developing a
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Financing
Transit Systems Through Value Capture: An Annotated Bibliography
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Access for Value: Financing
Transportation Through Land Value Capture.
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Value Capture as a Policy Tool in Transportation Economics
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318:David M. Levinson and Emilia Istrate.
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171:References
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