Using the Economic Value Created by Transportation to Fund Transportation (2014) / Chapter Skim
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10 LITERATURE REVIEW OF VALUE CAPTURE MECHANISMS The VC funding and finance approach has a wide audience in the United States and across the world. The literature in this area is large and comprehensive, and there are numerous applications around the world for highways and transit (Andelson 2000; Bowes and Ihlanfeldt 2001; Fensham and Gleeson 2003; Smith and Gihring 2006; Iacono et al.
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11 showed a national reliance of 17% on the property tax type mechanisms for local roads (Figure 5)
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12 Mechanism Conceptual Basis and Benefit or Levy Basis Applicable Purpose Highway-Related Examples (United States) IF New development to pay for facility use.
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13 FIGURE 4 Sources of state highway funding in the United States in 2012. (Source: FHWA 2012.)
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14 parks, public safety, and schools. The burden falls on the entire base of taxpayers.
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15 cifically authorized the use of IFs for municipal jurisdictions planning under the GMA. The GMA allows IFs for system improvements that reasonably relate to the impacts of new development and specifies that fees are not to exceed the proportionate share of the costs of improvements generated by the development.
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16 ning efforts, and the TDD funds cannot be used to recoup costs incurred during the planning and implementation process. • Transportation decision making with regard to new development proposals is fragmented at various levels of government.
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17 10. Provisions must be included in the ordinance to permit refunds for projects that are not constructed because no impact will have manifested.
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18 5. Initial project funding procurement.
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19 ment. In many states, legislatures have passed new enabling legislation that allows special districts to be used to finance a broader range of facilities than was allowable in the past.
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20 The Illinois SSA statute allows creation of SSAs that transcend municipal boundaries. Thus, the SSA enables a selftaxing district to be formed, primarily created to fund physical improvements such as infrastructure, commercial area management and promotions, and recreational and public safety facilities.
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21 • They apply only to properties within a designated area for their location-specific special benefits from the improvements. This emphasizes the beneficiary basis of SADs as a funding mechanism.
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22 • Contract with the Missouri Highways and Transportation Commission (MHTC) or the local transportation authority to receive revenue from the district to apply to project costs.
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23 AIR RIGHTS -- DESCRIPTION Air rights are a VC financing mechanism in which a private agency partly compensates the public agency for the cost of an investment through cost-sharing agreements. The public agency can also share in the future revenues from the development.
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24 market, this has led to the consideration of how ARs agreements may be developed or structured, including: • Up-front, one-time payments versus conventional lease agreements. • Long- and short-term leases: The lease provides access to air space as well as any land required for support or access to that air space for a defined period of time.
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25 Implementation Considerations Geographic Scale or Area of Applicability Joint development VC agreements are much like ARs and exactions. They tend to be used on a site-specific basis (project by project)
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26 LAND VALUE TAX -- DESCRIPTION The land value tax (LVT) is a variant of the property tax that imposes a higher tax rate on land than on improvements, or taxes only the land value.
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27 to services and transport networks. Thus, historically it has been used to support a range of services.
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28 not allocate expenditures for capital costs even in the case of transit, and most expenses were used for transit oriented development. However, TRZs do not receive favorable development benefits such as those that are common in TIF mechanisms by way of tax abatements or other subsidies or waivers.
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29 maintenance expenses but also capital expenditures, thereby expanding the scope of recoverable expenditures (Ewing 1993)
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30 Transportation Corporations Transportation corporations are not funding mechanisms in themselves. TCs are governance mechanisms that have been used to enable and mobilize the use of other funding mechanisms toward the planning and project development of transportation projects.
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31 • The promotion and development of transportation facilities and systems that are public, not private, in nature, although these facilities and systems may benefit private interests as well as the public (Texas Transportation Code, Title 6, Chapter 431)
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32 Efficiency Lari et al.
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33 Mechanism Efficiency Equity Political Feasibility Administrative Feasibility IF Can be efficient in principle. Uncertain if implemented rates satisfy efficient pricing rules (Altshuler and GomezIbanez 1993)
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34 Mechanism 6 -- Joint Developments Joint development is a public–private partnership to develop private construction projects using public land or using ARs. In general, JD occurs on a site-specific basis and typically accompanies AR agreements.
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