Not sure what the status is with CUNA’s talks with Ed Pawlowski on Community Benefits Agreements from developers in the Allentown NIZ, but I wanted to introduce people who are interested in that stuff to the “value capture” method of financing public improvements. If people want to bring back a trolley loop service to downtown Allentown, why not finance it this way?
“Value capture” is defined by Ian Carlton of TransACT as “the process by which all or a portion of increments in land value attributed to ‘community interventions’ – rather than landowner actions – are recouped by the public sector.”
Often, all that’s needed to get developer buy-in is a promise that they can double their density. Much of the explosive re-generation of Tyson’s Corner, Virginia, is made possible by developers tempted by newly unrestricted density near metro stations.
But there are lots of ways to capture value. Portland led the way, financing its streetcar system primarily with value capture strategies. They created two assessment districts, meaning that landowners near the proposed streetcar line paid extra taxes to help fund the transit because it would add value to their properties. The city also levied parking fees to help pay for it.
Washington, DC’s Metro agency has also been successful at implementing value capture, which currently covers about 0.7 percent of its annual budget.
The most common value capture strategy is joint development, meaning a transit agency collaborates with a private company to develop land or buildings the agency owns. About 60 percent of transit agencies say they’ve used it, compared with just 11 percent that have used tax increment financing, for example, which captures projected increases in tax revenue to fund the project.
(Thanks: Tanya Snyder)