Reston Spring

Reston Spring
Reston Spring

Tuesday, May 10, 2011

Access for Value: Financing Transportation Through Land Value Capture, David M. Levinson & Emiliar Istrate, Brookings Institution, April 2011

Expanded Summary:

The worsening financial straits of governments at all levels pose a significant challenge to
discretionary programs, such as transportation. The United States transportation system must become more efficient if it is to provide the same level of services with less money at all levels of government. At the same time, the competitive forces in the global economy require an increasingly effective U.S. transportation network, able to support a changing American economy. This study examines accessibility and its importance in assessing transportation performance and in creating a sustainable transportation funding source. It first delineates the concept of accessibility through a comparison with the common transportation performance metric of mobility.  The paper then explains how accessibility can help fund transportation through a virtuous circle of access, land value, and transportation infrastructure. Local, state, and federal governments must better understand the structure and characteristics of value-capture policies if they are to develop their full potential as a sustainable funding source.

Case 2: Existing Development, New Infrastructure (such as Dulles Corridor)
A special assessment district is a fee levied over a certain area for an identified new transportation project to fund the infrastructure in part or in whole. Governments use this technique widely to fund streetlights, repaving, sidewalks, other local transportation public works, and transit stops. For example, Portland, OR, funded its streetcar in part using a local improvement district of nearby property owners. The effort was coordinated by the City of Portland, with support from the metropolitan government. The initial line was designed to connect redevelopment areas north and south of downtown with existing developed areas. In addition to special assessments, Portland upgraded the zoning of these vacant parcels.  Proponents credit the streetcar with stimulating development in the area.

Tax increment financing (TIF) funds an infrastructure project by borrowing against the future
stream of additional tax revenue the project is expected to generate. Tax increment financing can be applied to new development or redevelopment. For instance, the Fortune 100 retailer Best Buy financed an interchange serving its headquarters in Richfield, MN, in exchange for the right to keep future property tax increases that otherwise would have gone to the city over a 24-year period. . . .

Policy Implications

1. Use accessibility as a performance metric in funding transportation projects
Accessibility is a useful performance indicator for determining how well the transportation and
land-use system work collectively. However, most of the performance measures of the transportation systems around the country focus on mobility or congestion alone. This results in incomplete or even erroneous conclusions regarding the performance of transportation. . . Although congestion has increased across U.S. metropolitan areas, the increase does not necessarily mean that transportation systems are failing their primary function. Examining accessibility trends as both mobility and land-use change demonstrate that travelers can reach more activities in the same amount of time.

Cities, counties, metropolitan areas, and states should incorporate accessibility as a performance criterion in allocating transportation funding. Not only is accessibility a more comprehensive measure of the performance of the transportation system, but it also shows the economic benefit of transportation. . . .

2. Employ value capture techniques to fund local transportation
The idea of accessibility is much deeper than just a performance indicator. As a measure of benefit, accessibility suggests a path for reforming local transportation finance to better associate benefits with costs. If the costs of transportation were more proportional to the benefits, both efficiency and equity would improve.

Value-capture techniques enable this link between the benefits and costs of transportation, mostly at the local level. Impact fees, joint development, special assessments, tax increment financing, land value taxes, transportation utility fees, and air rights are among the most widely discussed forms of value capture, and all have advantages and disadvantages from policy and political perspectives. . . .

3. Increase accessibility by coordinating local transportation and local land-use policies
Increasing the accessibility of transportation networks requires planning and coordinating transportation policies more intensively with local land-use policies. For example, developing land at transportation nodes could increase transportation network efficiency. Local zoning that restricts development density at transit stations diminishes the effectiveness of many recent rail systems.  As these are among the most expensive transportation facilities, it is most important to coordinate the transportation and land use.

Access for Value--Financing Trans Thru Land Value Capture--Brookings

For more information, visit the Metropolitan Policy Program at Brookings website.

No comments:

Post a Comment

Your comments are welcome and encouraged as long as they are relevant, constructive, and decent.