Special Assessments as a Value Capture Strategy for Public Transit Finance

Abstract

Applying a benefit principle, value capture strategies enable the public sector to harness the value created through infrastructure improvements and to use the funds to pay for such improvements. This article focuses on special assessments by which property owners located within a designated geographic area, or "special assessment district (SAD)," pay for special benefits accruing to their properties that are close to certain infrastructure improvement. The authors review the history of special assessments, the extent of use, and the mechanisms for funding public transportation especially transits. The authors then evaluate the applicability of special assessments in funding public transits on the basis of four criteria: efficiency, equity, sustainability, and feasibility. Finally, the authors discuss suitable conditions for special assessments and provide legal, administrative, and technical recommendations for their use in transportation finance. Keywordstransportation finance, transit-oriented development, value capture, special assessments Public Works Management & Policy 16(4) U.S. Department of Transportation, 1984). Finally, an environment where zoning allows higher-density development and infrastructure such as pedestrian plazas would encourage developers to support special assessments, where the improvement paired with high-density zoning provides them opportunities to generate more revenue (Cervero, 1994;Gihring, 2001).

Financing urban transportation infrastructure in a multi-actors environment: the role of value capture

“…The basic principles of this method are that the private entity is responsible for compensating the public entity though payments or cost sharing agreements and that all parties are involved in the process voluntary, although the result is a legally binding agreement. A main difference of joint development, in comparison to betterment tax and TIF, is that it does not require identifying the direct and indirect impact of transportation infrastructure in order to be implemented, as in the case of the two aforementioned mechanisms [7,72].…”

Le métro de Montréal et son financement : entre surenchère de gouvernance et déficit de gouverne

“…Certains auteurs (Snyder et Luby 2013;Siemiatycki et Friedman 2012;Albalate et al 2010;Price 2002;Jacobson et Tarr 1996) ont ainsi fait part des avantages et des inconvénients de souscrire à divers modes de financement, qu'ils soient publics, privés ou hybrides (partenariats public-privé). D'autres se sont plutôt tournés vers l'exploration de nouveaux mécanismes pour financer les infrastructures de transports collectifs, tels que les diverses stratégies pour capter la plus-value foncière (Zhao et Larson 2011;Rybeck 2004), les péages urbains (Altshuler 2010;DeCorla-Souza 2008, 2006Sorensen et Taylor 2006), ou les modes alternatifs d'emprunt ou de subvention des projets afin de diminuer le fardeau fiscal des autorités organisatrices de transport (Yusuf et al 2010;Hess et Lombardi 2005). De plus, pour favoriser une meilleure imputabilité et une gestion adéquate des risques dans la prise de décision en matière de transports collectifs, des auteurs ont analysé les méthodes et les processus décisionnels (Majumdar et coll.…”

Framework for land value capture from investments in transit in car-dependent cities

“…The concept of capturing the value created by the investment in infrastructure (value capture) is not new internationally, with an early example being New York City in the United States, which implemented a special assessment district in 1691 to fund the construction of the city's drainage and street pavement program (Zhao and Larson 2011). Value capture mechanisms have been critical to investments in modern urban infrastructure in the United States in the early part of the twentieth century (Cervero 1994;Rybeck 2004).…”

“…The US system of transit funding is also rarely presented with a complete framework of options for integrated transit/land-use funding (Zhao and Larson 2011), thus requiring a new assessment and capture framework to be developed.…”

“…In 2008, special assessment districts and general value capture mechanisms comprised 0.26 percent of total state and local government revenue, with some state governments receiving more than 2 percent (including sewer, water, roads, and transit) (Zhao and Larson 2011). Another long-term successful value capture program has been conducted by the Metropolitan Transit Railway Corporation (MRTC) in Hong Kong, which jointly develops its transit infrastructure with land development as part of the "Rail + Property" program (Cervero and Murakami 2009) by selling the development rights around and over its stations.…”