Value capture strategies: Type-I -- on property owners Land value tax Tax increment financing Special assessment Transportation utility fees 4
Land Value Tax The conventional property tax Tax on buildings Tax on land A land value tax or split-rate tax Captures more value from transportation More efficient in land use 5 Henry Georgia in 1865
Tax Increment Financing (TIF) Public improvements tend to cause a rise in property values in adjoining areas, causing an increase in property taxes. TIF uses these future increments in property taxes generated by new development to finance the initial costs of the development itself.
Special Assessments District 1. A compulsory levy used to finance a particular public improvement program 2. Its only levied against those parcels receiving a special benefit from the improvement 3. Assessment amount is directly related to the value of the benefits the property receives (Source: League of Minnesota Cities) 9
The Peachtree Street Streetcar Line Midtown Neighborhood SAD Atlanta, GA 10
Transportation Utility Fees Transportation network functions as a utility Facility use does not correlate with property value Depends on property type More direct connection between costs and benefits 11
TUF Simulation: Annual fee by land use - Minneapolis 12
Value capture strategies: Type-II -- on estate developers Negotiated exactions Development impact fees Joint development Air rights 13
Negotiated Exactions Non formulaic or preset contributions for the local transportation improvements decided through negotiation. 14
One-time predetermined assessments levied on new development Offset the impact of the development on the capital cost of providing regional transportation infrastructure Development Impact Fees 15 Development Impact Fees With new highway exist
Defining Joint Development Joint development private-sector sharing of capital costs private-sector payments to the public entity Incentives Public: additional $ for capital improvements Private: enhanced development potential 17
Summary Value capture The rationale to link benefits to costs A useful toolset with various features Policy considerations State authorization Local discretion Policy research and design Public engagement 26
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