University of Minnesota releases study of "value capture" for transportation finance
Contacts: Ryan Mathre, University News Service, (612) 625-0552, firstname.lastname@example.org
Michael McCarthy, Center for Transportation Studies, (612) 624-3645, email@example.com
MINNEAPOLIS / ST. PAUL (07/07/2009) —The University of Minnesota’s Center for Transportation Studies (CTS) has released its research report on the use of value capture for financing transportation projects, which was requested by the Minnesota Legislature. Value capture is a type of infrastructure financing in which increases in private land values generated by public investment are in part “captured” through a variety of approaches to help pay for infrastructure projects. The full report can be found at http://www.cts.umn.edu/research/ValueCapture
Large public investments in state transportation infrastructure—such as new freeway interchanges, highways or transit stations—can increase the value of surrounding private land, sometimes substantially. Capturing the value of this benefit through various tools is gaining interest as a finance mechanism for infrastructure investments, particularly with a growing concern about the adequacy and effectiveness of the current system of transportation funding in the United States.
CTS was commissioned by the state legislature in 2008 to conduct this first-of-its-kind research to look at value capture as a potential finance mechanism for future infrastructure investments in Minnesota.
"The need for this study grew out of the transportation funding debate in the 2008 legislative session," said Robert Johns, Director of the Center for Transportation Studies. "Legislators and interest groups felt new methods needed to be investigated for financing our transportation system and asked CTS to study how value capture policies might be implemented in Minnesota."
The study identiﬁed eight policies that can be classiﬁed as value-capture strategies: land value tax, tax increment ﬁnancing, special assessments, transportation utility fees, development impact fees, negotiated exactions, joint development and air rights. Some value-capture strategies target property owners, while others target developers. The strategies differ in how, when and where they may be applied. They also give different outcomes, which can be assessed along four criteria: economic efﬁciency, equity, sustainability and feasibility.
Important legal considerations for units of government wishing to apply some or all of these policies were also considered. Statutory adjustments in Minnesota law would be needed to allow for implementation of several of the policies.
“The project provides new financing methods that are not currently considered or are not available under current Minnesota state statutes,” said David Levinson, the R.P. Braun/CTS Chair in Transportation Engineering at the University of Minnesota and one of the lead investigators of the study.
CTS will offer a series of educational workshops for elected officials and policymakers during the summer and fall of 2009 to explain the study results.