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Transportation Finance Advisory Committee, June 2012 fafa Value Capture Strategies for Transportation Finance. Zhirong (Jerry) Zhao Associate Professor [email protected]. Land Value (EMV/Acre). The General Framework of Transportation Finance. Value capture strategies: Type-I. - PowerPoint PPT Presentation
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Transportation Finance Advisory Committee, June 2012
fafaValue Capture Strategies for Transportation Finance
Zhirong (Jerry) ZhaoAssociate [email protected]
Value capture strategies: Type-I-- on property owners
Land value tax Tax increment financing Special assessment Transportation utility fees
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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
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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)
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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
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Value capture strategies: Type-II-- on estate developers
Negotiated exactions Development impact fees Joint development Air rights
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Negotiated Exactions
Non formulaic or preset contributions for the local transportation improvements decided through negotiation.
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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
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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
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Air Rights Development
“The legal capacity to make use of a three-dimensional area for
development or improvement.”
-The Use and Abuse of the Term “Air Rights,” Sam
Galowitz, 1996
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Air Rights Development: The Minnesota Context
Characteristics of Minnesota’s freeway system provide unique opportunities for air rights
development
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