After the bruising battle over the 2008 transportation bill, the Legislature requested a study of "value capture" as a potential way to raise revenue for future infrastructure investments in Minnesota. The University of Minnesota's Center for Transportation Studies has released its analysis of eight potential strategies for funding transportation based on the concept.
Currently, transportation improvements are funded by general revenue (based on the assumption that all benefit indirectly from the transportation network) and user fees, such as gas taxes and transit fares. The rationale for value capture is based on the relationship between transportation networks and urban land value. [See diagram.]
Investment in transportation infrastructure — ranging from new roads and freeway interchanges to light rail lines and transit stops — improves accessibility to desirable locations such as jobs, shopping and entertainment. Property thus made more accessible tends to become more valuable. Developers and landowners benefit from this higher land value.
Value capture mechanisms seek to harvest a payback from the value created by the public investment. The revenue is then directed to pay off the improvements or finance new ones.
The study is quite lucid in spelling out the pros and cons of eight potential value capture approaches based on four criteria — economic efficiency, equity, sustainability, and perhaps most important for the Legislature, feasibility.
It will come as no surprise to students of tax policy that the most feasible measures have relatively low visibility to general taxpayers.
Perhaps the most intriguing of the eight approaches is Transportation Utility Fees (TUFs). TUFs treat transportation networks like other utilities and can be based on factors related to transportation demand, such as parking, square footage or type of facility. They are simple to administer and generate a stable revenue stream. But, as with any new "fee," there are drawbacks to getting them authorized in the first place.
The 12-page policy summary, "Harnessing Value for Transportation Investment," is worth a look by anyone interested in finding new ways to raise money for transportation. [Download Policy Summary]
— Charlie Quimby
Imagine if a half dozen large cities across the country had built robotic (light rail/monorail hybrid) transit with the stimulus funds. The front page today would not feature a re-paving project, or maybe it would, but we would most certainly feel like hickville, USA.
I suppose transit automation would fall into the category of transportation improvement (top arrow). I've advocated for it for ten years now.
Posted by: Tim Nelson | July 23, 2009 at 01:08 PM