Value capture, past and present
Although it’s been used widely in Europe and Latin America, value capture – the concept of asking private landowners to contribute to the cost of infrastructure, for example, in anticipation of the rise of property values such projects bring – has been a little harder to find in the U.S. That may be changing. One notable project, the Dallas-Fort Worth Cotton Belt transit line, is based on fundamental principles of value capture.
Value Capture and Land Policies, the latest in the Land Policy Conference series, seems especially timely. The collection of essays and commentaries may be the most comprehensive survey to date of the use of value capture in the U.S. and around the world, based on the proceedings of the 6th Annual Land Policy Conference held in Cambridge in May 2011.
The rise of value capture has a logical narrative. Infrastructure is crumbling everywhere, as urban population growth requires significant investments. At the same time, governments are struggling with declines in revenue from traditional sources, if not outright fiscal crises.
The idea that public actions, such as investments in infrastructure, the provision of public services, and planning and land use regulation, increase the value of land and property, goes back at least as far as Henry George. If it is possible to capture that value, the discussion has centered on the best ways to do it.
Contributors to Value Capture and Land Policies, edited by Lincoln Institute president Gregory K. Ingram and fellow Yu-Hung Hong, first examine the conceptual framework and history of value capture, the relationship with compensation for takings, the long history of value capture policies in Britain and France, and the remarkable expansion of tax increment financing in California. Other case studies include the conversion of rural-to-urban land in China, town planning schemes in India, community benefit agreements in the U.S., community land trusts to provide affordable housing, the use of land development to finance transit, and the use of various fees to fund airports.
Value capture is without question “in the air,” said Ingram. Some instruments inherently reflect the concept without being labeled as such, but future policies may come right out and say it.