The concept of value capture, which recognizes increases in property value triggered by government action and public investments, has been in the news of late, not coincidentally right here in our backyard. The Massachusetts transportation secretary, Stephanie Pollack, floated the idea as a way of confronting cost overruns in the proposed Green Line light rail extension north of Boston. The state has established a Value Capture Commission to explore ways of engaging the private sector in the financing of critical transportation infrastructure. The City of Cambridge similarly suggested that private developers and landowners might contribute more directly to transit operations that are such a critical element in the success of such booming areas as Kendall Square.
Our research on value capture in the context of land-based financing tools goes back many years, and the idea has a prominent place in the promotion of municipal fiscal health. Martim Smolka, director of the Program on Latin America and the Caribbean, and author of the report Implementing Value Capture in Latin America, has been conducting research, courses, lectures, and workshops, most recently in Sao Paulo, where additional floor-area ratio (FAR) is auctioned in a stock market. Those discussions have centered on several common concerns in the implementation of value capture, such as whether charges to property owners are passed along to consumers in the form of higher prices, or doubts about the ability of local officials to determine the precise land value increment linked to government action.
Next month, Lincoln Institute president George W. "Mac" McCarthy will make a presentation at Meeting of the Minds in Richmond, California covering land-based financing tools to allow cities to make critical investments in infrastructure. Armando Carbonell, chairman of the Department of Planning and Urban Form, will also present on value capture at the 45th Anniversary of the Loeb Fellowship in Cambridge, Mass., and value capture will be the subject of an upcoming talk at TEDxBeaconStreet. In addition, the Latin America program is commissioning further research on value capture, and conducting more workshops and online courses.