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3 Overview of Value Capture Techniques

At this stage, practitioners have a preliminary funding and financing plan in place and will have assessed the potential for value capture based on the high-level considerations presented in Chapter 2. Chapters 4 through 9 are intended to help practitioners select the most appropriate value capture technique for their project based on each technique's unique features - such as its revenue potential or ease of implementation - and on project-specific characteristics.

This chapter provides an overview of the 12 value capture techniques highlighted in this Manual. A brief definition of each technique is provided in Table 2. The Manual groups the techniques into the following six main categories based on common characteristics:

• Developer contributions: The category includes techniques that generate revenues for an infrastructure project by collecting fees from private developers. It includes two techniques: impact fees and negotiated exactions.
• Transportation utility fees (TUFs): TUFs are unique in that they generate revenues by levying fees on property owners or building occupants. This value capture technique is categorized separately.
• Special taxes and fees: This category includes techniques that generate revenues by imposing or capturing an additional tax or fee. It includes four techniques: special assessment districts (SADs), business improvement districts (BIDs), sales tax districts, and land value taxes.
• Tax increment financing (TIF): This category covers techniques that capture the incremental growth of tax revenue in a specific area or district.
• Joint development: This category includes techniques in which governments work together with developers to improve the use of land above or near an infrastructure development. It includes three techniques: at-grade joint development, above-grade joint development (also known as air rights), and utility joint development.
• Naming rights: Naming rights involves an agency selling the rights to name infrastructure to a private company.

Table 3 summarizes some of the main features of each of the value capture techniques. This table is intended to help practitioners narrow the range of appropriate value capture techniques for their project. The table indicates whether the technique is more commonly used to fund capital expenditures or O&M costs, the extent to which the technique has been successfully used for highway and road projects in the United States, whether it is more commonly used to fund or finance projects (see Chapter 2 for a detailed discussion of funding versus financing), the revenue potential of the technique, the timing of the revenue (whether funds are received somewhat immediately or delayed), the ease of implementation, and the degree of political acceptance. Further information on each value capture technique - including specific political, economic, market, legal, and implementation considerations - is provided in Chapters 4

through 9.

Table 4 and Table 5 also provide an overview of the case studies presented in the Manual to allow practitioners to easily reference real-world examples where specific value capture mechanisms were successfully applied.

3.1 Overview of Value Capture Techniques and Main Features

Table 2 presents the value capture techniques discussed in the Manual and provides a short definition.

Table 3 provides an overview of some of their key features.

Table 2. Overview of Value Capture Categories, Techniques, and Definitions

Category	Technique	Definition
Developer Contributions	Impact Fees	Fees imposed on developers to help fund additional public services, infrastructure, or transportation facilities required due to the new development.
	Negotiated Exactions	Negotiated charges imposed on developers to mitigate the cost of public services or infrastructure required as a result of the new development.
Transportation Utility Fees	Transportation Utility Fees	Fees paid by property owners or building occupants to a municipality based on estimated use of the transportation system.
Special Taxes and Fees	Special Assessment Districts	Fees charged on property owners within a designated district whose properties are the primary beneficiaries of an infrastructure improvement.
	Business Improvement Districts	Fees or levies charged on businesses within a designated district to fund or finance projects or services within the district's boundaries.
	Land Value Taxes	Split tax rates, where a higher tax rate is imposed on land than on buildings.
	Sales Tax Districts	Additional sales taxes levied on all transactions or purchases in a designated area that benefits from an infrastructure improvement.
Tax Increment Financing	Tax Increment Financing	Charges that capture incremental property tax value increases from an investment in a designated district to fund or finance the investment.
Joint Development	At-Grade Joint Development	Projects that occur within the existing development rights of a transportation project.
	Above-Grade Joint Development	Projects that involve the transfer of air rights, which are development rights above or below transportation infrastructure.
	Utility Joint Development	Projects that take advantage of the synergies of broadband and other utilities with highway right-of-way.
Naming Rights	Naming Rights	A transaction that involves an agency selling the rights to name infrastructure to a private company.

Table 3. Value Capture Techniques and Key Features

Technique	Capital Expenditure or O&M	Use for Highways and Roads	Funding or Financing	Revenue Potential	Timing of Revenue Received	Ease of Implementation	Public Acceptance
Impact Fees	Capital Expenditure	Medium	Funding	Medium	Immediate	Simple	High
Negotiated Exactions	Capital Expenditure	Medium	Funding	Medium	Immediate	Simple	High
Transportation Utility Fees	O&M	High	Funding	Low	Delayed	Moderate	Medium
Special Assessment Districts	Capital Expenditure	Low	Funding & Financing	Medium / High	Delayed	Moderate	Medium
Business Improvement Districts	O&M and Capital	Low	Funding	Low	Immediate	Moderate	High
Land Value Taxes	Capital Expenditure / O&M	Low	Funding	High	Delayed	Difficult	Low / Medium
Sales Tax Districts	Capital Expenditure	Medium	Funding & Financing	High	Delayed	Moderate	Medium
Tax Increment Financing	Capital Expenditure	Medium	Funding & Financing	Medium / High	Delayed	Moderate	Medium
Joint Development (including at-grade, above-grade, and utility joint development)	Capital Expenditure	Medium	Funding & Financing	Medium	Immediate or delayed	Simple / Moderate	Medium
Naming Rights	Capital Expenditure / O&M	Medium	Funding	Low	Immediate	Simple	Medium / High

Further considerations related to each value capture technique are provided in Chapters 4 through 9 of the Manual.

3.2 Guide to Examples and Case Studies

Table 4 provides an overview of the examples and case studies included in this Manual. Table 5 provides an overview of the same examples and case studies based on which mode is considered.

3.2.1 Examples and Case Studies by Value Capture Technique

Table 4. Implementation Manual Examples and Case Studies

Example or Case Study	Page	Type of Value Capture Technique
		Impact fees	Negotiated Exactions	Transportation Utility Fees	Special Assessment Districts	Business Improvement Districts	Land Value Taxes	Sales Tax Districts	Tax Increment Financing	Joint development			Naming Rights
										At-Grade	Above- Grade	Utility
Arapahoe County, CO, Rural Transportation Impact Fee	Example 2	X
Atlanta BeltLine	Appendix								X
Metropolitan Atlanta Rapid Transit Authority	Example 16									X	X
Bellevue, WA, Bel-Red Project	Appendix	X
Bozeman, MT, Impact Fees Program	Appendix	X
Chicago, IL, Tax Increment Financing Program	Example 11								X
Colorado E-470	Appendix	X	X					X
Columbus, OH, The Cap at Union Station	Appendix										X
El Paso, TX, Transportation Reinvestment Zones	Example 13								X
Hays County, TX, Transportation Reinvestment Zones	Appendix								X
Los Angeles, CA, Business Improvement Districts	Example 8					X
Los Angeles, CA, Streetcar	Example 6				X
Missouri Transportation Development Districts	Example 10							X
Missouri U.S. 63 Sales Tax District	Appendix							X
Ohio DOT Naming Rights Initiatives	Example 18												X
Oregon Transportation Utility Fees	Example 4			X
Osceola County, FL, Roadway and Bridge Program	Example 1	X
Pittsburgh and Pennsylvania Split Rate Tax	Example 9						X
Reno, NV, I-80 Air Rights Project	Example 15										X
San Francisco, CA, Transportation Sustainability Fee	Example 3	X
Seattle, WA, Streetcar	Example 7				X
Utah DOT Broadband Program	Example 17											X
Virginia Route 28 Special Tax District	Appendix				X
Washington, DC and Virginia Silver Line/Dulles Metrorail Corridor	Appendix				X
Washington, DC, New York Avenue Metro Station	Example 5				X
Washington, DC, Capitol Crossing	Appendix										X
Yankton County, SD, Tax Increment Financing	Example 12								X

3.2.2 Examples and Case Studies by Mode and Sector

Table 5. Examples and Case Studies by Sector

Example or Case Study	Page	Mode of Transportation			Development Type
		Highway and Road	Transit and Rail	Multi-Modal and Other1	Urban	Suburban	Rural
Arapahoe County, CO, Rural Transportation Impact Fee	Example 2	X					X
Atlanta BeltLine	Appendix		X	X	X
Metropolitan Atlanta Rapid Transit Authority	Example 16		X		X
Bellevue, WA, Bel-Red Project	Appendix	X		X	X	X
Bozeman, MT, Impact Fees Program	Appendix	X				X	X
Chicago, IL, Tax Increment Financing Program	Example 11		X	X	X
Colorado E-470	Appendix	X				X	X
Columbus, OH, The Cap at Union Station	Appendix	X			X
El Paso, TX, Transportation Reinvestment Zones	Example 13	X			X	X
Hays County, TX, Transportation Reinvestment Zones	Appendix	X				X
Los Angeles, CA, Business Improvement Districts	Example 8			X	X
Los Angeles, CA, Streetcar	Example 6		X		X
Missouri Transportation Development Districts	Example 10	X				X	X
Missouri U.S. 63 Sales Tax District	Appendix	X					X
Ohio DOT Naming Rights Initiatives	Example 18	X			X	X	X
Oregon Transportation Utility Fees	Example 4	X				X	X
Osceola County, FL, Roadway and Bridge Program	Example 1	X				X	X
Pittsburgh and Pennsylvania Split Rate Tax	Example 9	X	X	X	X	X	X
Reno, NV, I-80 Air Rights Project	Example 15	X			X	X
San Francisco, CA, Transportation Sustainability Fee	Example 3		X		X
Seattle, WA, Streetcar	Example 7		X		X
Utah DOT Broadband Program	Example 17	X				X	X
Virginia Route 28 Special Tax District	Appendix	X				X	X
Washington, DC and Virginia Silver Line/Dulles Metrorail Corridor	Appendix		X		X	X
Washington, DC New York Avenue Metro Station	Example 5		X	X	X
Washington, DC, Capitol Crossing	Appendix	X			X
Yankton County, SD, Tax Increment Financing	Example 12	X					X

1 Multi-modal includes multiple modes of transportation, including bike lanes and pedestrian facilities.

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