Value Capture Implementation Manual

August 2019
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6 Special Taxes and Fees

This chapter provides an overview of techniques that involve special taxes and fees, including special assessment districts (SADs), business improvement districts (BIDs), land value taxes, sales tax districts, and tax increment financing (TIF).

6.1 Special Assessment District

Agencies may consider special assessments especially when substantial funding is required for an infrastructure investment that is expected to generate property value increases property owners can tangibly recognize.

Opportunities: SADs may generate substantial revenues to fund and finance projects.

Challenges: SADs may require significant outreach, and implementation costs may be high.

6.1.1 Overview

Definition: SADs are a funding technique under which a fee is charged on property owners within a designated district whose properties are the primary beneficiaries of an infrastructure improvement.

Alternative Terms: SADs are also known as benefit assessment districts (California), local improvement districts (Washington), community improvement districts (Missouri), downtown improvement districts, transportation improvement districts (Virginia, Ohio), and special service areas (Illinois).

6.1.2 Sectoral Uses

Highways and Roads: Roadway improvements are an authorized use of special assessments. In Michigan, for example, the Road Commission for Oakland County created an assessment district that enabled property owners along residential county roads to repave their streets. Property owners were allowed a 10-year period to pay off their assessments. 77 Another example is the Route 28 Highway Transportation Improvement District in Northern Virginia, as described in Appendix Section X.

Transit: In the 1980s, cities such as Los Angeles, CA, and Washington, DC started using special assessments to finance new rail projects. Seattle, WA, and Portland, OR, have also used special assessments to finance streetcars and light rail. In Portland and Seattle, assessments paid for 17 percent 78 and 50 percent of the capital costs of streetcar projects, respectively. 79 Fairfax and Loudoun counties in Virginia funded one-fifth of the $5.7 billion Dulles Metrorail extension through assessment fees, as discussed in Appendix Section VIII.

Other Sectors: Assessment districts can be used for water systems, sewer systems, waste disposal and collection, public parks, street lighting, and the maintenance of sidewalks and bicycle paths, among others. 80

6.1.3 Implementation and Funding

Structure and Timing of Funds: Assessment fees are based on real estate valuation, including property value, parcel size, street frontage and use, and other characteristics as shown in Sidebar 4. 81 Fees are often tiered to reflect the fact that properties closer to an improvement experience greater benefit than those that are farther away. The value obtained by property owners as a result of the improvement is typically measured in reductions in travel time and travel costs. 82 Assessment charges are usually collected annually. In some cases, property owners have the option to pay the fees up front or over a longer period.

  • The benefits assessed or increased value method estimates the increase in property value to calculate the assessment amount.
  • The zone method uses proximity to the amenity to determine the assessment amount. For example, properties may be divided into zones depending on infrastructure proximity, with the fee rate increasing with greater proximity.
  • The area method makes assessments proportional to the building area or to the size of the land parcel on which the property is located. 83

Source and Use of Funds: Taxes are typically levied on businesses, with residential property exempted. Assessment fees are typically used to close funding gaps in capital and maintenance budgets. 84 Special assessments offer a stable revenue source and can amount to significant revenues. Implementing agencies can spend assessment funds as they are collected (pay-as-you-go) or use assessment-backed bonds to fund the project (pay-as-you-use), as described in Chapter 13. The latter allows assessment fees to finance a project's capital costs. To ensure that assessment revenues do not decline in real dollars, fees may include an escalation rate that may approximate the interest on the bonds or the consumer price index. 85 86

Management of Funds: Special assessments are collected in property tax bills. Therefore, municipalities may still apply assessments to fund or finance infrastructure even if they have reached their property tax limits. 87 Fees are usually required to be segregated into a separate fund that can only be drawn upon for project-related costs.

Ease of Implementation: Similar to TUFs, municipalities can use existing collection and enforcement processes to collect assessment fees, incurring little to no additional costs. 88 Implementing SADs is easier when the majority of land within the designated area is held by a few landowners. Negotiating required agreements with numerous small parcel owners can be costly and ineffective.

6.1.4 Legal Considerations

Enabling Legislation: Special assessments are authorized in all 50 States, either under explicit enabling legislation or under State constitutional provisions. 89 Approval is also required by a majority of the affected property owners. 90 In many jurisdictions, the creation of an SAD requires an ordinance by the city or town council after a majority of the landowners within the proposed district submits a petition requesting that an assessment district be created, or, after the council passes a resolution stating its intention to form a SAD. 91

Legal Basis: For SADs, 1) the type of property expected to benefit from the infrastructure improvement must be specified, 2) there must be reasonable nexus or demonstrable relationship between the improvement and the enhanced real estate value within the district, and 3) the geographic area must be defined and justified. 92 As with all value capture techniques, practitioners are advised to consult with legal counsel familiar with the case law in their State.

The assessment fee should also be proportional to the special benefit received. The "special benefit" is calculated by taking the difference in the value of property before and after the improvement. The difference, measured in percentage terms, should be greater than the overall rise in property values in the jurisdiction. The assessment on a property within the SAD cannot be greater than the special benefit that the property ultimately receives. 93

A unique characteristic of a SAD is that it typically enjoys a legal benefit known as the "presumption of validity." This means that it is more challenging and typically also more expensive for citizens to appeal an assessment fee than to appeal an ad valorem 94 property tax. There may only be limited windows during which special assessments can be appealed. 95

Federal Requirements: Agencies utilizing these mechanisms, which wish to maintain Federal eligibility, must meet Federal requirements, including property management and Uniform Act requirements. These are discussed in Section 12.3.

6.1.5 Market Considerations

Challenges: Assessment revenues face real estate market risks, which are particularly important when they are used to back bond financing.

Opportunities: Assessment revenues are generally less volatile than tax increment financing revenues. The U.S. capital markets are more likely to accept bonds secured primarily or solely by SAD revenues. For more detail, refer to the Dulles Metrorail case study in Appendix Section VIII.

6.1.6 Political Considerations

Challenges: Approval by a majority of property owners is needed to establish a SAD. Significant resources are often required to build local support, requiring the benefits to be obvious and apparent.

Opportunities: SADs can be a useful tool to create local support. As shown in the case of the Washington, DC, Metropolitan Area Transit Authority (see Example 5), and Los Angeles, CA, streetcar (see Example 6) dedicated non-profit entities can be formed to promote the project to stakeholders and property owners. The commitment can then be used to leverage Federal and State funds. 96

6.1.7 Economic and Equity Considerations

Challenges: SADs may be subject to equity concerns. Property owners within the district may argue that it is inequitable that their neighbors outside the district or future residents are not required to pay the fee, even though they partially benefit from the infrastructure improvement. The impact of assessment fees on lower income residents' ability to pay should also be carefully considered.

Opportunities: Assessment districts may promote economic efficiency by placing the burden of funding the project on the project's beneficiaries. They may also be considered more equitable if the fee rate is proportionate to the property's distance from the infrastructure facility, such that properties that experience a greater benefit pay more and vice versa. Exemptions or discounts can also be imposed to reduce the burden on low-income or senior households.

6.1.8 Case Studies

Washington, DC's Metropolitan Area Transit Authority (Example 5) illustrates how a new transit station funded through a SAD resulted in a significant rise in property values and increased sales. It also shows how local non-profit entities can help build local support for a project funded through a SAD.

Example 5: A DC Non-Profit Works to Support a SAD

In the 1990s, the area north of Massachusetts Avenue in Washington, DC, primarily consisted of empty freight rail yards, abandoned buildings, and vacant lots. The population of 6,000 had a median income of $23,396, with 24 percent of residents living below the poverty level. The Washington Metropolitan Area Transit Authority's Red Line passed through the area, which was located between Union Station and Rhode Island Avenue stations but did not have a stop. In 1998, urban planners identified the area as a prime location for development, giving it the name "NoMa."

After a feasibility study confirmed the station's viability, local landowners became interested in the project. However, significant outreach efforts were still required. The DC Department of Housing and Community Development's New York Avenue Task Force (later named Action 29 - New York Avenue Metro Station Corporation) led the outreach efforts, which included monthly meetings with stakeholders such as business owners, government officials, community members, and environmental groups. Landowners were also educated on the impact of transit improvements on land values. The non-profit group received $140,000 from the private parties and a $100,000 grant from the district government to fund their outreach efforts, which resulted in significant enthusiasm for the project and almost no resistance.

In December 1998, private landowners agreed to contribute $25 million to the project through a SAD. The remaining funds for the $104 million project came from District of Columbia and State funds. In 2001, the District of Columbia Council passed the New York Avenue Metro Special Assessment Authorization Emergency Act to create the SAD and allow the District to collect the assessment. The assessment district was defined as commercially zoned parcels that were within 2,500 feet of the entrances to the station but not within 1,250 feet of Union Station. The tax was charged and collected on top of existing property taxes. In 2002, the District started collecting the taxes.

One of landowners' motivations to agree to the assessment district was the government's visible commitment to the area. The District of Columbia agreed to match the contribution by private landowners, contributing $25 million and an additional $6 million to improving planned bicycle and pedestrian trails. 97

The New York Avenue-Florida Avenue-Gallaudet University Metro station opened in November 2004. As of September 2017, NoMa has over 13.2 million square feet of office space and more than 4,800 new apartments. More than 54,000 people work in NoMa every day, and more than 44,000 people live in the greater NoMa neighborhood. 98

The Los Angeles, CA, streetcar project in Example 6 illustrates the creation of a SAD to back a bond issued to finance project capital costs. It also illustrates the significant efforts required to build local support for a project funded through a SAD.

Example 6: Los Angeles Streetcar Uses SADs for Funding

Since 2011, the city of Los Angeles, CA, and the LA Metro have worked on a streetcar system for downtown Los Angeles. The project consists of a 3.8-mile loop that serves many downtown districts and destinations. The $290 million project is expected to be funded through a SAD, funds from the Los Angeles Department of Transportation, and a $100 million Federal Transit Administration Small Starts grant. 99 100 101 102

In December 2012, local businesses voted overwhelmingly in favor, by 72.9 percent, of a special tax assessment, officially called the "City of Los Angeles Community Facilities District No. 9 (Downtown Streetcar)." 103 The measure allows for a "not-to-exceed $85 million community facilities district bond," which includes $62.5 million of construction capital as well as 2 years of capitalized interest, bond issuance costs, reserve fund, and other costs. 104

Properties in the district will be taxed based on their proximity to the streetcar line and on their size. A 10,000 square-foot parcel directly on the route will pay $4,490 annually, properties one or two blocks from the streetcar line will pay $3,640, and properties three blocks away will pay $1,730. Condominium units will be charged their unit's proportional share of the underlying land, like the structure of most homeowner association fees. Most will pay less than $100 a year, and the median will pay $60 annually. 105

In late 2016, 30 percent design or preliminary engineering was completed and the environmental impact report was approved and certified. In August 2018, the Los Angeles City Council approved the financial plan for the streetcar and, 3 months later, the State government approved its grant. 106

Proponents of the project have stated that the project is still on track to start service by July 2021. 107 108 109

This case highlights the importance of strong public outreach for the establishment of a tax district. L.A. Streetcar Inc. (Streetcar or LASI), a non-profit formed to promote the project, worked with property owners for more than 4 years. They held outreach events to educate potential voters prior to the 2012 vote organizing meetings, presentations, a "Taste of Streetcar" event, and a screening at the new Grand Park. In August 2012, they launched a voter registration and streetcar education campaign related to the community facilities district. As a result of their efforts, the number of registered voters increased from 7,497 on May 21, 2012, to 10,283 on November 1, 2012 - a 37.2 percent increase. 110 The general counsel for LASI noted that "the more people knew and understood the streetcar and why it's important for Downtown, the more strongly they supported the streetcar." 111 In the past year, however, support for the LA streetcar has waned, illustrating the impact of frequent project delays and funding shortfalls on public support for a project. 112 113 114

In the case of the Seattle, WA, streetcar (Example 7), a SAD (known as a local improvement district in Washington) was able to fund up to half of project costs. This case shows how property owners can be provided with alternative structures for paying their assessment fees.

Example 7: For Seattle Streetcar, Property Owners Choose Assessment Schedule

The Seattle South Lake Union Streetcar, which was completed in 2007, was part of a larger investment intended to revitalize the South Lake Union neighborhood in Seattle, WA. In 2005, property owners approved a local improvement district (LID). The district contributed $26.2 million toward construction costs, almost half of the total project cost of $56.4 million, with the remaining project funds coming from Federal and State funds. 115 An additional $700,000 in assessment revenue was used to create, maintain, and operate the LID program. LID revenues can only act as a funding source for capital expenditures (or to repay debt services on the bonds) and not to fund O&M costs. 116

Property owners were provided with the option to pay the assessment fees up front or during an 18-year period, at a 4.4 percent interest rate. The annual payment was $115 per $1,000 of assessment in 2007, declining to $59 per $1,000 of assessment in 2024. 117 If a property was sold before the full fee had been paid, the entire balance would be payable at closing. The 18-year payment option and the associated interest rate reflected the tenure and interest rate of the general obligation bonds issued by the city to fund the project's capital costs.

During the 5-year planning and construction phase, properties within three blocks of the streetcar line saw a median property value increase of 123 percent, compared to 53 percent citywide, highlighting the success of the assessment mechanism to fund the streetcar.

6.1.9 Decision-Making Tool

The following decision-making tool was created as a resource for implementing agencies in assessing the appropriateness of a SAD for their project and jurisdiction.

Table 7. Decision-Making Tool for SADs
Focus Area Questions for Decision Makers Possible Next Steps
Market
  • Have SADs been used in the municipality?
  • If yes, research the extent to which private landowners were supportive of SADs. Consider the extent to which circumstances may be similar or dissimilar.
  • If no, undertake market research to understand how SADs were received in cities with similar dynamics. Organize discussions with property owners to obtain their views related to the SAD.
  • Has the implementing agency studied the real estate market risks associated with the assessment fees?
  • If no, consider undertaking a risk assessment to understand the potential real estate risks associated with assessment fees. Prepare to include the assessments in revenues by having analysts account for this in their forecasts and by including preemptive backstop measures/clauses.
Legal
  • Has the local government reviewed the State enabling legislation and any relevant local legislation for establishing a SAD?
  • Consider reviewing relevant State and local jurisdiction legislation for establishing SADs. In many jurisdictions, the local government must either pass a resolution stating its intention to form a SAD or must receive a petition from landowners requesting the establishment of a SAD. Subsequently, in most jurisdictions the local government is then required to read an ordinance at a public hearing announcing the formation and main parameters of the SAD.
  • Has the municipality specified the type of property expected to benefit from the infrastructure and defined and justified the geographic area?
  • If no, consider additional planning to ensure that the SAD sufficiently meets legal requirements.
  • Is the local government able to demonstrate a reasonable nexus between the improvement and the enhanced real estate value within the district?
  • Consider whether legal advice may be required in order to build a strong legal basis for the establishment of the district.
Economic and Equity
  • Has the implementing agency considered how the value obtained by property owners as a result of the improvement will be measured?
  • Consider hiring advisors at regular intervals to assess the expected value obtained by property owners as a result of the improvement, often measured in reductions in travel time and travel costs. This will help build a justification for the SAD and define its boundaries.
  • Has the implementing agency considered how the project will benefit the community - what is the economic value of the project?
  • Does the proposed assessment district further the local government's economic and social objectives for the area?
  • If yes, consider creating public awareness about how the SAD will further the area's economic and social development.
  • If no, consider the extent to which an altered district scope may better meet economic and equity objectives for the area.
Political
  • Does the implementing agency expect there to be support among affected property owners for the SAD?
  • If the proposed assessment district was the result of a petition by property owners, then there is already a basis of support for the district. Nevertheless, the implementing agency may still find opposing voices among affected owners.
  • Consider developing a strategy for engaging with affected property owners to build the required support for the technique, including clearly articulating the value and benefits obtained by property owners from the improvement.
  • Consider creating a non-profit organization to lead outreach efforts.
  • If there is a precedent for public resistance to SADs, consider examining the reasons for public resistance and the extent to which lessons learned can be derived.
  • Has the implementing agency considered ways in which assessment funds may be matched by the State government to increase funding for the improvement project?
  • Support from the State government shows the government's commitment to the area, which may increase confidence and support among property owners.
Implementation & Funding
  • Has the local government considered the most appropriate method for determining the value of the assessment fees?
  • Consider hiring external advisors to determine the most appropriate method for determining the amount and location of the assessment fees, whether based on property value, parcel size, street frontage, or use.
  • Consider whether tiered fees may be appropriate to reflect the fact that properties closer to an improvement experience greater benefit than those that are farther away.
  • Consider whether property owners will have the option to pay fees up front or over time at a rate of interest.
  • Has the local government considered how it will collect and manage the assessment fees?
  • Consider whether existing collection and enforcement processes can be used to collect enforcement fees.
  • Consider how fees will be segregated into a separate fund that can only be drawn upon for project costs.

6.2 Business Improvement District

Agencies may consider business improvement districts when business owners wish to see improvements in infrastructure or services in their district and are willing to pay for them.

Opportunities: Business improvement districts are locally driven, have significant autonomy, and are relatively easy to establish.

Challenges: Business improvement districts are not necessarily suited to supporting larger infrastructure investments.

6.2.1 Overview

Definition: Business improvement districts (BIDs) are a type of assessment district that involves a partnership between the local government and local businesses. In a BID, businesses within a defined geographic area pay an additional tax or levy to fund or finance projects or services within the district's boundaries. Generally, a BID's revenue is used to fund infrastructure or services that may be currently underfunded, 118 such as ensuring security or safety, cleaning streets, recycling and waste collection, or pedestrian and streetscape areas. BIDs typically have a broader scope and mandate than SADs. The rationale behind a BID is that businesses can be assessed a differential tax rate based on a special benefit that is conferred to them by being part of the district. BIDs have numerous benefits: they are locally driven and therefore can determine their own priorities and action areas, businesses are represented and can decide what they want for the area, and BIDs can provide networking opportunities for local businesses. 119

Alternative terms: BIDs are also known as business improvement areas, business revitalization zones, or community improvement districts.

6.2.2 Sectoral Uses

BIDs often dedicate their efforts to smaller projects related to street maintenance, pedestrian and bike facilities, or parking management. For example, the BID in Amherst, MA, included in its transportation mandate four projects: a five-college shuttle bus, bike storage, a valet program, and parking management. 120 In London, United Kingdom, at least three BIDs are active in initiatives related to urban freight transport. 121

BIDs have been more active in supporting ancillary investments to transportation (such as parks, lighting, and safety) than contributing to actual transportation projects. BIDs typically contribute to services such as street lighting, parks and landscaping, garbage clean-up, beautification efforts such as graffiti removal, pedestrian and bike facilities, safety and crime prevention, as well as events in the district.

6.2.3 Implementation and Funding

Structure and Timing of Funds: Most BIDs operate on the basis of annual charges for a defined period, for example, 5 or 10 years. The fee amounts are calculated based on formulas that approved both by the BID and the local government.

Source and Use of Funds: Fees are collected from businesses in the district. Residential properties may also contribute but are usually exempt. Revenues can only be used for infrastructure and services within the district's boundaries. Often, BIDs can only fund services beyond those provided by the local government.

Management of Funds: Fees are typically collected by the local government and then returned in full to the BID periodically. Often, BIDs also collect their own revenues from event ticket sales, private grants, or parking revenues, which are directly retained by the district.

Ease of Implementation: BIDs require significant commitment to manage. Some have paid staff that manage day-to-day activities, while others operate only with volunteers. 122 Once established, BIDs have a high degree of autonomy, which allows them to rapidly implement plans. They can bring together significant skillsets that reside within the district, including political access, financial expertise, and marketing and promotional experience. 123 BIDs should operate long enough to give them a fair chance to succeed, typically at least for 5 years. In addition, investing in the relationship between the local government and the business improvement district also improves chances for success. Some relevant questions are listed in Sidebar 5. 124

  • How will the BID benefit transportation within the city or jurisdiction?
  • In which areas can the city or local government provide support to the BIDs?
  • Are the local government and city in favor of the district?
  • Is the city willing to help the district secure outside funding sources, such as Federal or State funds, and can the city provide any technical support?
  • Does the BID want to contract with the city for supplemental services and/or assume responsibility for services traditionally provided by the city, such as snow removal?
  • How can the BID ensure that local government will not cut back on existing services and hand over responsibility to the district?
  • How will the business improvements help business within the BID?
.6.2.4 Legal Considerations

Enabling Legislation: BIDs must comply with statutory requirements.

Legal Basis: A BID is a political subdivision of a State, county, or municipal government. Within its boundaries, the BID operates as a form of local government that can organize and implement activities. Where BIDs have been successful, generally State laws outline the types of services a BID can provide, the procedures that should be followed for its formation, and the period of time it can be in place. Typically, a specific percentage of property owners must agree with and petition for the district. In addition, the district must comply with zoning regulations. A BID usually may not be established in a primarily residential area. As with all value capture techniques, practitioners are advised to consult with legal counsel familiar with the case law in their State.

6.2.5 Market Considerations

Challenges: BIDs may exacerbate city inequalities by incentivizing business to relocate to the district and possibly not generating additional revenue for the city as a whole - just relocating the revenue source. This may leave other city areas underdeveloped and underfunded.

Opportunities: Many BIDs actively promote the district, organize special events, and recruit new business to relocate to it. By investing in new infrastructure and services, businesses may be incentivized to move to the district. This may result in new market dynamics, including increases in property values in the district itself. 126 In addition, because many municipalities are dependent on taxes collected downtown, the city's fiscal prosperity will benefit from improved economic performance.

6.2.6 Political Considerations

Challenges: BIDs can be controversial. Critics argue that they are undemocratic, because they exclude residents and concentrate decision-making power in the hands of a few businesses. To reduce the risk of public opposition to a BID, a strong foundation of outreach from the outset is essential.

Opportunities: For a BID to be successful, property owners and merchants will need to be convinced that they will receive tangible benefits from being members. Thoughtful outreach, education activities, and careful and comprehensive planning will be required. Property owners, merchants, and citizens should be informed about the benefits of the district and how much they will need to pay. BID organizers should be prepared to demonstrate a clear correlation between the assessments paid and the benefits obtained from the district. 127

Studies have also shown that homogeneity among the types of properties in the district or, at the very least, homogeneity among their service and spending preferences, results in a more successful BID. 128 When residents and businesses have common interests, BIDs are more likely to succeed.

6.2.7 Economic and Equity Considerations

Challenges: Because BIDs are created to serve businesses, they may not consider equity concerns such as the provision of affordable housing options. 129 They may also exacerbate inequalities by incentivizing business to relocate to the district, leaving other areas of the city underdeveloped and underutilized and not generating additional revenue for the city as a whole.

Opportunities: By making downtown districts more attractive, BIDs may generate job growth and make the city more attractive, improving property values. BIDs have shown some success in reducing crime and increasing safety in cities. 130

6.2.8 Case Studies

Example 8 shows how BIDs in Los Angeles, CA, that prioritized safety and crime prevention had significant success.

Example 8: Business Improvement Districts Help Reduce Crime in Los Angeles

Between 1994 and 2005, 30 BIDs were established in neighborhoods in Los Angeles, CA. Several academic studies reported a significant decrease in violent crimes in the neighborhoods in which BIDs were established. A 2010 study found that the implementation of a BID was associated with a 12 percent reduction in the incidence of robbery and an 8 percent reduction in the incidence of violent crimes. 131 The authors indicated, however, that their establishment was "not a panacea," and highlighted the importance of "targeting business improvement district efforts to crime prevention interventions." 132 A 2008 study similarly found that BIDs in Los Angeles had reduced crime by 6 to 10 percent, attributing it to their ability to overcome a collective action problem. It also noted that BIDs had spent $21,000 on average to avert one violent crime, substantially lower than the $57,000 social cost of a violent crime, which suggests that investments in crime prevention through a BID are generally cost-effective. 133

6.2.9 Decision-Making Tool

Implementing agencies can use the decision-making tool in Table 8 to consider the appropriateness of a BID for their jurisdiction.

Table 8. Decision-Making Tool for Business Improvement Districts
Focus Area Questions for Decision Makers Possible Next Steps
Market
  • Have business improvement districts (BIDs) been used in the same city or jurisdiction?
  • If yes, research the extent to which businesses and developers were supportive of the BIDs. Consider the extent to which circumstances may be similar or dissimilar.
  • If no, undertake market research to understand how BIDs were received in cities with similar dynamics. Organize discussions with businesses to obtain their views.
Legal
  • Has the municipality reviewed relevant regulation to understand which types of services a BID can provide, the procedures that must be followed and the period of time that can be in place?
  • The local government may consider advising the organizers of the BID on the legal requirements related to the district to facilitate its establishment.
  • Does the relevant local or State regulation allow the BID to pursue the types of projects and services that it is proposing?
  • If no, then the scope of the BID may need to be defined. Seeking examples of BIDs in jurisdictions with similar regulations may help redefine the scope and mandate of the district.
Economic and Equity
  • Does the vision of the BID and its proposed activities and services align with the local government or city's economic and social goals?
  • Consider creating public awareness about the BID, including for residents outside the district.
  • Consider how the relationship between the BID and the local government will be maintained and which channels of communication will be used to ensure goals are aligned.
  • If no, consider how the local government or city might work together with the BID to ensure a common vision for the area.
Political
  • Has political resistance to BIDs or other SADs been an issue in the city or jurisdiction?
  • If yes, consider undertaking research and conducting first-hand interviews with relevant stakeholders to understand the cause of public resistance in those other districts and the extent to which those causes can be mitigated.
  • Even if previous districts did not face public resistance, public outreach is still essential to ensure the success of a BID.
  • Is the public educated and aware of the purpose and benefits of a BID?
  • Consider how outreach activities can be organized to build support for the BID, including organizing events, publishing plans for it, or highlighting BID successes in other cities.
Implementation & Funding For the local government or city:
  • Has the city reviewed (and if so, suggested changes to) the proposed geographic scope for the BID?
  • Has the local government reviewed (and, if relevant, suggested changes to) the proposed vision, mandate, and activities for the BID?
  • Has the local government confirmed its role in collecting and managing funds? Will it collect funds and periodically transfer them to the BID? If so, how often?
  • Has the local government or city considered whether Federal or State funds can help complement revenues from the BID? Can it assist the BID in obtaining those funds?
  • Local governments or cities are encouraged to take a proactive role in collaborating with the BID organizers. This increases the likelihood that it will receive community support and that its activities will align with public economic and social goals.
For the organizers of the business improvement district:
  • What is the vision for the BID? What services, improvements, and activities will it provide?
  • How much will the proposed services and improvements cost?
  • How will fees be structured? How much will individual businesses pay? Who will be exempt?
  • Can the geographic boundaries of the BID be justified in terms of tangible benefits to property owners and tenants/merchants?
  • How long will the BID operate?
  • Does the BID need to hire staff to manage day-to-day activities? How will it manage volunteers?
  • BID organizers are encouraged to seek best practices from successful districts across the country to develop an appropriate vision and mission, scope of services, fee structure, geographic boundary, and organizational structure.
  • Organizing and administering a successful BID requires public approval and oversight. Organizers are encouraged to work together with government officials to ensure that both public and private objectives are met. Organizers are encouraged to meet with officials early on in the process and provide examples of how BIDs have improved neighborhoods in similar areas to secure public support.
  • BIDs are more likely to be successful if business leaders have worked together successfully in the past. Organizers may wish to find avenues for successful collaboration among business leaders to lay the groundwork for the establishment of a BID in the future.

6.3 Land Value Tax

Agencies may consider a land value "split rate" tax to enhance economic efficiency in the tax system and when property tax increases are controversial.

Opportunities: Taxing land at a higher rate than property is considered more economically efficient and equitable than taxing land at a lower rate than property.

Challenges: Land value taxes are often misunderstood and require significant outreach and education to implement. Because of their limited use to date, implementation costs may be high.

6.3.1 Overview

Definition: A land value tax can come in two forms: 1) a tax that is only imposed on the value of land, a pure land value tax, considered mainly for theoretical purposes; 134 or 2) a split tax rate, where a higher tax rate is imposed on land than on buildings. 135 136 137 This Manual considers a split-tax system.

Alternative terms: N/A.

6.3.2 Sectoral Uses

Highways and Roads: The nature of the land value tax makes it difficult to use it to fund a single project; rather, it is more appropriate as a transportation program funding source. A significant portion of transportation funding currently comes from the property tax. 138 A split tax system in which land would be taxed at a higher rate than property could theoretically raise significant funds for a transportation program. 139

6.3.3 Implementation and Funding

Structure and Timing of Funds: Although practical examples are limited, land value taxes would likely be collected in a similar manner as property taxes.

Source and Use of Funds: Split-rate tax systems impose taxes on landowners as well as on property owners, with the rate on land being higher than that on property. Section 6.3.7 explains why it makes economic sense to tax land at a higher rate.

Management of Funds: Although practical examples are limited, land value taxes would be managed in a similar manner to property taxes since they are based on land only, which is a part of property value.

Ease of Implementation: A split-rate tax system should be seen more as an overall reform of the tax program to fund broader programs than as a funding source for a specific project. Such a tax reform requires significant political will and resources to implement, especially since there is limited practical experience with this technique in the United States. Accurately assessing land value may also be a significant challenge for governments. 140

6.3.4 Legal Considerations

The return on land value is embedded within a property tax. Some State constitutions require that all taxpayers be taxed in an identical manner. In these States, taxing land and buildings at different rates is prohibited. A land value tax, therefore, is first enacted by State and local officials and any applicable statutory or regulatory requirements or prohibitions must be considered. 141 142 As with all value capture techniques, practitioners are advised to consult with legal counsel familiar with the case law in their State.

6.3.5 Market Considerations

Opportunities: A split-rate property tax would influence developer behavior, likely leading to denser development, as developers build more to recover expenses. 143

6.3.6 Political Considerations

Challenges: Because land value taxes are not well understood among the public, local governments may need to invest significant efforts in outreach activities. In addition, a revenue-neutral change in tax will have winners and losers, meaning that some taxpayers will have an interest in preserving the status quo. Any local government considering this technique will therefore need to invest in education and outreach activities. 144

Opportunities: Land value taxes may be less controversial than property taxes.

6.3.7 Economic and Equity Considerations

Opportunities: Land value taxes may have positive impacts on equity and economic efficiency. By placing the tax burden on a fixed, public asset - land - instead of private assets such as buildings, a land value tax does not create the same distortions as traditional taxes and provides incentives to create dense and compact developments. A 2012 study found that split-rate taxes would lead to higher density developments in all the cities studied. 145 Dye and England note that "when a tax does not affect the amount of the commodity produced or consumed, there is no additional cost." Such a tax is therefore more efficient than other taxes that reduce production. 146 A land value tax is often considered a progressive form of tax, which incentivizes a better use of vacant land. 147

Explore in Detail

Assessing the Theory and Practice of Land Value Taxation
Dye, Richard and Richard England, Lincoln Institute of Land Policy, 2010

6.3.8 Case Studies

Example 9: Pennsylvania Split Rate Tax

Several major cities and small towns in Pennsylvania have adopted a split-rate tax. Pittsburgh, PA, enacted a split-rate tax in 1976, raising its land taxes from twice the rate levied on buildings to nearly six times greater. Other regional cities experienced a decline in new developments in the 1980s, but Pittsburgh witnessed a significant rise in commercial construction. Research has suggested that the higher land tax was one of the contributing factors to this development. 148

6.4 Sales Tax Districts

Agencies may consider sales tax districts when substantial funding is required for a specific investment that voters recognize as critical.

Opportunities: Once approved, sales tax districts generally face limited public resistance, have low implementation costs, and can raise substantial funds both for capital and O&M expenses.

Challenges: Sales tax districts are a regressive tax and may not be seen as equitable.

6.4.1 Overview

Definition: In a sales tax district, an additional sales tax is levied on all transactions or purchases in a designated area that benefits from an infrastructure improvement.

Alternative terms: In Illinois, sales tax districts are called special service areas. In Missouri and Kansas, they are called transportation development districts. In California, they are called local transportation sales taxes.

6.4.2 Sectoral Uses

Highways and Roads: Sales tax districts are a common funding source for highways and roads. Examples include the I-15 Express Lanes Project in Riverside County, CA, where a Measure A half-cent local option sales tax raised $1 billion in transportation improvement funding between 1989 and 2009; 149 the I-405 Improvement Project in Orange County, CA, where Measure M2 sales tax revenues raised $253.94 million for the project; 150 and the Loop 202 South Mountain Freeway in Phoenix, AZ, where a half-cent sales tax raised $702.4 million to fund the project. 151 Another relevant example is Los Angeles County's local half-cent sales tax (Measure R), which finances new transportation projects and programs and accelerates those already in the pipeline. 152

Many States have enacted specific types of sales tax districts for highways and roads. In California, local transportation sales taxes have been used in at least 18 counties, generating over $2 billion annually in revenue for capital, maintenance, and operational costs. 153 Example 10 illustrates how a transportation development district was used to finance improvements on U.S. 36 in northeast Missouri. 154

While not conventionally considered a value capture technique, vehicle registration fees collected from a specific district serve a similar purpose as a sales tax district. In the case of the E-470 toll road in Colorado, a vehicle registration fee was collected within E‑470's voting boundary and served as a material funding source for that major Denver-area road, especially during the start-up years, as discussed in Appendix Section VI.

Transit: Sales tax districts are one of the most common forms of revenues for transit agencies and also comprise a significant portion of revenues for capital spending nationwide. 155 A study of the 25 largest transit systems found that 15 systems received dedicated sales tax funds, totaling $4.5 billion in 2003 or 43 percent of dedicated funds. 156

Other Sectors: Sales tax districts can also be established for other sectors, such as waste collection and management.

6.4.3 Legal Considerations

Enabling legislation: Incremental sales tax rates are established by statute. Sales tax district statutes also define eligible costs sales tax funds may be used to support. 157 158 As with all value capture techniques, practitioners are advised to consult with legal counsel familiar with the case law in their State.

6.4.4 Implementation and Funding

Structure and Timing of Funds: Sales tax district revenues can be used to back bonds or loans to finance a project's capital costs. The sales tax revenues received throughout the life of the project are used to repay debt service.

Source and Use of Funds: Within a sales tax district, levies apply to nearly all consumer purchases, subject to a few exceptions. 159 As such, sales tax districts can raise substantial funds. Typically, funds will be used to finance the capital costs of a project. Sales tax districts can be used alone or in conjunction with other value capture techniques, such as tax increment financing, when further funding sources are required. 160

Management of Funds: When sales taxes back bonds, these funds are segregated into separate funds to guarantee that debt service will be prioritized and repaid.

Ease of Implementation: Sales tax revenues are relatively easy to implement and administer, in particular when existing collection approaches can be used.

6.4.5 Market Considerations

Challenges: Sales tax revenues are dependent on economic growth and may decline during economic downturns. This is a risk when sales tax revenues are used to repay bonds. Where sales tax revenues are used to fund operations, downturns may result in significant cuts in service, further exacerbating economic challenges. Another disadvantage of local sales tax districts is that residents may travel to bordering jurisdictions to make purchases in order to avoid the tax, creating negative commercial impacts.

Opportunities: If sales taxes are sufficiently small, they may not be noticeable enough to change customer behavior and may therefore have a marginal impact on commercial activity.

6.4.6 Political Considerations

Challenges: Frequently, the wider the scope of the proposed sales tax increase, the greater the likelihood of public resistance. Statewide increases in sales taxes to fund transportation programs often face opposition by communities that argue that funds are unlikely to "trickle down" to their area. Residents tend to be more supportive of sales tax increases in their own area, where the benefits are local and tangible.

Opportunities: Because sales tax districts require local voter approval, have finite terms, are used for tangible projects and require local control over revenues, they typically face less public resistance than gas taxes, because they are perceived to give citizens greater control over transportation investments. 161

6.4.7 Economic and Equity Considerations

Challenges: Because taxes are applied to most consumer purchases, they may be seen as inequitable because light transportation users may pay more per mile than heavy users. Proponents argue, however, that even these users benefit from good roads, as do non-drivers, in the form of reduced goods and services costs. 162 Sales taxes are typically seen as regressive, 163 yet they can be made less so by exempting purchases for which low-income citizens spend a greater portion of their income, such as groceries, or extending sales taxes to goods or services used by high-income consumers. 164

Opportunities: Proponents argue that transportation investments funded through sales tax revenues promote economic development, which will eventually pay for public improvements and potentially more.

6.4.8 Case Studies

Example 10 illustrates the use of sales tax districts in Missouri. It highlights a few of the legal and regulatory provisions around the establishment of a transportation development district (a type of sales tax district) and shows how sales tax revenues financed a $34.5 million loan to make improvements to U.S. 36 in northeast Missouri.

Example 10: Missouri Transportation Development Districts Fund Transportation

The Missouri Transportation Development District (TDD) Act was enacted in 1990. Under the Act, a TDD can be created to fund, promote, plan, design, construct, improve, maintain, and operate one or more projects or to assist in such activity. A TDD is limited in scope to transportation-related projects, which can range from streets and highways, parking lots, bus stops, stations, ports, airports, railroads, light rail, or other mass transit. It is established through a petition to the circuit court, which can be made by property owners, registered voters, or transportation authorities. A TDD can impose a sales tax in increments of 0.125 percent to 1 percent. The sales tax is applied to all retail sales in the district that are subject to taxation, excluding specific categories such as motor vehicles, trailers, boats, outboard motors, and utilities. It can also impose a property tax of up to 10 cents annually per hundred dollars ($100) assessed. 165 Since 2010, revenues from a TDD have been collected by the Missouri Department of Revenue. 166

Sales tax district revenues finance Missouri U.S. 36 loan: The U.S. Highway 36-Interstate 72 Corridor TDD in northeast Missouri was formed to construct 52 miles of two additional lanes on U.S. 36 from Hannibal to Macon, creating a four-lane expressway deemed necessary due to safety concerns. However, lack of funding had prevented the project's construction. In April 2005, voters in the counties of Macon, Marion, Monroe, and Shelby approved a half-cent sales tax to help fund the project. In 2008, the district entered into a loan agreement with the Missouri Transportation Finance Corporation for $34.5 million, backed by 15 years of anticipated sales tax revenues that were used to make principal payments on the loan. State funding was used to fill the remaining gap in project funding.

Sales tax collections began in January 2006. The project was completed in 2010 and full repayment of the loan occurred in July 2017, more than 3 years earlier than anticipated due to higher-than-expected revenues.

Footnotes

77 "Special Assessment District Paving Program," Road Commission for Oakland County, MI, November 2008, myfoxbay.com/RCOCSAD Brochureresized.pdf.

78 Seattle Department of Transportation and Parsons Brinckerhoff, "Seattle Streetcar Network and Feasibility Analysis, June 30, 2004, brooklynrail.net/images/new_brooklyn_streetcar/ppt/docs/Seattle_Streetcar_Report_063004.pdf.

79 Shishir Mathur, "Special Assessment District's Ability to Fund Transit: Lessons from Project-Level Analysis," Transportation Research Record 2417, no. 1 (2014): 103-110. https://doi.org/10.3141%2F2417-11.

80 Independence Township, Oakland County, MI, A Citizen's Guide to Special Assessment Districts (SADs), July 2015, www.indetwp.com/document_center/Assessing/Citizen_s_Guide_to_Special_Assessment_Districts___1.pdf.

81 Mathur, "Special Assessment District's Ability to Fund Transit."

82 Vadali, Using the Economic Value Created by Transportation to Fund Transportation.

83 Mathur, "Special Assessment District's Ability to Fund Transit."

84 Vadali, Using the Economic Value Created by Transportation to Fund Transportation.

85 Vadali, Using the Economic Value Created by Transportation to Fund Transportation.

86 Mathur, "Special Assessment District's Ability to Fund Transit."

87 Vadali, Using the Economic Value Created by Transportation to Fund Transportation.

88 Vadali et al., Guidebook to Funding Transportation through Land Value Return and Recycling.

89 "Special Assessments: An Introduction," Federal Highway Administration, www.fhwa.dot.gov/ipd/fact_sheets/value_cap_special_assessments.aspx.

90 Vadali et al., Guidebook to Funding Transportation through Land Value Return and Recycling.

91 For example, the municipal code of the City of Grand Ledge, MI, (§ 44-1 Initiation of Special Assessment Projects) states that "A special assessment project may be commenced by resolution of the Council on its own initiative, or by initiatory petitions signed by owners of not less than 51% of the property to be assessed for the project."

92 Vadali et al., Guidebook to Funding Transportation through Land Value Return and Recycling.

93 "The Seattle Waterfront Local Improvement District (LID)," Miller Nash Graham & Dunn Attorneys at Law, October 30, 2013, www.millernash.com/the-seattle-waterfront-local-improvement-district-lid-10-30-2013/.

94 An ad valorem tax is "a tax that is calculated according to value of property, based on an assigned valuation of a piece of real estate or personal property." Legal Information Institute, www.law.cornell.edu/wex/ad_valorem_tax.

95 In Michigan, there are only a few windows during which special assessments can be appealed - after the formation or modification of the district or shortly after a special assessment roll has been confirmed. Once these appeal windows have closed, the presumption of validity begins and it becomes very challenging to appeal a special assessment. Joseph M. Turner, "Michigan Property Taxation - Distinguishing between Special Assessments and an Ad Valorem Tax," Michigan Assessor, June 2004, pp. 35-38, www.michiganpropertytax.com/distinguishingfeatures2004.htm.

96 Mathur, "Special Assessment District's Ability to Fund Transit."

97 pbConsult, New York Avenue-Florida Avenue Gallaudet University Metro Station: A Case Study, Build America Transportation Investment Center (BATIC) Institute: An AASHTO Center for Excellence, 2011, www.transportation-finance.org/pdf/funding_financing/funding/local_funding/New_York_Avenue_Case_Study.pdf.

98 "NoMa Neighborhood," NoMa Parks Foundation, September 2017, www.nomaparks.org/history.

99 Bianca Barragan, "Downtown streetcar project glides forward with $291M construction budget," Curbed Los Angeles, August 17, 2018, la.curbed.com/2018/8/17/17696458/downtown-streetcar-funding-metro-grants-transportation.

100 Elijah Chiland, "Downtown LA streetcar opening may be pushed to 2021," Curbed Los Angeles, June 27, 2017, la.curbed.com/2017/6/27/15878808/downtown-la-streetcar-opening-date-2021.

101 Bianca Barragan, "Price tag swells to $291M for downtown Los Angeles streetcar," Curbed Los Angeles, July 26, 2018, la.curbed.com/2018/7/26/17614832/downtown-streetcar-construction-update-measure-m.

102 City of Los Angeles, Report Back on Preliminary Engineering, Project Schedule, and New Independent Cost Estimate for the Los Angeles Streetcar Project, Inter-Departmental Memorandum,June 14, 2017, clkrep.lacity.org/onlinedocs/2011/11-0329-S12_rpt_CAO_06-16-2017.pdf.

103 A Resolution of the Council of the City of Los Angeles to Establish a Community Facilities District and to Authorize the Levy of Special Taxes, Council of the City of Los Angeles, cao.lacity.org/streetcar/3-Resolution%20of%20Intent_CFD9%20Downtown%20Streetcar.pdf.pdf.

104 City of Los Angeles, Report Back on Preliminary Engineering, Project Schedule, and New Independent Cost Estimate for the Los Angeles Streetcar Project.

105 Adrian Glick Kudler, "Locals Approve Huge Leap Forward for Downtown Streetcar," Curbed Los Angeles, December 4, 2012, la.curbed.com/2012/12/4/10299402/locals-approve-huge-leap-forward-for-downtown-streetcar.

106 "OC and Federal Officials Celebrate Groundbreaking for Streetcar Project," CBS Los Angeles, November 30, 2018, losangeles.cbslocal.com/2018/11/30/oc-and-federal-officials-celebrate-groundbreaking-for-streetcar-project/.

107 Barragan, "Downtown streetcar project glides forward with $291M construction budget."

108 Chiland, "Downtown LA streetcar opening may be pushed to 2021."

109 Barragan, "Price tag swells to $291M for Downtown Los Angeles streetcar."

110 In comparison, voter registration in the rest of downtown Los Angeles only increased 14.7% during that same period, while Los Angeles County registration only grew 6.7%. Neal Broverman, "Tons of Downtowners Want to Vote on Special Streetcar Tax," Curbed Los Angeles, November 20, 2012, la.curbed.com/2012/11/20/10303552/tons-of-downtowners-want-to-vote-on-special-streetcar-tax.

111 Steve Hymon, "Downtown L.A. Voters Approve Streetcar Tax by Landslide," The Source, December 12, 2012, thesource.metro.net/2012/12/03/downtown-l-a-voters-approve-streetcar-tax-by-landslide/.

112 Meghan McCarty Carino, "Who Desires A Streetcar in Downtown LA? Mostly Developers, But They Won't Get It Anytime Soon," LAist, July 30, 2018, laist.com/2018/07/30/who_desires_a_streetcar_in_downtown_la_mostly_developers_but_guess_whod_pay.php.

113 Bianca Barragan, "Don't build a streetcar in Downtown LA, use the buses, but gussy 'em up a bit," LA Curbed, July 27, 2018, la.curbed.com/2018/7/27/17617616/downtown-los-angeles-streetcar-bad-idea.

114 Dana Gabbard, "If Last Week's Hearing Was Any Indication, Enthusiasm Is Low for Downtown Streetcar," Streets Blog LA, August 7, 2018, la.streetsblog.org/2018/08/07/if-last-weeks-hearing-was-any-indication-enthusiasm-is-low-for-downtown-streetcar/.

115 Public and Private Investments in South Lake Union, report prepared for the city of Seattle's Office of Economic Development, July 2012, www.seattle.gov/Documents/Departments/economicDevelopment/SLUpublicPrivateReportFinal-2012_0703_small.pdf.

116 O&M costs are funded through a combination of farebox revenues, advertising, King County Metro Transit funds, and interfund loans. General fund expenditures were not impacted by the construction of the streetcar. City of Seattle Adopted and 2012 Endorsed Budget, 2011, www.seattle.gov/financedepartment/11adoptedbudget/documents/StreetcarfromUTILITIESANDTRANSPORTATION.pdf.

117 For more information, refer to the website of the city of Seattle: http://clerk.seattle.gov/~public/fnote/115692.htm.

118 An inevitable question arises, namely, why does the local government not simply provide these services? First, many cities may not have the financial resources to provide the required services. Second, most voters do not live in central business districts and, as a result, elected officials may believe that significant investments into business districts will bring them little tangible benefit. Large expenditures spent on central business districts are not always favorable when most constituents live outside the city. It can also be difficult to show secondary benefits to constituents outside the BID and how it will impact them. Carleton Clifford, "Business Improvement Districts: A Powerful Tool for Managing and Financing Downtown Activities," Graduate Student Theses, Dissertations, & Professional Papers, University of Montana, 1988, scholarworks.umt.edu/cgi/viewcontent.cgi?article=2741&context=etd.

119 Marc Sanford, "Business Improvement Districts," United Kingdom Parliament House of Commons Briefing Paper, 2018, researchbriefings.parliament.uk/ResearchBriefing/Summary/SN04591#fullreport.

120 Amherst Business Improvement District, Amherst Business Improvement District Improvement Plan, September 2011, www.amherstdowntown.com/wp-content/uploads/2015/07/Improvement-Plan-1.pdf.

121 Michael Browne et al., "Business Improvement Districts in Urban Freight Sustainability Initiatives: A Case Study Approach," Transportation Research Procedia, vol. 12, 2016, pp. 450-460.

122 Clifford, "Business Improvement Districts."

123 Clifford, "Business Improvement Districts."

124 Clifford, "Business Improvement Districts."

125 Federal, State, and local.

126 Clifford, "Business Improvement Districts."

127 Clifford, "Business Improvement Districts."

128 Henry Overman, "Business Improvement Districts," Spatial Economics Research Centre Blog, April 18, 2012, eprints.lse.ac.uk/82703/.

129 Wayne Batchis, "Business Improvement Districts and the Constitution: The Troubling Necessity of Privatized Government for Urban Revitalization," Hastings Constitutional Law Quarterly, vol. 38, no. 1, 2010, pp. 91-130.

130 Leah Brooks, "Volunteering to Be Taxed: Business Improvement Districts and the Extra-Governmental Provision of Public Safety," Journal of Public Economics, vol. 92, no. 1-2, February 2008, pp. 388-406, www.sciencedirect.com/science/article/abs/pii/S004727270700103X.

131 John MacDonald et al., "The Effect of Business Improvement Districts on the Incidence of Violent Crimes," Injury Prevention, vol. 16, June 29, 2010, pp. 327-332, https://injuryprevention.bmj.com/content/16/5/327.info.

132 MacDonald, "The Effect of Business Improvement Districts on the Incidence of Violent Crimes."

133 Brooks, "Volunteering to Be Taxed."

134 A pure land value tax is typically considered an inadequate substitution for the revenues derived from property taxes. A 2010 report found that for a pure land value tax to fully replace revenues derived from improvements, Milwaukee, WI, would need to tax away all the economic rents from land. Similarly, Philadelphia, PA, would need to collect more than 80% of land rents. Richard Dye and Richard England, "Assessing the Theory and Practice of Land Value Taxation," Lincoln Institute of Land Policy, 2010, www.lincolninst.edu/sites/default/files/pubfiles/assessing-theory-practice-land-value-taxation-full_0.pdf.

135 Vadali, Using the Economic Value Created by Transportation to Fund Transportation.

136 Dye and England, "Assessing the Theory and Practice of Land Value Taxation."

137 Vadali et al., Guidebook to Funding Transportation through Land Value Return and Recycling.

138 Property taxes and assessments represented 4.8% ($10.3 billion) of the overall funding for highways in the U.S. in 2012. "Transportation Funding," BATIC Institute: An AASHTO Center for Excellence, www.financingtransportation.org/funding_financing/funding/.

139 Dye and England, "Assessing the Theory and Practice of Land Value Taxation."

140 Jason R. Junge and David Levinson, "Financing Transportation with Land Value Taxes: Effects on Development Intensity," The Journal of Transport and Land Use, vol. 5, no. 1, 2012, pp. 49-63.

141 Vadali et al., Guidebook to Funding Transportation through Land Value Return and Recycling.

142 Dye and England, "Assessing the Theory and Practice of Land Value Taxation."

143 Junge and Levinson, "Financing Transportation with Land Value Taxes."

144 Dye and England, "Assessing the Theory and Practice of Land Value Taxation."

145 Junge and Levinson, "Financing Transportation with Land Value Taxes."

146 Dye and England, "Assessing the Theory and Practice of Land Value Taxation."

147 Vadali, Using the Economic Value Created by Transportation to Fund Transportation.

148 David M. Levinson and Emilia Istrate, Access for Value: Financing Transportation through Land Value Capture, Brookings Institute, April 2011, www.brookings.edu/wp-content/uploads/2016/06/0428_transportation_funding_levinson_istrate.pdf.

149 For more information, see: www.fhwa.dot.gov/ipd/project_profiles/ca_i15_express_lanes_project.aspx.

150 For more information, see: www.fhwa.dot.gov/ipd/project_profiles/ca_i405_improvement_project.aspx.

151 For more information, see: www.fhwa.dot.gov/ipd/project_profiles/az_loop_202.aspx.

152 For more information, see: www.metro.net/projects/measurer/.

153 Amber Crabbe et al., "Local Transportation Sales Taxes: California's Experiment in Transportation Finance." California Policy Research Center, vol. 14, no. 6, September 2002, https://escholarship.org/uc/item/0hj2r88h.

154 Vadali, Using the Economic Value Created by Transportation to Fund Transportation.

155 A study of approximately 600 transit agencies reporting to the Federal Transit Administration showed that, after State funds, sales taxes comprised the largest source of revenues for capital spending (38%) and the second-largest source of operating expenses (27%) after fares (32%). Arizona PIRG Education Fund, "Why and How to Fund Public Transportation," March 2009, uspirgedfund.org/sites/pirg/files/reports/Why-and-How-to-Fund-Public-Transportation.pdf.

156 Arizona PIRG Education Fund, "Why and How to Fund Public Transportation."

157 Vadali, Using the Economic Value Created by Transportation to Fund Transportation.

158 "Sales Tax Districts," Federal Highway Administration, Center for Innovative Finance Support, www.fhwa.dot.gov/ipd/value_capture/defined/sales_tax_districts.aspx.

159 Jaimee Lederman et al., "Lessons Learned from 40 Years of Local Option Transportation Sales Taxes in California," Transportation Research Record: Journal of the Transportation Research Board, June 2018, journals.sagepub.com/doi/10.1177/0361198118782757.

160 Robert D. Klahr and Lauren A. Smith, Summary of the Missouri Transportation Development District Act, Armstrong Teasdale LLP, June 2010.

161 Crabbe et al., "Local Transportation Sales Taxes."

162 Lederman et al., "Lessons Learned from 40 Years of Local Option Transportation Sales Taxes in California."

163 A regressive tax is applied uniformly and impacts low-income earners more than high-income earners. A progressive tax has a greater impact on high-income earners.

164 Arizona PIRG Education Fund, "Why and How to Fund Public Transportation."

165 Klahr and Smith, Summary of the Missouri Transportation Development District Act.

166 "Transportation Development Districts (TDDs)." Missouri Department of Revenue, https://dor.mo.gov/business/sales/tdd/.

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