Appendix: Assessing the Funding and Revenue Sources Needed
To pursue value capture as a supplement or main source of funding, the revenue needs must be clearly established. This needs assessment framework can apply to districts, municipalities, counties, and State agencies. The needs assessment should address:
Project or program funding needs: What type of transportation funding need or deficiency is being experienced? Is there a funding need for one or multiple projects? Or is there a demand for more transportation funding and project delivery that necessitates a program?
Revenue generation potential: What is the scale of funding to be generated? Will it need to be sustained?
Timing: Is this a one-time need that will be completed with the conclusion of the project or repayment of the associate debt? Is it preferable for the funding need be periodically reviewed and renewed? Will the funding need be long-term or indefinite?
The table below describes some of these needs, revenue potential and timing attributes.
Table 6: Descriptions of Value Capture Techniques and Key Attributes
| Category |
Technique |
Description |
Project or Program |
Revenue Generation |
Timing |
Developer contributions |
Impact fees |
Fees imposed on developers to help fund additional public services, infrastructure, or transportation facilities required due to the new development. |
Ideal for smaller district and municipal projects or programs. Potential applications: partial or gap funding for complete streets, roadways, and interchanges. Can be directed to specific projects or a fund. |
One-time fees for new developments are reliant on economic and real estate market conditions. |
Each development will only pay in once. Revenues streams are dependent upon continuous 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 in a designated district whose properties are the primary beneficiaries of an infrastructure improvement. |
Can be structured for single or multiple projects, as well as programs. |
Fees are recurring and can be structured as short- or long-term revenue stream based upon need or legal requirements. |
Districts can be created for a finite set of time, with options to renew. |
Business improvement districts |
Fees or levies charged on businesses in a designated district to fund or finance projects or services in the district's boundaries. |
Land value taxes or split-rate taxes |
A lower property tax rate applied to privately created building values and a higher rate applied to publicly created land values. |
Recurring revenues over time can support multiple small projects or programs. |
Encourages density as parcels vacant or occupied with structures will generate the same revenue. |
Tax revenue remains static as it only applies to land values and not structures. Requires reassessment of land overtime for revenues to grow in future years. |
Sales tax districts |
Additional sales taxes levied on all transactions or purchases in a designated area that benefits from an infrastructure improvement. |
Can be structured for single or multiple projects, as well as programs. |
High revenue potential. Fees are recurring and can be structured as short- or long-term revenue stream based upon need or legal requirements. |
Districts can be created for a finite set of time, with options to renew. |
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. |
Can be structured for single or multiple projects, as well as programs. |
Fees can be recurring of have a scheduled sunset with options for renewal at predetermined intervals |
Districts can be created for a finite set of time, with options to renew. |
Transportation reinvestment zones |
Transportation reinvestment zones allow for a broader range of transportation projects. The local governing body designates a zone in which it will promote a transportation project. The zone does not require the local entity to create a board. |
Joint development |
At-grade joint development |
Projects that occur within the existing development rights of a transportation project. |
Includes inherent risk and costs. Revenue potential depends on the number of suitable sites, markets, and sale versus lease agreements. |
Revenue structure must take into consideration the operations and maintenance of structure and impact on transportation infrastructure adjacent, above, or below development. Has potential for being revenue neutral. |
Sales are a one-off, while leases are long-term. In many cases leases can be transferred with approvals from agencies. Includes options for renewals and |
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. |
Project oriented and can be applied to major ROW projects if utility partners exist, need low-cost access to the ROW, and are willing to share costs. |
Cost saving measure but must be structured to ensure both parties’ benefit. |
Revenues can be spread overtime of one-time up front. |
Concessions |
Asset recycling |
Involves the recycling of existing public infrastructure assets through sale or lease to the private sector, with all funds received being invested in new infrastructure. |
Can be a significant revenue source for mega projects, bundles of projects, or large programs. |
High as most assets are tens to hundreds of millions of dollars. |
Typically, long-term for leases of facilities with proven less risky returns. |
Naming rights |
Naming rights |
A transaction that involves an agency selling the rights to name infrastructure to a private company. |
Program, services, or small projects. Revenue is generated sell |
Low barrier to entry |
Often includes multi-year deals with the opportunity to renew. |
Source: “Value Capture: Capitalizing on the Value Created by Transportation - Implementation Manual” EDC-5, Aug 2019
