For a successful value capture implementation, the agency or jurisdiction will need to first establish the need for funding, whether it is a single project, series of projects, or program. The appropriate or preferred value capture technique can then be determined based upon the size of the funding need, duration of the funding need, the intended application, legislative and regulatory environment, and resources available. This section provides the basic steps and indications of the level of effort and time required to implement various forms of value capture. Table 4 describes the general steps leading towards implementation and the major tasks and considerations associated with those steps.
Table 4 : Steps, Considerations, and Tasks for Value Capture Implementation
| Step |
Considerations and Tasks |
Define Funding Need |
- Faster delivery of projects
- Ability to fund more projects
- Ability to meet local share requirements
- Insufficient funds for critical infrastructure need
- Project(s) not eligible under traditional funding sources
|
Define Intended Use of Funds |
- Capital Improvements: Single project, multiple projects, or infrastructure program
- Maintenance and rehabilitation
- One-time investment or ongoing revenue source
- Fund infrastructure to support or induce economic development
- Funding to ensure that infrastructure provision keeps pace with growth in demand (development)
- Cost recovery or new revenue
|
Review Enabling Legislation |
- Determine if enabling legislation exists (letter to State Attorney General, municipal legal counsel).
- Monitor bills under consideration for techniques not currently supported by enabling legislation.
- Determine statutory requirements for techniques that are enabled by State law.
- Review other local implementations of the value capture technique to anticipate potential obstacles and avoid legal challenges.
|
Make the Business Case and Build Stakeholder Support |
- Create opportunities to engage and educate policy makers (from municipalities, counties, and State level), the public, or private sector including employers/businesses and developers.
- Communicate and advocate the benefits of value capture with legislators and local businesses.
|
Identify and Build Required Resources |
- Assess agency strengths, weakness, and skills required to implement value capture techniques, e.g., using the Capability Maturity Matrix.
- Evaluate operations, resources, and systems needed including:
- Disposition of surplus excess properties
- Develop communication and relationships with peer agencies, advocates, and public
- Systems for administration, finance, accounting, and real estate assessment
- Assess gaps in advocacy and leadership
- Build or maintain access to internal staff or external experts able to navigate legal requirements, assess market conditions, make reliable financial projections (finance), collect and track revenues (accounting) and negotiate effectively with private developers.
- Evaluate project risks including political, financial, and real estate market risks.
|
Develop Implementation Plan |
- Match value capture technique with funding and infrastructure needs, enabling legislation, skills, and resources available, and political and business support.
- Assign tasks and responsibilities.
|
The research, communication, and building of expertise are investments that will enable new funding and revenue to be directed at needed capital or maintenance projects. Startup time can vary, as value capture is not a one-size fits all funding mechanism. As with any funding or financing strategy, value capture requires careful research to determine the most effective and viable options for the funding need in terms of scale, duration, local restrictions, and other funding resources available. The table below, which is organized by overarching strategy, describes each value capture technique’s applicability towards projects or programs and the level of effort and timing for implementation.
Table 5: Timing and Level of Effort for Value Capture Techniques
| Strategies |
Techniques Included |
Project or Program |
Timing for Implementation and
Level of Effort |
Cost Sharing Strategies: growth paid for growth |
- Developer Voluntary Contribution
- Transportation Impact Fees/ Mobility Fees/Multimodal Fees
- Negotiated exaction
|
Contributions can be towards individual projects, or to a dedicated fund for infrastructure projects. |
Once established, projects supported by impact fees generally proceed in tandem with project development. For smaller projects dealing with bed/bike, signage and landscaping, the timing is in the 12-to-18-month range. Fees are collected through zoning and permitting processes. Needs public support if tied to zoning and density requirements. Transactional based VC techniques (exactions) will require more staff time for negotiations on a per project basis and will result in collection variability. |
Maintenance, Correcting Deficiency, Preservation |
Transportation Utility Fees, Road Maintenance Fees, etc. |
Can be a new source of revenue to address backlog of road maintenance and preservation. |
TUF and other maintenance fees may require new administrative methods for tracking and collection. Requires initial analysis and expertise to establish rates. Requires public and business support. Once established and administrative processes setup, fees may need to be renewed or revaluated at defined intervals. |
Cost Recovery (Special Fees and Taxes) |
- Special Assessment District
- Community Improvement District/ Business Improvement District
- Land Value Tax
|
Can be a source of revenue for transportation projects, programs, or long-term maintenance. Some programs incorporate defined duration for districts and dates for renewals. |
Debt pledges and financing will provide capital funds sooner, especially if existing infrastructure bank or jurisdictional finance options are available. Building finance capability will require internal or external finance expertise. Creating an entirely new infrastructure bank may take multiple years to fund depending upon number of jurisdictions and complexity of agreements involved. New CIDs or BIDs focused on smaller projects can take 1 to 2 years with appropriate support. |
Economic Growth, Attract Development, Job Creation |
- Tax Increment District (TIF)/Tax Increment Reinvestment Zone (TIRZ)
- Sales Tax Increment District
- Transportation Reinvestment Zones
|
Contributions can be towards individual projects, or to a dedicated fund for infrastructure projects encouraging economic development and improved access. |
Once enabling legislation exists, zones can be established quickly. In Texas, the El Paso TRZ was established within a year of passage. Zones overlapping municipal boundaries require coordination and may increase time to initiate. Generating support and passage of enabling legislation if it does not exist can add years to process. |
Joint Development, Mixed Use Development, etc. |
- At-Grade Right-of Way (ROW) Agreement
- Above-Grade ROW Agreement/Air Right Development
- Below-Grade ROW Agreement/ Utility Joint Development
|
Land disposals create short-term one-time revenue. Long-term leases can generate consistent funding. Scale of funding is based on the size and number of agreements. Often contributes to operating, capital, or general transportation funds. |
Unless there is a pre-established set of guidelines or streamlined process, negotiation and financing for projects can take years. Engineering constraints, local politics, and real estate markets can impact and delay agreements. Most joint development projects take about 2.5 years to implement once a project and funding have been agreed upon. Above and below grade ROW agreements are more complex and often take significantly longer than at grade developments, with experienced staff and motivated developers can take upwards of 6 years. |
Recycle the Value of the Existing Infrastructure Assets |
Asset Recycling |
Has potential to become a major source of project or program funding depending upon the size of the asset recycled. Can unlock a large amount of capital upfront if the P3 agreement includes large investors of bonding. |
Requires planning, real estate, negotiation, legal, and pricing expertise to develop long-term leasing strategy and P3 agreement. This expertise is instrumental in protecting the public interests and assets. Larger or more valuable the asset is, the greater the requirements for review, analysis, communication, and public outreach needed. Smaller properties and assets can include parking facilities and parcels with lower risk, expertise requirements, or time needed to establish asset recycling agreement. Inclusive of architecture and engineering phase, smaller projects may take up to three years to develop. |
Offset Operating & Maintenance Expenses |
- Naming Rights
- Sponsorships and Advertising
|
Funding can be incorporated into a general fund for transportation, or to pay in-part for small transportation programs or services. |
Low level of effort. There are private firms that help States, agencies, and municipalities make connections with sponsors. Low risk with sponsorships as the sponsor is investing in the visibility of assets and does not retain any ownership of the facility. |
