FHWA develop a series of primers to assist practitioners understand and navigate the different aspects of implementing Value Capture Strategies in transportation projects. Value capture is an innovative revenue-generation tool that may be either project specific or programmatic in nature. Project-specific tools include those that are typically applied to specific transportation projects, such as:
- Special assessments, that is, special charges imposed on property close to a new facility. The assessment is levied only against those parcels that receive a special benefit that can be clearly identified and measured.
- Tax increments, that is, the future increment tax revenue (property tax and economic activities) within a development or redevelopment geographically area to finance infrastructure improvements.
- Negotiated exactions, such as in-kind contributions to local roads, parks, or other public facilities, or in-lieu fees, as a condition of development approval.
Joint development, involving the development of a transportation facility and adjacent private property with a private sector partner that is either providing the facility or making a financial contribution to offset its costs. The development that occurs in the vicinity of a transit or highway facility is configured differently than it otherwise would be were the facility not present.
- Split-rate tax, which applies a higher property tax rate on land than on buildings. These taxes capture the general increase in the value of land due to improved accessibility from transportation networks.
- Transportation utility fees, which treat transportation networks like a utility. The fees are similar to other local services, such as water and wastewater treatment, that are financed primarily from user charges. Properties are charged fees in proportion to their network use, rather than according to their monetary value, as in property taxation. The fees are based on the number of trips generated and vary with land use. Transportation utility fees have been used by many cities in Oregon.
Managing Economic Shocks to Value Capture-Funded Projects: A Primer PDF | HTML
- Value capture strategies rely on increases in property values, business activity, and economic growth resulted from transportation infrastructure investment to help fund current or future transportation improvements. This Primer provides an overview on how economic shocks, such as those experienced during the Global Financial Crisis (GFC) of 2007-2009 and those caused by the COVID-19 Pandemic of 2020-2021, can affect value capture funding sources for transportation and other infrastructure and how to mitigate those shocks. Although no two economic shocks are the same, the Primer illustrates through real-world cases the various ways that economic shocks can affect value capture funding and be mitigated. While there is uncertainty on the full-extent of COVID-19â€™s impact on real estate and value capture, the experience in the last two years provides useful data in planning for similar shocks when utilizing value capture techniques. The Primer also walks through various tools project planners can use to build more economic resilience into their value capture-funded projects.
Assessing Value Capture Risks - A Primer: PDF | HTML
Assessing Value Capture Risks - A Presentation: PDF | HTML
- Value capture strategies rely on increases in property values, business activity, and economic growth resulted from transportation infrastructure investment to help fund current or future transportation improvements. The use of value capture strategies to fund transportation infrastructure is relatively new and not free of risks. Risk is an intrinsic component of any transportation project, regardless of the funding source used to pay for them. A host of reasons may affect the cost of construction and the construction schedule, and external factors may alter travel demand forecasts. From a funding perspective, the availability of financing and cash flow to pay for the project is a vital project element that almost always involves risk. As a result, using value capture revenue sources to fund a project involves its own set of risks, particularly because it depends on value creation linked to real estate and economic development. Assessing and managing risks associated with value capture is critical to maximize the likelihood that the project will generate the value and the funding expected. This primer is based on a review of relevant literature, interviews with practitioners, case studies, and lessons learned from practicing agencies.
Development Impact Fees (DIFs) and Other Fee-Based Development Charges: A Primer - PDF | HTML
Introduction to Development Impact Fees and Other Development Charges: PDF | HTML
- DIFs are specifically designed for the public improvement needs of new developments that help local economic growth. Their uses are also focused specifically on off-site improvements outside the development project boundary, thus complementing other VC techniques, such as TIF and SAD, which focus more on on-site improvements in existing developments. This primer provides practical information for implementing Development Impact Fees (DIFs) for State departments of transportation and local public agencies to consider implementing value capture strategies. It includes overviews of these techniques, processes involved in implementing them, their role in key value capture opportunities and challenges, as well as real-world case examples of when and how best they can be used.
Special Assessment Districts (SADs) - A Primer: PDF | HTML
Introduction to Special Assessments - A Presentation: PDF | HTML
- SADs are special assessments to property owners within a specifically defined geographic area, which is regarded as the main concentration of beneficiaries of respective publicly funded infrastructure improvement. This Primer provides practical information for implementing special assessments (also known as special assessment districts, benefit assessment districts, community improvement districts, etc.) for State and local departments of transportation and public works agencies as one approach for adding Value Capture to their infrastructure funding strategies. It includes an overview of this technique, processes involved in implementation, as well as real-world examples of when and how it can be used.
Tax Increment Financing (TIF) - A Primer: PDF | HTML
Introduction to Tax Increment Financing - A Presentation: PDF | HTML
- TIF is an infrastructure funding mechanism created in California in 1952. The concept rests on two assumptions. First, it is assumed that, absent new or improved public infrastructure, economic activity within a defined area would remain unchanged. In accordance with this assumption, tax revenues generated within this area would also remain essentially unchanged into the future. Second, it also is assumed that a proposed investment in new or improved infrastructure would induce an increase in economic activity and in tax revenues. Any subsequent increase in tax revenues above the pre-investment revenue level is a tax increment that is assumed to arise solely as a result of the public infrastructure project. This primer provides practical information for implementing tax increment financing (TIF) for State and local departments of transportation and public works agencies as one approach for adding value capture to their infrastructure funding strategies. It includes an overview of this technique, the processes involved in implementation, and real-world examples of when and how it can be used.
Transportation Reinvestment Zones: Using Value Capture to Fund Transportation Capital Improvements: Primer : PDF | HTML
Introduction to Transportation Reinvestment Zones-A Presentation: PDF | HTML
- Transportation reinvestment zones (TRZs) are a value capture technique that relies on the principles of tax increment financing (TIF) to help pay for transportation projects. A TRZ is very similar to a TIF district in that a TRZ is also a TIF mechanism used to set aside property and sales tax increments. However, a TRZ is explicitly dedicated to transportation improvements in almost every transportation mode. The primer presents the basic concepts needed to understand how TRZs work and explains the implementation stages. Additionally, it highlights the role that TRZs play in the delivery of transportation projects, the types of projects that can be funded using TRZ revenues, and the TRZ financing methods commonly employed by local governments. Finally, this primer shares the opportunities and challenges associated with the use of TRZs to fund transportation projects and provides a case study that illustrates how the local government of a small community used TRZs to deliver a critically needed transportation project.
Transportation Utility Fees (TUFs) - A Primer: PDF | HTML
- TUFs is primarily used by local governments to fund the maintenance of local roads. The fee is paid by property occupants based on land use intensity also knows as street maintenance fee, road use fee, street utility fee. It is distinct from transportation impact fees and mitigation fees since the fee paid is by property occupants rather than developers and paid on an ongoing (monthly) basis for maintenance.
Development Agreements and Other Contract-Based Value Capture Techniques (CDA) - A Primer: PDF | HTML
- The Primer provides practical information for implementing DA, CBA, JDA, and other contract-based VC techniques (such as public right of way [ROW] use agreements) for State departments of transportation and local public agencies to consider implementing Value Capture strategies. It includes overviews of these techniques, processes involved in implementing them, their role in key VC opportunities and challenges, as well as real-world case examples of when and how best they can be used.
Introduction to Development Agreements and Other Contract-Based Value Capture: PDF
Capital Improvement Programming (CIP): A Primer - PDF | HTML
Capital Improvement Programming (CIP): A Presentation - PDF | HTML
- Capital improvement programing: Using Value Capture to Fund Transportation Capital Improvements is the multi-year scheduling of capital improvements based on available fiscal resources and community desire for specific improvements. The primer provides practical information for local communities that are interested in implementing a capital improvement plan (CIP) and understanding how value capture techniques for transportation funding can assist in this process. More specifically, it provides an overview of the most important elements of a CIP and the capital improvement planning process, with an emphasis on the use of value capture techniques for the transportation component of the CIP.
Making the Business and Economic Case for Value Capture: Primer - PDF | HTML
Making the Business and Economic Case for Value Capture: A Presentation - PDF | HTML
Value capture (VC) is derived from real estate development and economic activities triggered by transportation infrastructure improvements. A well-thought-out value capture strategy can further promote equity by targeting them in areas needing economic development support. And when properly implemented, value capture incentivizes development concentrated at or near transportation facilities, which minimizes sprawl and promotes more sustainable land development forms. Value capture helps accelerate the completion of needed highway improvements and the benefits they bring to the economic growth, job creation, environment, travel conditions and safety. Making the business and economic case for value capture to generate new funding for transportation infrastructure projects and programs is ultimately about establishing a clear and direct nexus between the transportation projects and the real estate developments and economic activities that emerge or benefit from those projects.
This primer is based on literature reviews, interviews, case studies, and lessons learned from practicing agencies. It introduces qualitative and quantitative approaches to developing the B/E case for select VC techniques and how these techniques could be integrated to maximize the VC potential. It also provides a specific case example to illustrate the integrated approach to making VC B/E case along a major corridor or at system level.