Capital Improvement Programming Using Value Capture to Fund Transportation Improvements

February 2021

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Notice

This document is disseminated under the sponsorship of the U.S. Department of Transportation (USDOT) in the interest of information exchange. The U.S. Government assumes no liability for the use of the information contained in this document.

The U.S. Government does not endorse products or manufacturers. Trademarks or manufacturers' names appear in this report only because they are considered essential to the objective of the document. They are included for informational purposes only and are not intended to reflect a preference, approval, or endorsement of any one product or entity.

The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide information and clarity to the public regarding existing requirements under the law or agency policies. Value capture techniques and policies are often implemented outside of Federal funding or regulatory requirements.

Quality Assurance Statement

The Federal Highway Administration (FHWA) provides high-quality information to serve Government, industry, and the public in a manner that promotes public understanding. Standards and policies are used to ensure and maximize the quality, objectivity, utility, and integrity of its information. FHWA periodically reviews quality issues and adjusts its programs and processes to ensure continuous quality improvement.

Cover photos source: USDOT/Getty

FOREWORD

State and local governments often struggle to mobilize the necessary funds to maintain, rebuild, and expand their local transportation networks. Planned projects often face funding or financing hurdles that may result in projects being delayed for years (if not indefinitely). Such delays result in important safety and mobility objectives being unmet.

Value capture refers to a set of techniques that generally take a share of increases in property tax revenues, economic activity, and growth linked to infrastructure investments to help fund those infrastructure improvements. Under certain circumstances, value capture may allow practitioners to close funding gaps and accelerate project delivery, as well as help spur economic development and achieve other community goals.

The capital improvement program or plan (CIP) is a tool that local communities can use for planning, fiscal management, and budgeting purposes. First, the CIP can be used as a planning tool to implement local comprehensive plans and transportation plans. In addition, the CIP can be used as an effective fiscal management tool to identify future capital needs in advance, allowing time to secure State and Federal funds for their implementation, and to monitor the schedule and financial status of ongoing capital projects. Finally, a CIP can serve as a budgeting tool to develop a capital budget, estimate the impact of capital improvements on the operating budget, and maintain a balanced budget (as is required by most States).

Value capture techniques are often used to totally or partially fund transportation projects identified in the CIP. The use of the CIP allows coordination with metropolitan and regional transportation planning efforts to ensure that an adequate combination of local, State, and Federal funds is available in time and quantity over the entire life of the project. As a result, the funds are available when they are required, expediting delivery of the project.

This primer was developed on behalf of the Federal Highway Administration's Value Capture Implementation Team and is based on a review of relevant literature, interviews with practitioners, case studies, and lessons learned from practicing agencies. Its audience includes two groups of practitioners:

1) Practitioners from communities that do not currently have a CIP but may be considering adopting one in the near future.

2) Practitioners from communities that already have a CIP but are interested in learning how value capture techniques may assist them in generating transportation funding for critical projects.

This primer provides an overview of the most important elements of a CIP and the capital improvement process, with an emphasis on the use of value capture techniques for the transportation component of the CIP. The primer highlights the value of coordination between the development of a CIP for a local government and the development of a metropolitan transportation improvement program for a metropolitan planning organization and a statewide transportation improvement program for a State department of transportation. Finally, the primer provides four case studies to illustrate how different communities across the country have used value capture techniques to fund the transportation projects included in their CIPs, and how the CIP within budget.


TECHNICAL REPORT DOCUMENTATION PAGE

Form DOT F 1700.7 (8-72)
Reproduction of completed page authorized

Acknowledgements

The Federal Highway Administration would like to express appreciation to the members of its Value Capture Implementation Team and to the local officials who provided extensive materials for the case studies, as well as feedback during the development of this primer:

  • Ray Dovalina, Assistant Public Works Director, City of Phoenix, Arizona
  • Doug Frost, Principal Planner, Planning and Development Department, City of Phoenix, Arizona
  • Terry Quezada, Capital Improvement Manager (Consultant), Town of Horizon City, Texas
  • Stevie Greathouse, Manager (Capital Program Consultant), Housing and Planning Department, City of Austin, Texas

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