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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.
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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
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 hurdles that may result in projects being delayed or canceled altogether, leaving important safety and mobility objectives unmet.
Derived from real estate developments, value capture refers to a set of techniques that allow monetizing of the appreciation in real property values triggered by infrastructure improvements. Such monetization enables generation of future revenues that can be leveraged upfront to help finance current or future infrastructure improvements. Under the right circumstances, this may allow practitioners to help close funding gaps and accelerate project delivery, as well as trigger much-needed economic development/redevelopment to provide livable communities, create jobs, and create environmental stewardship benefits.
If a jurisdiction creates or improves public infrastructure and thereby creates specific and identifiable benefits for individual properties (in addition to benefits that might be created for all properties or persons), then the individual benefiting properties could be assessed a fee (“special assessment”) to help fund the infrastructure project up to, but not exceeding, the value of the benefit that they receive. The amount of the special assessment could be based on the value of the benefit or the cost of construction. Typically, special assessments terminate after project construction or financing costs have been retired. Courts require a clear link between the property being assessed and the infrastructure costs or benefits (nexus). Additionally, courts require that special assessment fees be proportional to each property’s fair share of the benefits received or costs imposed.
Assuming that a jurisdiction is authorized to levy property taxes and special assessments, these special assessment fees are collected through a jurisdiction’s existing property tax collection process. This simplifies administration. The special assessment fee revenues are not deposited into a jurisdiction’s general fund. Instead, they are deposited into separate accounts and used only for the projects for which the fees are collected.
This primer was developed on behalf of the FHWA Every Day Counts (EDC)-5 Value Capture Implementation Team and is based on literature reviews, interviews, case studies, and lessons learned from practicing agencies. It introduces the concept of special assessments and how they can provide a funding source to help improve transportation and other critical infrastructure needs. It also provides several examples showing how public agencies have established and managed special assessments.
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Form DOT F 1700.7 (8-72)
Reproduction of completed page authorized
The Federal Highway Administration (FHWA) would like to express appreciation to the members of the Value Capture Implementation Team and acknowledges their valuable contribution of expertise and guidance throughout the development of this report.
