Value Capture for Transportation Finance

17 Pages Posted: 10 Jan 2011 Last revised: 20 Jan 2011

See all articles by Mike Iacono

Mike Iacono

University of Minnesota - Twin Cities

David Matthew Levinson

affiliation not provided to SSRN

Zhirong Zhao

affiliation not provided to SSRN

Date Written: January 1, 2010

Abstract

As vehicles become more fuel-efficient and overall levels of travel stagnate in response to increases in fuel prices, conventional sources of revenue for transportation finance such as taxes on motor fuels have been put under increasing pressure. One potential replacement as a source of revenue is a set of policies collectively referred to as value capture policies. In contrast to fuel taxes and other instruments that impose charges on users of transportation networks, value capture policies seek to generate revenue by extracting a portion of the gains in the value of land that result from improvements to transportation networks. In this paper we identify a set of eight policies that contain elements of the value capture approach. These policies include land value taxes, tax increment financing, special assessments, transportation utility fees, development impact fees, negotiated exactions, joint development, and air rights. We evaluate each of the policies according to four criteria: efficiency, equity, sustainability (in terms of revenue adequacy and stability), and feasibility. The value capture concept is placed within a more general framework of transportation finance that emphasizes the relationship between different types of charges and groups of beneficiaries from transportation investments.

Keywords: Fuel Prices, Value Capture Approach, Fees, Transportation Investments

JEL Classification: R40, R41, E22

Suggested Citation

Iacono, Mike and Levinson, David Matthew and Zhao, Zhirong, Value Capture for Transportation Finance (January 1, 2010). Available at SSRN: https://ssrn.com/abstract=1737786 or http://dx.doi.org/10.2139/ssrn.1737786

Mike Iacono

University of Minnesota - Twin Cities ( email )

420 Delaware St. SE
Minneapolis, MN 55455
United States

David Matthew Levinson (Contact Author)

affiliation not provided to SSRN

Zhirong Zhao

affiliation not provided to SSRN

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