Land Value Capture and Tax Increment Financing: Overview and Considerations for Sustainable Urban Investment

European Journal of Sustainable Development, 2018, 2(3), xx

9 Pages Posted: 30 Jan 2018 Last revised: 26 Aug 2019

See all articles by Simon Huston

Simon Huston

Coventry University; Chartered Institute of Management Accountants (CIMA)

Ebraheim Lahbash

Royal Agricultural University

Date Written: January 17, 2018

Abstract

The paper reviews the notion of Land Value Capture (LVC), its advantages and disadvantages and relevance to for urban growth management. LVC encompasses a wide range of mechanisms, applied in very diverse contexts to monetize ‘windfall’ gains, accruing to landowners because of growth, infrastructure or place-making projects. Despite widespread conviction that a proportion of these ‘unearned increments’ should somehow be harvested for the wider public good, contention, legal and pragmatic challenges remain. As policy makers confront population pressures, transport needs and inequality, LVC can help bridge infrastructure funding gaps, accelerate housing provision and temper polarization. Betterment taxes, Tax Increment Finance (TIF) or participatory instruments like land readjustment can target ‘planning gains’ capitalized into land and property values near stations, historic monuments or upgraded precincts. As well as flagging instrument diversity and variable contexts, the literature suggests LVC mechanisms work best in a joined-up policy context. Ironically, spatial LVC schemes like TIF are most likely to fail when the regeneration need is most acute. In America, inadequate governance, scrutiny or auditing undermined schemes to fund transport or improve the public realm. In Europe LVC exists in a variety of modalities but three European examples, suggests it remains underutilized. London megaprojects, UK regional housing schemes and French sprawl, illustrate that policy makers have yet to adequately capture unearned increments.

Keywords: Land Value Capture, TIF, Project Funding, Unearned Increment, Windfall Gains, Planning Gains

Suggested Citation

Huston, Simon and Lahbash, Ebraheim, Land Value Capture and Tax Increment Financing: Overview and Considerations for Sustainable Urban Investment (January 17, 2018). European Journal of Sustainable Development, 2018, 2(3), xx, Available at SSRN: https://ssrn.com/abstract=3103949 or http://dx.doi.org/10.2139/ssrn.3103949

Simon Huston (Contact Author)

Coventry University ( email )

William Morris Building
Coventry, CV1 5FB
United Kingdom

HOME PAGE: http://https://www.coventry.ac.uk/

Chartered Institute of Management Accountants (CIMA) ( email )

26 Chapter Street
London, SW1P 4NP
United Kingdom

HOME PAGE: http://https://www.cimaglobal.com/

Ebraheim Lahbash

Royal Agricultural University ( email )

Stroud Road
Cirencester, Gloucestershire GL7 6JS
United Kingdom

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