South America provides a wealth of value capture case studies (see this UN/Lincoln Land Institute lecture for one example discussion). Recently, the folks over at CityLab, formerly Atlantic Cities, have posted a description of Brazil's most celebrated value capture mechanism. Brazil allows the designation of areas where building rights can be sold to developers and the proceeds reinvested in the same designated area. Transportation infrastructure, including transit, has been one favored investment option. According to CityLab, proposals to modify the mechanism include changes to the expenditure restrictions such that money can be spent on transit outside of the designated area, presumably on transit centers/services that would ultimately benefit the area. It seems like a decent idea in theory but certainly could open Pandora's box in practice. Let's watch and see what happens.
There's a proposed fee in Portland that smells a little like value capture. Streetsblog recently reported in a post that Portland is pressing forward with a plan to charge property owners a transportation fee (Bike Portland reports that "The monthly ‘Transportation User Fee’ will be $11.56 per single-family household, $8.09 for low-income households and will rely on a calculation based on trip generation for businesses.") Much of the fees proceeds will fund roadway maintenance while some will be used to stripe bike lanes and provide other safety features.
A classic example of value capture was the frontage-based fees for paving roads. Property owners were required to pay for the improvement to their property's access based on how much property they owned (or a proxy based on street frontage). This measure of relative scale served as a rough approximation of the value of the property and the relative utility paving provided (whether you used the land to its full potential was your choice). The fee was based on the "beneficiary pays" principle of taxation where taxes are assessed proportionate to the benefit one receives from the corresponding government service.
A fee like Portland's, one based on a per unit basis or on trip generation measure, is also based loosely on the "beneficiary pays" principle in the form of a "user pays" scheme. The fee is proposed such that land users, the sources of trip origins, pay for access to a quality road network based on the number of trips that are anticipated to originate from the location (single family homes are all expected to generate about the same number of trips).
So, is it value capture? As framed, the fee is not posed as one that captures the value created by having well maintained, safe streets accessible by multiple modes. The fee is not assessed proportionate to the value of the properties in question or the type of roadway access they are afforded. While one might assume that there exists proportionality between the demand for trips and the roadway supplied in a location, that may not be the case. If properties were to pay based on the access quality that the fee afforded them, then single family homes could have vastly different fees. For example, a single family home on an arterial avenue close to downtown would pay significantly more than a home on a lane in suburbia. In one instance, the value of access would justify a higher capture rate and provide an incentive for the single family home owner to better utilize their highly accessible property so that they could pay the fee (a wonderful feature of value capture taxation). Yet, in Portland's case, the two houses pay the same rate based on anticipated usage of roadways (though this is measured in trips and not distance or marginal impact on congestion... another topic for another time).
Based on the framing of the fee policy, particularly the assessment rules, this does not appear to be an instance of transportation value capture. That said, with a few tweaks (and a lot more political will) this could easily be transformed into a value capture policy.
Ian Carlton is a transportation and land use expert specializing in transit-oriented development (TOD). He helps clients - including transit agencies, planning departments, and landowners - optimize real estate development around transit.
Special thanks to Burt Gregory at Mithun for permission to use the Portland Streetcar image above.