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October 2008
Research team gathers feedback at Value Capture stakeholder workshop
David Levinson
Jerry Zhao
Michael Iacono
Adeel Lari
CTS hosted a half-day stakeholder workshop on September 18 to introduce the Value Capture Study and receive feedback on the questions it should address. Margaret Anderson Kelliher, Speaker of the Minnesota House of Representatives, gave welcoming comments for the workshop, which was moderated by CTS director Robert Johns.
The state legislature appropriated funding to CTS earlier this year to study the public policy implications of “value capture”—public financing methods that capture part of the increased value of private property following a public investment such as a highway interchange.
The workshop featured brief presentations by four members of the research team assembled by CTS to conduct the study. Principal investigators are David Levinson, the Braun/CTS Chair in Transportation Engineering and associate professor of civil engineering; Zhirong (Jerry) Zhao, assistant professor in the Hubert H. Humphrey Institute of Public Affairs; and Adeel Lari, research fellow in the Humphrey Institute. The team also includes Michael Iacono, a research fellow in the Department of Civil Engineering.
Levinson began the workshop with some background on transportation and value creation. Transportation creates access; access creates value; landowners receive value. Through value capture, he said, a fraction of that increased value is captured by public organizations to fund transportation infrastructure. In turn, more access is created and landowners receive more value, closing the feedback loop.
Margaret Anderson Kelliher
Zhao introduced three of the value capture strategies that the study will explore: tax-incremental financing, special assessment taxes, and joint private/public development. The study will look at the efficiency (economic impact) of these methods, equity (fairness for payers), adequacy (revenue generation), and feasibility (public acceptance, ease of implementation). The study will also look at how to overcome barriers.
Iacono reviewed two other strategies: land taxes and exactions. Exactions— developer contributions for on-site improvements—are often based on growth forecasts, he said, which can leave communities on the hook if forecasts are off, such as in today’s foreclosure crisis. Land taxes are viewed by economists as an “ideal” tax, he said, but have their own issues. For example, should only nearby residents be taxed for a new freeway interchange when its users may live in a different city or county? The researchers will also analyze how land taxes and development fees affect the amount of development.
Lari described his portion of the study, which will review current Minnesota laws to determine what strategies are allowed and what changes may be needed. He will also review national case studies and lessons learned and explore possibilities for implementation in Minnesota.
Stakeholders offered a number of ideas and suggestions for the research team, such as involving private sector developers.
Preliminary findings are due to the legislature by March 1, 2009, and a full report by July 1, 2009. A second stakeholder workshop will be held in March 2009.
For more information about the study, contact Linda Preisen, CTS research administration director, at 612-626-1808, lpreisen@umn.edu, or see www.cts.umn .edu/Research/Featured/ValueCapture.