Value Capture for Transportation Finance

Researchers identify eight potential strategies to raise funding for transportation

A team of University of Minnesota transportation and public policy researchers has identified eight potential strategies to raise funding for transportation infrastructure investments. When a large public facility is built—such as a new freeway interchange or transit station—the value of surrounding private property can go up, sometimes substantially. The eight strategies capture a part of this value. The following documents describe the strategies, their policy implications, and the legal considerations needed to use several of them in Minnesota.


Project Summary

Large public investments in state transportation infrastructure–such as new freeway interchanges, highways, or transit stations–can increase the value of adjacent private land, sometimes substantially. Capturing the value of this benefit through various tools is gaining interest as a finance mechanism for infrastructure investments. But many questions remain: Does "value capture" promote or hinder economic development? How high should the tax rate be? How stable is the revenue?

To answer these and other questions, the state legislature appropriated funding to CTS to study the public policy implications of value capture.

Researchers reviewed the relationship between transportation and land values, including the measurement of benefits from a transportation improvement, as well as the legal and economic frameworks for capturing the value gains. They explored the major financing techniques associated with value capture–such as joint development of infrastructure and adjacent private parcels, rezoning and reselling, impact fees, special assessment districts, and tax increment financing–and some examples of their implementation. They then evaluated several of the proposed policies and their suitability for implementation locally, based on the criteria of economic efficiency, social equity, adequacy as a revenue source, and feasibility.


Research Team

CTS assembled an interdisciplinary research team for this investigation.

Study principal investigator

  • Robert C. Johns, Director, Center for Transportation Studies

Research principal investigators

  • Adeel Lari, Research Fellow, Humphrey School of Public Affairs
  • David Levinson, R.P. Braun/CTS Chair in Transportation Engineering and Associate Professor, Department of Civil Engineering
  • Zhirong (Jerry) Zhao, Assistant Professor, Humphrey School of Public Affairs

Co-investigator

  • Michael Iacono, Research Fellow, Civil Engineering

Research assistants

  • Sara Aultman, Kirti Vardhan Das, and Kerstin Larson, Humphrey School of Public Affairs
  • Jason Junge and Michael Scharenbroich, Department of Civil Engineering

Study coordinators

  • Joe Barbeau, Center for Transportation Studies
  • Linda Preisen, Center for Transportation Studies

News & Media Coverage

Mission considers road fee that would link properties, street use, Kansas City Star, May 19, 2010

Shrinking gas tax pot has state looking elsewhere, Pioneer Press, August 11, 2009

New U of M report suggests transportation revenue alternatives, Saint Paul Legal Ledger Capitol Report, July 9, 2009

New 'U' study offers Minnesota legislators advice on paying for transportation projects, Politics In Minnesota, July 7, 2009

Value Capture for Transportation Finance, TRB Transportation Research E-Newsletter, July 7, 2009

Study identifies value capture strategies to raise transportation revenue, CTS Report, August 2009

Value Capture study featured at transportation funding and finance forum, CTS Report, August 2009

Research team presents Value Capture Strategies, CTS Report, May 2009

Research team gathers feedback at Value Capture stakeholder workshop, CTS Report, October 2008

Legislature funds University study of 'value capture' for transportation finance, CTS Report, August 2008