Financing Transportation Through the Capture of Land Value Gains: Practical Integration and Stakeholder Involvement

Principal Investigator:

Adeel Lari, Director, Innovative Finance (SLPP), Humphrey School of Public Affairs

Project Summary:

The accessibility that transportation networks provide has a direct influence on the value of land, particularly in urban areas. Improvements to transportation networks alter the relative accessibility of places, and thus land values. The capitalization of these accessibility benefits into land value provides a source of benefit that can be extracted in order to finance, at least partially, transportation facilities and services. This practice of "value capture" is particularly useful in cases where it is difficult or impossible to finance improvements from direct user charges. This project was part of a collaborative research project that explored how to use value capture to fund transportation in Minnesota. This project reviewed current Minnesota laws related to eight value capture mechanisms (land value taxes, tax increment financing, special assessments, transportation utility fees, negotiated exactions, development impact fees, joint development, and air rights) as well as reviewing national project cases and literature. Findings from these efforts were incorporated into a discussion of implementation considerations for Minnesota. This project included stakeholder involvement through workshops at project startup and completion, as well as educational workshops following the study. This document summarizes the eight strategies, their policy implications, and the legal and administrative considerations required to implement them in Minnesota.

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