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Guide to Value Capture Financing for Public Transportation Projects (2016)

Chapter: Chapter 2 - Definitions of Value Capture Mechanisms

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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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Suggested Citation:"Chapter 2 - Definitions of Value Capture Mechanisms." National Academies of Sciences, Engineering, and Medicine. 2016. Guide to Value Capture Financing for Public Transportation Projects. Washington, DC: The National Academies Press. doi: 10.17226/23682.
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13 Following are definitions of strategies and mechanisms commonly associated with value cap- ture in the context of transit infrastructure finance. 2.1 Value Capture 2.1.1 Definition Value capture is the public recovery of some portion of private property value created as a result of public infrastructure investment. This is not a new concept. The Romans may have assessed wealthy homeowners to finance aqueduct improvements (Zhao and Larson, 2011). In 1427, Henry VI adopted an act assessing differential tax rates on those “whose property derives benefit from the works” related to sewage and sea defenses (Connellan, 2004). John Stuart Mill proposed taxation of the “unearned increment” in 1858. The concept was refined by economist Henry George in 1879 (George, 1879). New York City levied special assessments in 1691 to finance drainage and street improvements. In the early 1930s, New York adopted special assess- ments, successfully and unsuccessfully, to capture part of the value created by the subway system extension (Hagman and Misczynski, 1978; Raskin, 2013). Public infrastructure investment can attract private investment in real estate development and lead to the creation of significant real property value. Such value creation can be directed and encouraged through coordinated partnership between transit agencies, local govern- ments, developers, and other entities. The following series of figures (Figure 5 to Figure 9) illustrate the dynamic relationships between various entities, value creation, and value capture in five steps. Subject to market constraints, new transportation capacity and access create opportunity for increased real estate development. Developers respond to transit agency investment in infra- structure by evaluating market opportunity for value creation created by new transportation capacity (or anticipation of such capacity). The large green circle in this series of figures represents value creation through transit-influenced development. TOD is a subset of transit-influenced real estate development. Some portion of aggregate value creation (the larger, light green circle) may be considered market premium (the smaller, dark green circle), reflecting consumers’ willingness to pay higher prices for real estate assets (residential units, office and retail space, etc.) in close proximity to transit access and related amenities than for otherwise identical properties not similarly served by transit. Value associated with the transit service/utility, as well as that of other amenities com- mon to high-quality TOD, becomes capitalized into the market price of real property (McIntosh, Trubka, and Newman, 2014; Cervero et al., 2004). C h a p t e r 2 Definitions of Value Capture Mechanisms

Figure 5. Transit infrastructure investment, value creation, and value capture (Step 1 of 5). Figure 6. Transit infrastructure investment, value creation, and value capture (Step 2 of 5). Figure 7. Transit infrastructure investment, value creation, and value capture (Step 3 of 5).

Definitions of Value Capture Mechanisms 15 A portion of the transit value premium (here referred to as “captured value”) may be recov- ered through one or more value capture mechanisms. To the extent that value capture imposes an additional cost burden on real property, care must be taken that the amount of value captured does not exceed consumers’ perceived transit-related value premium. In an efficient real estate market, value capture exceeding consumer’s increased willingness to pay for transit amenities will create a competitive disadvantage and disincentivize investment in development and value creation. In practice, these considerations are further complicated by real estate land acquisition, entitlement, development, construction, and financing costs; many or all of these may be higher than those in less complex projects of lower development intensity. Figure 8. Transit infrastructure investment, value creation, and value capture (Step 4 of 5). Figure 9. Transit infrastructure investment, value creation, and value capture (Step 5 of 5).

16 Guide to Value Capture Financing for public transportation projects A value capture strategy allowing local government to offset fiscal impacts associated with new real estate developments (such as TOD) and to finance supportive municipal infrastructure can allow local governments to invest in further value creation through enhanced infrastructure, expanded service capacities, and various amenities in the public realm. Additional value may be created, and additional public pol- icy objectives may be achieved, through strategic planning and partnership with other public agencies or not-for-profits such as workforce or affordable housing providers. Costs and benefits associated with development of affordable or workforce housing, parks, parking, or municipal infrastructure may be allocated among the parties in the context of development agreements negotiated toward maximizing mutually beneficial value creation. Opportunity for value capture may be maximized to the extent that public and private stakeholders successfully cooperate in strategic value creation. Billions of dollars in new development have now been realized in proximity to Portland’s streetcar corridor. For more details, please see Appendix F. 2.1.2 Value Capture Mechanisms Value capture usually refers to one or more of a number of mechanisms or strategies such as those shown in Table 3 and described in the following. As Table 3 suggests, value capture mechanisms can often be applied jointly. For instance, the Portland streetcar project used a combination of special assessment districts, tax increment financing, and parking fees. Funding for the Kansas City streetcar included a special assessment district based on property values, sales taxes, and parking fees. In many settings, joint development, TIFs, and special assessment districts are “likely to yield the highest revenue” (Mathur and Smith, 2012), and the guide will focus on these. 2.1.2.1 Impact Fees Impact fees are assessed by local governments against newly developed real estate to offset costs associated with providing infrastructure and service to that development. Impact fees com- monly finance roadways, water and wastewater utilities, schools, libraries, and other municipal Portland, OR, Modern Streetcar Project Example The first phase of Portland’s modern street- car system was funded in 1996 with an initial infrastructure investment of $103 million. Property and business owners and developers, motivated by opportunities for development, redevelopment, and revitalization of dormant urban areas, embraced local improvement districts and specific forms of special assess- ment districts as a means to contribute finan- cially to the streetcar project and to see it to fruition. Value Capture Mechanism Exclusive Application Joint Application Air rights Impact fees Joint development Land value taxation Naming rights Negotiated exactions Parking fees Sales tax districts Special assessments districts TIF Adapted from Vadali, 2014. Table 3. Major value capture mechanisms and their applications.

Definitions of Value Capture Mechanisms 17 services. Similarly, transportation impact fees can be used to finance transit or transportation infrastructure. Impact fees are widely used in residential development. Several studies have found that they increase housing prices (Mathur and Smith, 2012). One challenge associated with impact fees is that they impose additional costs to new devel- opment. Everything else being equal, these fees could reduce competitiveness with compa- rable properties if the associated benefits—higher-quality infrastructure, schools, and other amenities—are not cost-effectively delivered and the value is not clearly communicated (Fogarty and America, 2008). 2.1.2.2 Joint Development Joint development results from a partnership between multiple parties engaged in a particular real estate development project. In the context of value capture, joint development generally refers to a partnership among an agency, one or more developers, and/or other parties such as a local government. Such projects often con- sist of public–private partnerships (P3s) to develop land owned or controlled by the transit agency or local government, often within half a mile of the transit facility. Like other value capture mecha- nisms, joint development seeks to capture what would otherwise be private benefits created through public infrastructure (Zhao and Das, 2012). The FTA has published guidelines defining joint development projects for purposes of funding eligibility. Joint development projects under FTA guidance may include residential and non- residential property physically or functionally associated with public transportation projects. Eligibility for federal funding is subject to several criteria, including that the project should: • Enhance economic development and/or incorporate private investment, • Enhance the effectiveness of the associated public transporta- tion project or facilitate enhanced coordination between multiple transportation modes, and • Yield a fair share of revenue for support of public transportation (FTA, 2014a). Joint development is often made up of complex mixed-use projects involving several par- ties and designed to achieve multiple objectives. Residential joint development projects may include affordable or workforce housing elements and partnerships with local governments or other public entities in addition to the transit agency. One or more joint development projects may be executed under a master development agreement allowing a single development team to oversee one or more large projects or sites and oversee or coordinate sub-developers or builders. One potential challenge and limitation of joint development is that the transit agency or local government may own only a fraction of the land supporting value creation near the facility. In many cases, joint development is combined with a broader district approach, like a special assessment district or TIF. For the purposes of this guide, air rights are considered a subset of joint development. Depending on applicable legislative authority, transit agencies may be able to sell air rights to developers—including developable volume above or even below a transit facility. In general, air rights are applicable in dense urban areas where the additional costs of air rights construction can be borne by higher prices and rents. Joint development with air rights: Bethesda Metro Station, WMATA: Bethesda, MD The Bethesda Metro Joint Development (BMJD) project encompasses buildings above the Bethesda Metrorail station in Bethesda, MD. In 1981, the Bethesda Metro Center Limited Partnership entered into a 50-year lease agreement with the Washington Metropolitan Area Transit Authority (WMATA), the regional transit agency. The project contains a 17-story office tower with 368,000 ft2 of office space, 41,600 ft2 of retail space, a 390-room hotel, and a five-story parking garage. BMJD generates minimum annual lease revenue of $1.6 million (Mathur, 2014).

18 Guide to Value Capture Financing for public transportation projects 2.1.2.3 Land Value Taxation Unlike commonly administered ad valorem property taxes, land value taxation is a levy on the unimproved value of land, without regard to vertical improvements. Many economists and policy advocates have lauded the merits of land value taxation. The underlying premise is that unlike the value of vertical building improvements such as housing or office space, which are subject to many private choices and investment decisions, the economic value of unimproved land is more directly reflective of the value of public investment in infrastructure. This makes land value the most logical, and perhaps most equitable, source of public revenues. Advocates of land value taxation suggest that emphasizing ad valorem taxation on land rather than building improvements could have wide-ranging benefits with respect to investment behavior and social and economic consequences. Land value taxation is much discussed, and various versions have been implemented in many places throughout the world and in U.S. states such as Pennsylvania and Connecticut. Nevertheless, land value taxation remains uncommon in the United States (Gurdgiev, 2012). 2.1.2.4 Naming Rights Naming rights are a familiar concept for sports venues and involve an up-front or ongoing payment from a private entity to an agency in return for naming a station or other assets for the private firm. As discussed in the following, naming rights may be appropriate for stations or even entire bus rapid transit (BRT) or light rail lines, as was the case for Cleveland’s Healthline and the UC San Diego Blue Line (Greater Cleveland Regional Transit Authority, 2016; University of San Diego, 2015). 2.1.2.5 Negotiated Exactions Negotiated exactions are direct payments or in-kind contributions by developers to local governments that are used to offset costs imposed by development. Exactions that are negoti- ated can include infrastructure improvements such as roadway paving and street signalization as well as contributions of equipment or facilities such as fire trucks and park, library, and school improvements. Negotiated exactions are often set as a condition for granting development approvals for a specific parcel or plan. It is important to note that negotiated exactions need to meet two legal precedents: (1) a relationship, or nexus, between the exaction requested and the needs to government service provi- sion created by the development, and (2) appropriate proportionality between the exaction and the impact imposed by the development. Much like impact fees, negotiated exactions are commonly viewed as a means of having development pay for the costs associated with its impacts. However, the actual process of negotiated exactions is highly dependent on the specific project context, including the political con- text of the development and the parties included in the negotiations. As such, negotiated exactions do not lend themselves easily to gener- alization or direct reapplication in many contexts. 2.1.2.6 Parking Fees Some local governments and transit agencies have established park- ing fees to pay for transit, either within the district benefitting from the transit or city-wide. One example is Portland, whose parking fee materially supported its streetcar project. Not all practitioners would consider parking increments value capture since they are not neces- sarily capturing the increased value of parking. Special Assessment Districts: Community Development Districts, FL When developers of master-planned commu- nities in Florida first started to employ com- munity development districts (CDDs) in the early 1980s, developers of competitive projects not subject to CDD assessments successfully marketed against CDD projects because of the higher apparent tax burden. Over time, however, home purchasers recognized the enhanced quality of place that CDDs delivered. Special assessments are likely to be most feasi- ble in areas subject to significant development activity (also subject to special assessment fees) and in robust real estate markets.

Definitions of Value Capture Mechanisms 19 2.1.2.7 Special Assessment Districts Local governments establish special assessment districts within which monetary obligations/charges are assessed against real property parcels benefitting from one or more specific public investments. A general requirement of such assessments is that the benefits on which they are based are direct and unique. SADs assume a variety of forms across jurisdictions but are commonly used to reimburse public infrastructure investment that directly benefits private property. Some form of special assessment has been authorized within all 50 states, allowing local governments to finance a wide variety of infrastructure improvements. Benefit assessment districts and local improvement districts are specific examples of special assessment districts. In one survey, Orrick and Datch (2008) show how specific states define special districts dif- ferently, underscoring the importance of understanding local regulations and laws. Assessments may be used to fund a wide variety of municipal infrastructure, such as streets, underground utilities, fire protection equipment, and transit facilities. Addi- tionally, special assessment districts can be used to support ongo- ing maintenance of streetscaping and landscaping. Kansas City successfully used a Missouri Transportation Development Dis- trict, a form of special assessment, to fund all operations and maintenance for its 3.9-mile streetcar project, estimated to be $2.8 million annually in 2013 dollars (Kansas City Area Trans- portation Authority, 2013). Establishment of a special assessment district commonly requires a majority vote of property owners within the proposed district. Special assessments are generally of fixed duration, sometimes extending to 30 years. Special assessments are often employed outside of transit projects to fund municipal infrastructure and utility capacity. In some jurisdictions, special assessments may also be employed to fund municipal services such as police or fire protection or street lighting. In other jurisdictions, use of special assessment to fund services may be prohibited. Special assessments must be proportional and directly related to the cost of the infrastructure or service and the benefit to the property owner. Unlike impact fees or negotiated exactions, special assessments can be levied against and generate revenue from existing real estate improve- ments as well as new development. Imposing assessments on existing properties has different equity and political implications than assessments against new developments alone. Special assessments are sometimes made against only one property class, such as commercial but not residential, for example (Mathur and Smith, 2012). 2.1.2.8 Sales Tax Districts In a sales tax district, retail entities and other commercial enterprises that are subject to the jurisdiction’s sales tax are charged an increment that is dedicated to the transit project. If the effective sales tax rate is not higher than that of competing areas, sales tax districts may not dis- tort real estate markets in the same way that special assessment districts do. Establishment of a sales tax district may require a referendum of registered voters. The Kan- sas City Downtown Streetcar Transportation Development District (which enabled a district- wide sales tax) was formed pursuant to the Missouri Transportation Development District Act, Special Assessment Districts: Red Line Benefit Assessment Districts: Los Angeles, CA The Red Line was the Los Angeles Metro Rail system’s first heavy rail line. In 1992, voters passed bond measures that created two bene- fit assessment districts around future Red Line stations. The districts included 1,500 proper- ties, with a total area of over 67 million ft2. By 2005, the districts were generating $20 million per year in revenue and paid for 9% of the Red Line construction (APTA, 2015a). Photo credit: Creative Commons.

20 Guide to Value Capture Financing for public transportation projects §238.200 to 238.280. Following creation of the sales tax district, a separate measure proposing the tax was voted on by citizens within that district (Kansas City, 2012c). 2.1.2.9 Tax Increment Financing Local and state governments establish TIF districts within which ad valorem tax revenues are capped for a period of time for purposes of remittance to the local government’s general fund, based on the total assessed value within the district on a specified date. Thereafter, tax revenues resulting from increases in assessed value—the “increment” induced through public and private investment—are used to reimburse infrastructure invest- ment either directly or via bond debt service payments, as shown in Figure 10. TIF financing has been used extensively in the United States to finance a wide variety of infrastructure and redevelop- ment projects. In transit-specific projects, TIF has been used to finance station infrastructure, structured parking facilities, and related infrastructure. TIFs may also be used to finance municipal infrastructure and other public investment associated with TOD. Many (but not all) states authorize TIFs. Because the tax increment is derived from the total increase in ad valorem assessments—on all properties—within the district, benefit is derived from market appreciation of existing and reno- vated properties as well as the incremental value of new develop- ment. On the other hand, assessed values tend to be somewhat murky, subject to political and policy agenda, and lag real-time changes in market value (Case and Wachter, 2005), reducing con- fidence in this technique as a financing source. TIF financing of transit-influenced development or TOD can mitigate costly up-front obligations to developers or the local government. Such financing can provide development incentives in addition to those resulting directly from proximity to transit. TIF is of even greater value where transit stations will serve new, as opposed to existing, development. This is because every dollar of new, additional assessed valuation will contribute to the TIF revenue stream, and values of vacant land or blighted or under- utilized property are likely to be less than those of existing and fully occupied buildings. Establishment of a TIF district commonly requires a finding that the proposed development, redevelopment, or economic development project would not occur except for the investment facilitated through TIF. Successful TIF is explicitly dependent on the project’s success in raising assessed real estate values within the district. Failure of assessed values to increase could jeop- ardize TIF-backed bond repayments. Because of this, TIF bonds are often secured by general or other obligations of government in addition to the TIF increment or some other type of back- stop. This is a critical issue in using TIF as a financing mechanism. A form of such a backstop is a synthetic TIF, in which the increment is not pledged directly to bondholders. Instead, bonds are secured through a local government general obligation, which uses the increment to satisfy that obligation. Charlotte, NC, for example, has employed a version of synthetic TIF to finance TOD improvements. Under the Charlotte TIF, developers advance TIF: Transbay Transit Center: San Francisco, CA The Transbay Transit Center is a multimodal transportation and real estate development project that will connect 11 transit systems and provide 3 million ft2 of new office and commercial space, 100,000 ft2 of retail space, and 2,600 homes. Value capture revenues will be generated by this new real estate develop- ment. The TIF district around the project is expected to generate $1.4 billion over 45 years (APTA, 2015a). Photo Credit: Transbay Transit Center, 2016.

Definitions of Value Capture Mechanisms 21 capital for infrastructure investment and are reimbursed from incremental tax revenues ear- marked for the purpose (Fogarty and Austin, 2011). The complexity of TIF requires extensive financial and fiscal impact analyses. “Creating and maintaining a TIF district requires significant institutional capacity. TIF is complex, often requiring the expertise of municipal-bond financing experts, economic development experts, real estate appraisers, civil engineers, financial analysts, and consulting planners” (Mathur and Smith, 2012). Several states are considering legislation that fosters TIF along rail corridors that cross munici- pal boundaries. This legislation includes SB077 in Illinois, which allows for TIF in certain “rede- velopment project areas,” including the Chicago Union Station Master Plan and the Chicago Transit Authority’s Red and Purple Modernization Program, Blue Line Modernization and Extension, and Red Line (Illinois General Assembly, 2015). Similarly, Massachusetts is con- sidering legislation that would allow corridor-based TIF that could be used to help fund the Green Line light rail extension and potentially other Massachusetts Bay Transportation Authority (MBTA) transit projects (Commonwealth of Massachusetts, 2016). 2.2 Value Capture Participants Three major participants in projects with value capture are defined in the following sections: the transit agency, developer, and local government. As discussed throughout the guide, there are numerous other public and private entities that play a role in value capture success. 2.2.1 Transit Agency For the purposes of this guide, a transit agency is a public entity whose primary purpose is to plan, construct, operate, maintain, and (usually) finance public transportation services in a particular jurisdiction, usually within a local government or in a region consisting of a group of local governments (a metropolitan region). These include the 834 organizations recognized by APTA that operate a public transportation system in an urbanized area (APTA, 2015b). Transit agencies can be organized as departments of a local government or as separate public authorities. Figure 10. Tax increment finance value capture mechanism.

22 Guide to Value Capture Financing for public transportation projects 2.2.2 Developer For the purposes of this guide, developers are construed as private or not-for-profit entities that invest in and effect the improvement of real property. This includes coordination of real estate development activities such as the purchase of land, improvement of land (vertical or infrastructure), renovation of existing improvements, and sale of the improved land or parcels to others. The developer may or may not be the property owner. 2.2.3 Local Government For the purposes of the guide, a local government is the municipality providing municipal goods, services, and infrastructure in the area served by the subject transportation project. A local government also includes any government entity with the right or obligation to levy local/ municipal tax obligations on real property benefitting from a transportation improvement. 2.3 Public Transportation Modes This guide applies to many modes of public transportation, including BRT, commuter rail, heavy rail, light rail transit (LRT), and streetcars. The concepts and principles articulated in the guide also apply to intercity transportation, including intercity and high-speed rail and stations serving private intercity buses. While BRT is an emerging mode in the United States, recent research suggests that high- quality BRT service, delineated as “silver” or “gold” standard service (Institute for Transportation Development and Policy, 2016), can result in TOD similar to that which is induced through LRT and streetcars (Nelson and Ganning, 2015). 2.4 Transit-Influenced Development and Value Value capture opportunities may be associated with many types of transit-influenced develop- ment or with other transportation infrastructure investment. TOD is a type of transit-influenced development most often associated with value capture initiatives. 2.4.1 Transit-Oriented Development TCRP Report 102: Transit-Oriented Development in the United States observes that there is no universally applicable definition of TOD (Cervero et al., 2004). Definitions evolve over time, as does the concept itself, and vary from place to place depending on context. However, common elements of TOD are: • Integrated design: TOD consists of vibrant, pedestrian- and bicycle-friendly, amenity-rich, mixed-use development benefitting from proximity to transit. TOD generates and benefits from significant transit ridership. TODs are relatively high-density developments incorpo- rating residential, retail, office, institutional, and civic spaces. TOD is often of high quality, planned for sustainability and economic vitality, and designed to take advantage of market opportunity created by transit users and others. • Value creation: TOD creates opportunity for significant value creation. For example, new stations can stimulate development of previously underutilized sites. Municipal planners may allow development of higher-density development and more intensive mixed use near sta- tions. New facilities may induce additional public investment in infrastructure beyond transit. The transit amenity may enhance marketability of new or renovated residential units, offices, and retail space (Fogarty and America, 2008; Gihring, 2009).

Definitions of Value Capture Mechanisms 23 • Premium: Numerous studies have demonstrated that under certain circumstances, TOD can command sales price and rent premiums for a variety of properties (McIntosh, Trubka, and Newman, 2014). Consumers’ willingness to pay higher prices for TOD amenities can help to offset increased development costs associated with higher densities and mixed use (Cervero et al., 2004). 2.4.2 Transit Areas of Influence APTA defines “transit areas of influence” as those “spatial areas in which transit stops and stations typically have the greatest impact on land use and development and from which there is high potential to generate transit ridership” (APTA, 2009). APTA “provides guidance on delineating these areas for the purposes of influencing decisions about private and public invest- ments and services.” The research team has adopted APTA’s definition of transit areas of influ- ence for use in this guide. In site- and context-specific application, however, the nature and extent of transit influence on value creation and the surrounding built environment will vary by alignment, station location and design, station typology, competitive market, and other factors. APTA defines three spatial definitions of transit areas of influence (see Table 4). Value capture may also be effectively applied to real estate that falls within secondary catch- ment areas. This includes existing properties located beyond the typical one-half-mile radius of a transit station, where value is often captured through special assessment districts, impact fees, or other techniques. The real estate in this area may be of a more traditional format, including office buildings constructed in park-like settings, such as along the Dulles Metrorail, or single- family detached homes as proposed in Miami (Scurr and Page, 2015). The concept of transit areas of influence can also extend to pedestrian and bicycle improve- ments. The FTA published a final policy statement on the eligibility of pedestrian and bicycle improvements that identifies a functional relationship of half a mile for pedestrian improve- ments near a transit facility and 3 miles for bicycle improvements (FTA, 2009). This policy recognizes a de facto relationship between pedestrian improvements and public transportation. The policy also recognizes that pedestrian and bicycle improvements beyond these distances may also have a functional relationship to public transportation, but such relationships must be demonstrated. The importance of this policy for value capture is to illustrate that the concepts of areas of influence and catchment areas for transit, pedestrian, and bicycle improvements are context-specific but are becoming general industry guidelines. Type Definition Station Area Radius Core station area The area around a transit station within which land use and urban design features have a primary influence on transit ridership and pedestrian access. ¼ mile Primary catchment area The area within which land use and urban design features, as well as the ease and directness of access to the stop or station, have a substantial impact on transit ridership and pedestrian access. The primary catchment area may generate a significant portion of total transit trips to and from the stop or station. ½ mile Secondary catchment area The area around a transit station within which ease and directness of access to the stop or station have the greatest influence on transit ridership and within which the majority of all trips using the stop or station are generated. Within this area, bike, feeder transit, and auto are the primary access modes to and from the station. 2 miles Source: APTA, 2009. Table 4. Transit area of influence definitions.

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TRB's Transit Cooperative Research Program (TCRP) has released Research Report 190: Guide to Value Capture Financing for Public Transportation Projects. Value capture is the public recovery of a portion of increased property and other value created as a result of public infrastructure investment. The report identifies the requirements necessary for successful value creation through transportation infrastructure investment and capturing a portion of that value through specific value capture mechanisms. It includes six case studies that provide practical examples of successful value capture from public transportation investments.

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