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Pages 41-66

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From page 41...
... 41 This chapter addresses two broad questions that are important to consider in the determination of whether land value return could be a viable funding source for transportation investments: • Can land value return generate sufficient revenue? • How can land value return methods satisfy constitutional, statutory, and regulatory requirements?
From page 42...
... 42 Guidebook to Funding Transportation Through Land Value Return and Recycling increased land value also will vary on the basis of a variety of factors such as the type of investment, the real estate market, and the general economy of the area in question. Through answering the following questions, transportation investment benefits and resulting increases in land values can be more clearly defined: • What are the key benefits?
From page 43...
... Funding Transportation with Land Value Return 43 Transportation investments also can result in harm as well as benefits. It is important to recognize that positive outcomes from transportation investments may occur along with negative effects such as environmental degradation or by drawing economic gains from neighboring regions or states.
From page 44...
... 44 Guidebook to Funding Transportation Through Land Value Return and Recycling For landowners, the primary differentiating factor will be proximity to the investment, but there could be other factors, such as what is known as the "network effect," in which an investment in infrastructure at one location creates value at distant locations. For example, a new highway interchange can create value near other interchanges that now have access to the new interchange's location.
From page 45...
... Funding Transportation with Land Value Return 45 If a transportation investment benefits all taxpayers equally, regardless of their location, such an investment is generally not suitable for land value return. Land value return typically requires that significant benefits accrue to an identifiable and defined area, regardless of its geographic size.
From page 46...
... 46 Guidebook to Funding Transportation Through Land Value Return and Recycling Simulations can be conducted in many different ways depending on resources available, including the following: – Integrated transportation–land use models. Land use models integrated with travel demand models reflect the interactions between the transportation system and land use development.
From page 47...
... Funding Transportation with Land Value Return 47 Some changes in land value might appear only after a project has matured (long after completion of construction) , while others might be observed upon the announcement of the planned transportation investment.
From page 48...
... 48 Guidebook to Funding Transportation Through Land Value Return and Recycling multiple levels of government, a diversity of agencies, and, increasingly, private entities are involved in funding and delivering transportation investment. Answering the following questions can help determine whether and how value created by improved service or performance of the transportation system or facility can be returned: • Who paid or will pay for the capital cost of the transportation investment?
From page 49...
... Funding Transportation with Land Value Return 49 consider creating or enhancing incentives for local governments to generate revenue from development opportunities created through transportation investment. On the other hand, local governments could spur economic development through investments in transportation and land value return could be a suitable source of funding for the investments.
From page 50...
... 50 Guidebook to Funding Transportation Through Land Value Return and Recycling status of local projects. Local governments would have the option to use general funds, land value return tools, or other sources of revenue for the local contribution.
From page 51...
... Funding Transportation with Land Value Return 51 The Hong Kong rail system land leasing approach to land value return also is a notable example of public–private partnering (see Case Example 16)
From page 52...
... 52 Guidebook to Funding Transportation Through Land Value Return and Recycling Calculating Potential Land Value Return Revenue Revenue potential is an estimate of the possible level of revenue that could result from implementing a particular option. The two key elements of calculating revenue potential are • Increase in land value created by the investment and • Form and level of the tax or fee imposed.
From page 53...
... Funding Transportation with Land Value Return 53 Box 4-1. Revenue Generation Potential Case example 7: Joint Development and Air Rights Lease Project: High Street Cap development Location: Columbus, Ohio Ten percent of ongoing retail development lease revenues was provided to the City of Columbus (20-year lease with eight 5-year renewal options)
From page 54...
... 54 Guidebook to Funding Transportation Through Land Value Return and Recycling divergence (if any) in rents, sales prices, and assessments for these benchmarked properties can be tracked.
From page 55...
... Funding Transportation with Land Value Return 55 up-front payment or in ongoing payments (quarterly or annual, in most cases)
From page 56...
... 56 Guidebook to Funding Transportation Through Land Value Return and Recycling Leveraging Revenue Through Financing In most cases, land value return methods generate a stream of revenue over time. Given that transportation investments often require large, up-front funding, leveraging land value return revenue streams through financing mechanisms such as debt is often desired.
From page 57...
... Funding Transportation with Land Value Return 57 Case example 21: Special Assessment Debt Financing Project: Silver Line Metrorail Extension, Washington Metropolitan Area Transit Authority Location: Fairfax and Loudoun Counties, Virginia The Silver Line is a 23-mile extension to the Washington, D.C., Metrorail system. The $5.8 billion project is funded jointly by the federal government, Virginia, the Northern Virginia Transportation Authority, Fairfax County, Loudoun County, and aviation funds and toll revenues from the Metropolitan Washington Airports Authority (MWAA)
From page 58...
... 58 Guidebook to Funding Transportation Through Land Value Return and Recycling What Are the Legal Requirements for Land Value Return? This section outlines the legal and regulatory context for land value return.
From page 59...
... Funding Transportation with Land Value Return 59 Legislatures, the National Governors Association, and the Tax Foundation's Center for State Tax Policy can be resources. Powers of Counties, Townships, Cities, and Other Political Subdivisions.
From page 60...
... 60 Guidebook to Funding Transportation Through Land Value Return and Recycling Takings also can include some regulatory or revenue-raising activities if they are not properly structured. Determining whether a land value return (or land value return–like)
From page 61...
... Funding Transportation with Land Value Return 61 or which are in the same class. Similarly, most state constitutions have a requirement that taxes and fees be "uniform," that is, that people or property that are similarly situated be treated similarly.
From page 62...
... 62 Guidebook to Funding Transportation Through Land Value Return and Recycling In Maryland, this means that "land" and "improvements on land" are (or could be) separate classes of property.
From page 63...
... Funding Transportation with Land Value Return 63 is the same, and changing the apportionment would have no impact on tax liability. In a jurisdiction that imposes separate rates of taxation on land and buildings, however, appealing the apportionment could yield a material difference in tax liability, even if the total value is not contested.
From page 64...
... 64 Guidebook to Funding Transportation Through Land Value Return and Recycling would, therefore, tax only land values and not building values. Although Altoona, Pennsylvania, tried this briefly from 2011 through 2016, the authors of this Guidebook are unaware of any other jurisdiction that applies a tax rate of zero to building values.
From page 65...
... Funding Transportation with Land Value Return 65 Transportation Utility Fee Transportation utility fees are currently authorized by state law in Oregon, Florida, and Montana. The legal requirements for imposing transportation utility fees are similar to the requirements for exactions and development impact fees: • Rational nexus between the fee and the transportation operating and maintenance costs being funded and • Dedication of revenue to transportation operations and maintenance.
From page 66...
... 66 Guidebook to Funding Transportation Through Land Value Return and Recycling infrastructure capacity for new development is lacking. To impose development impact fees, the following conditions must be met: • Proposed development generates an identifiable need for new or improved public infrastructure, • Cost of new or improved infrastructure need has been identified, and • Fee imposed is proportional to the public-sector cost of new or improved infrastructure for the development.

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