Value capture


Value capture

Value capture refers to a type of innovative public financing in which increases in private land values generated by a new public investment are all or in part “captured” through a land related tax to pay for that investment or other public projects.

Value capture refers to the process by which all or a portion of increments in land value attributed to "community interventions" rather than landowner actions are programmed in advance and recouped by the public sector. These "unearned increments" may be captured indirectly through their conversion into public revenues as taxes, fees, exactions or other fiscal means, or directly through on-site improvements to benefit the community at large.

Value capture refers to a type of Public-private partnership in which the private sector compensates a public agency for the cost of a facility that generates economic value. It is in almost all cases led by the responsible public agency.

Transportation projects, for example, can increase adjacent land values, and thus generate a windfall for private landowners. Public agencies can with proper preparation and foresight capture a portion of that windfall with any of the following methods: 1) local improvement districts; 2) public-private development of adjacent land; 3) traffic impact fees; 4) tax increment financing districts; or 5) buying privately held land near transportation hubs that is zoned for low-density use on the open market, increasing the designated use density, then selling the land back to private developers on the open market, capturing the capital gain resulting from both the increase in designated use density and the presence of the transportation hub.

Value capture can be thought of as a fully contained sub-set of land value tax, however with a much more focused domain of application as indicated here. The Lincoln Institute of Land Policy [http://www.lincolninst.edu/] offers this perspective on value capture:

:"Value capture mechanisms are being implemented, with varying degrees of success, in several Latin American countries, while in other parts of the region the notion of value capture continues to meet with suspicion and resistance.

:"In addition of the use of value capture mechanisms to control urban growth and territorial expansion and to reduce the perverse effects of land speculation, we are interested in their applicability to circumstances characterized by the large-scale and persistent informality in land markets so typical in Latin America. These include situations where land tenure relationships are poorly defined, where land occupations are mostly irregular or illegal, and where significant land value increments are self-generated by the community, rather than by state action. This network explores whether land value increments (resulting directly or indirectly from public interventions) can be mobilized to mitigate urban poverty in general and improve the access to serviced land by low-income families in particular. [http://www.lincolninst.edu/topics/value_capture.asp]

::"Another broad meaning of capturing the value is the way by which a business retains value it has created in a prior step for its customers. Generally studied under operations and technology management, typical questions for a firm trying to capture value include::*How should we design the business model?::* Where should we compete in the value chain?::* How should we compete if standards are important?"

ee also

* Land Value Tax
* Property tax
* Tax increment financing

References

* [http://www.vtpi.org/smith.pdf Financing Transit Systems Through Value Capture: An Annotated Bibliography] , Jeffery J. Smith and Thomas A. Gihring in [http://www.vtpi.org Victoria Transport Policy Institute Encyclopedia] , Victoria Canada, Nov. 2004
* [http://www.findarticles.com/p/articles/mi_m0254/is_1_60/ai_74643767 Value Capture as a Policy Tool in Transportation Economics] , American Journal of Economics and Sociology, Jan, 2001 by H. William Batt
* [http://www.scotland.gov.uk/library5/planning/dmclv-00.asp Developing a Methodology to Capture Land Value Uplift Around Transport Facilities: Executive Summary] , for Scottish Executive, October 2004.
* [http://www.rics.org/downloads/static/land_value.pdf Land Value and Public Transport] , Royal Institution of Chartered Surveyors (RICS) and the Office of the Deputy Prime Minister (ODPM), London, Oct. 2002
* [http://www.apta.com/info/briefings/cervero_duncan.pdf Transit’s Value Added: Effects of Light Commercial Rail Services on Commercial Land Values] , Robert Cervero and Michael Duncan, TRB 2002, Washington D.C.
* [http://www.lincolninst.edu/pubs/pub-detail.asp?id=307 Challenges in Implementing Colombia's Participación en Plusvalías] , Botero, Carolina Barco and Smolka, Martim, March, 2000, Lincoln Land Institute

External links

* [http://www.earthrights.net/wg/wg6.html Earth Rights Institute's Land Rights and Land Value Capture Course]
* [http://www.ecoplan.org/land/ The Land Cafe] (international expert discussions, shared library, program)
* [http://www.lincolninst.edu/index-high.asp Lincoln Institute of Land Policy (USA)]
* [http://www.wisc.edu/ltc Land Tenure Center]
* [http://www.urbantools.org/ Center for the Study of Economics (USA)]
* [http://www.urbantools.org The Center for the Study of Economics]
* [http://www.marylandlandtax.org The Land Value Tax Project]
* [http://www.libdemsalter.org.uk Liberal Democrats Action for Land Tax and Economic Reform]
* [http://www.landpolicy.co.uk/ Centre for Land Policy Studies (UK)]
* [http://www.labourland.org Labour Land Campaign]
* [http://www.henrygeorgefoundation.org/ Henry George Foundation]
* [http://landvaluetax.org Land Value Taxation Campaign Committee website]
* [http://www.hallwatch.org/proptax/about/landtax/index_html Land tax in Philadelphia, what does it mean for you?]
* [http://www.progress.org/geonomy Geonomy Society]
* [http://groups.yahoo.com/group/landtheory/ Land Theory] (international expert discussions)


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