Value capture strategies generate sustainable, long-term revenue streams that can help repay debt used to finance the upfront costs of building infrastructure, such as transit projects. Revenue from value capture strategies can also be used to fund the operations and maintenance costs of transit systems.
Value capture strategies are public financing tools that recover a share of the value transit creates. Examples of value capture strategies used for transit include: tax increment financing, special assessments, and joint development.
Value Created by Transit
Studies have found that transit projects increase nearby property values by 30 to 40 percent, and as much as 150 percent where conditions are ideal. Transit projects likely to create the biggest values include:
- Convenient and reliable transit service, with good regional connections to other transportation modes
- Transit-supportive surrounding land use with adequate jobs, housing units, shops and schools accessible by transit
- Strong political/stakeholder support for transit and transit-oriented land use
- Appropriate local zoning laws, urban design standards and parking rules
- Robust regional and national economy to enable development
Done well, value capture optimizes the benefits for both the public and private sectors. This requires close coordination to ensure that the transit investments are designed to maximize value creation and that the value capture strategies recoup enough funding for transit without creating disincentives for development.
FTA’s Role in Value Capture
Most value capture strategies are local matters. States establish the legal and regulatory framework for revenue/financing strategies, and cities and counties hold the land use implementing authority over revenue/taxing, business districts, and zoning, etc. Land owners determine the use of their land. Transit agencies, like any other land owner, must work with local governments to establish value capture strategies that use property and sales taxes, or development impact fees. The federal government does not have the legal authority to regulate local land use.
When transit agencies own land, particularly land acquired with federal transit funding, they can realize opportunities for transit-supportive value capture strategies. FTA plays a direct role in helping make that happen.
Joint development is a value capture strategy allowing a transit agency to coordinate with developers to improve the transit system and, at the same time, develop real estate in ways that share costs and create mutual benefits. Joint development creates revenue streams for transit that can be used to cover operating expenses and finance capital projects. For example, a transit agency might convert a publicly owned park-and-ride lot into a mixed-use development of offices and housing. When new FTA funding or land previously acquired with FTA funding is used for a joint development, it must go through an FTA approval process.
A wide variety of information and technical assistance regarding value capture is available to potential project sponsors. Please view the resources listed below or contact FTA using the information on the right side of this page for further assistance.