One Big Chinese Lesson for America’s Infrastructure Plan | Bloomberg

David Fickling at Bloomberg writes: One Big Chinese Lesson for America’s Infrastructure Plan It’s not just about laying down tracks for superfast trains. It’s about letting the public sector benefit from increasing land values.

My quotes:

Measures to levy fees on the local property owners, such as the special assessment zones used to finance projects like Seattle’s South Lake Union Streetcar, could in theory have a similar effect. The problem is that the unity of purpose needed to develop larger-scale infrastructure is lacking in the modern U.S., according to David Levinson, a professor of transport engineering at the University of Sydney and former transportation planner in Maryland.

“Transportation decisions are much more fractured” in the U.S., Levinson says. “Property taxes are a local government thing whereas transport infrastructure funding tends to be a state thing. Governments aren’t willing to upend the privileges of municipalities to get infrastructure built.”

That fragmentation also means that spending is too reactive — for instance, repeatedly widening roads to eliminate congestion rather than developing integrated visions for how cities as a whole could function better. “The traffic engineers have more power than the planners,” Levinson says, “and the decision makers drive a car, so they have the view from their windshield.”

Can Chinese infrastructure translate in the U.S.? Photographer: Billy H.C. Kwok/Bloomberg

Shaping a new funding model for public transit in Quebec

Jason Magder writes in the Montreal Gazette: Shaping a new funding model for public transit in Quebec

David Levinson, who teaches in the department of civil, environmental, and geo-engineering at the University of Minnesota, said there are several ways to capture the value of transit developments without taxing citizens heavily.

One idea is to reverse the way property is taxed so that the land portion is taxed more heavily than the development portion.

“You should tax the land more. That way, you encourage development as a way to pay for transit, instead of having all these lots of land lying fallow,” he said.

Another method of capturing the value of real estate is for the transit agencies themselves to purchase land around future stations and then develop them, or sell them off.

Any future agreement with the Caisse to build the two train projects will probably end up with the Caisse owning the train stations so that the pension fund can develop commercial or residential properties.

Levinson noted that the city of Vancouver is particularly good at this type of land capture. Land development has helped pay for a portion of the new Canada Line — part of the SkyTrain network that links the suburb of Richmond to the airport and the city’s downtown centre. The transit agency in Vancouver, Translink, is in the process of buying up land around a proposed subway, at least 10 years before the project’s construction is slated to start.

Vancouver is looking to find new sources of revenue to fund a $7.5-billion 10-year wish list, which includes a four-stop subway, and extensions of the SkyTrain network. The city has proposed to increase the provincial sales tax in the metro Vancouver region from 7 to 7.5 per cent to pay for the project, and a write-in plebiscite on the proposal will take place in the spring.

In part 2 Questions surround who should make decisions about future transit projects, he writes:

David Levinson, who teaches in the department of civil, environmental, and geo-engineering at the University of Minnesota, said the London model is worth exploring.

He said it forces transit agencies to think more like companies, and make decisions on projects based on where the service is most needed, in a way that will provide the best value for investment.

“The only way that public transit is sustainable is if it’s serving customers,” he said.

He said the London model still relies on the government to subsidize less busy routes. Private bus companies also compete to run routes that are not profitable.

Levinson said rather than pouring more money into transit, government policies should make it more expensive to use a car to travel, by charging what’s called a congestion tax to drive into the city.

He said governments must make it more expensive to drive, and that will automatically give a major boost to public transit.


Rail-volution: Value Capture: Myth or Reality?

I am moderating (and presenting) on a Rail-Volution panel on Tuesday September 23, 2014 at 10 AM. This is being held in Minneapolis at the Hyatt Regency Hotel in the Minnehaha Room. I will be at the conference much of Tuesday, so email if you want to meet up.
Value Capture: Myth or Reality?     AICP CM 1.5
Capturing the value of public transit investments can be a tricky business. Everybody has a vested interest. Everyone wants a piece of the pie. Value capture strategies include joint development, special assessment districts, tax increment financing and development impact fees. But how much of the value actually makes it back to the transit agency? Where have these strategies been successful and why? What does the FTA think about value capture? Explore the concepts of value capture, learn from real projects and hear the latest thinking directly from the FTA.
Moderator: DavidM.Levinson, Professor, Center for Transportation Studies, University of Minnesota, Minneapolis, Minnesota
NadineFogarty, Principal/Vice President, Strategic Economics, Berkeley, California
Dan Ngo, Program Analyst, Federal Transit Administration, US Department of Transportation, Washington, DC
JohnHowe, Vice President of Strategic Consulting, Parsons Brinckerhoff, Toronto, Ontario
There will also be a Bloggers confab on Tuesday afternoon at 2:00 pm in the appropriately named Mirage room.

New Idea to Pay for Street Repairs Across Minnesota | kstp

KSTP reports on proposed legislation for a Municipal Street Improvement District.

 Instead of using money from property taxes, cities could use yearly tax assessments for on-going upgrades. Erhardt says it’s a good investment strategy that actually saves money in the long run. “Wasted money, temporary stuff, into the potholes which will blow out of there in short time and it’s not the potholes, it is the road deteriorating that bad.”

As a believer in local autonomy and road maintenance, this seems a good idea. This is a form of value capture, similar to Special Assessments, though different in some important, subtle, legal ways.

The League of Minnesota Cities says:

Existing funding mechanisms for street maintenance and reconstruction are inadequate. Special assessments can be onerous to property owners and are difficult to implement for some cities. Special assessments are not always useful for funding collector streets and other streets that do not abut private property. Property tax dollars are generally not dedicated and are sometimes diverted to more pressing needs such as public safety, water quality and cost participation in state and county highway projects. Municipal state aid (MSA) is limited to cities over 5,000 population of 853 cities in Minnesota–and cannot be applied to more than 20% of a MSA city’s lane miles. Existing MSA is not keeping up with needs on the MSA system.

Altoona Pennsylvania adopts Land Value Tax

The Altoona Mirror reports that Altoona Pennsylvania adopts Land Value Tax, sadly the report headlines on confusion. Altoona property tax bills confuse property owners :

“City Council voted to adopt “land value tax” in 2002, on the urging of The Center for the Study of Economics in Philadelphia, whose president, Joshua Vincent, had made a presentation the year before.

Land value tax shifts the basis for property tax to assessed value of land and away from assessed value of buildings. It’s designed to encourage development and discourage speculative hoarding of ground.

While 16 cities and two school districts in Pennsylvania use land value tax, Altoona this year became the first municipality in the country to go as far as to rely on land value alone.

Council introduced the practice with a 20-percent shift toward taxing on land alone, followed by successive annual shifts of 10 percent, until the transformation was complete.

Because collective assessed value of land in the city is one-seventh as much as assessed value of land and buildings combined, the city had to increase millage by a factor of seven to generate the same revenue.

That land millage is now 369 mills.

Applied to the $24.59 million assessed value of land in the city, it generated $9 million for 2011, theoretically.

Because the new millage is seven times higher than the millage under the old system, individual property owners pay less if their land value is less than one-seventh of their total assessed value – the amount that was the basis for taxation under the old system.

Conversely, owners pay more if their land value is more than one-seventh of their total assessed value.”

H/T Matt Yglesias

Mission exempts churches from ‘driveway tax’

Brad Cooper at the Kansas City Star reports on their Transportation Utility Fee: Mission exempts churches from ‘driveway tax’ :

Mission is giving in a little on an innovative, but heavily criticized way to fund road work.
The city this week agreed to exempt churches and some non-profit groups from a transportation fee that was intended to collect money for roads based on properties that generate the most traffic.
Touted as an alternative way to pay for roads short of raising property taxes, the fee set off a firestorm of complaints last year from critics who labeled it a “driveway tax.”
It prompted two churches — First Baptist Church of Mission and St. Pius X Catholic Church in Mission – to bring a lawsuit to halt the fee. The churches were represented by the Alliance Defense Fund, an Arizona legal organization that advocates for religious freedom.
The churches accused the city of violating state law by imposing a tax dressed up as a fee. Their lawyer equated the fee to taxing churchgoers.
City Administrator Mike Scanlon said today that the council agreed to exempt the churches if the Alliance Defense Fund dropped the lawsuit. The ordinance approved by the City Council takes effect Oct. 11. Scanlon declined to comment on the lawsuit.
Last year, Mission became the first city in Kansas — and possibly in the Midwest — to impose what is called a transportation utility fee on property owners to help pay for roads.
The fee is based on how much traffic each property produces. It shifts the burden for financing roadwork away from single-family homes that may not generate a lot of traffic, to properties such as box stores and government offices, which generate more traffic.
Homeowners will pay $72 a year in fees while the local Target store will pay about $46,000. According to the suit, First Baptist has been assessed $970.77 and St. Pius $1,685.19.
The fee generates about $830,000 a year. The decision to exempt the churches and some non-profits such as charities will cost the city about $70,000, Scanlon said today. Other non-profits, like government buildings, would still have to pay the fee.
The fee is intended to help the city bankroll a 10-year, $30 million plan for improving city roads. The city also plans to ask voters this fall to extend a quarter cent sales tax to contribute to the road plan.
The transportation fee coupled with the sales tax could bring the city about $15 million. Mission will count on other sources, like the state and federal governments, to help pay for the rest of the road plan,”

See our paper: Junge, Jason and David Levinson (2010) Economic and equity effects of transportation utility fees. Presented at 89th Transportation Research Board Conference, January 2010, Washington , DC. Journal of Transport and Land Use (in press).

Disclosure: I did a very very small amount of consulting for Mission KS appearing via Skype at a workshop on this fee about a year ago.

Value Capture for DC Streetcars

From the WaPo Commercial property owners may be asked to pay for part of streetcar costs

Commercial property owners along 37 miles of planned routes for a D.C. streetcar system may be asked to foot the bill for a quarter or more of the $1.5 billion system proposed by Mayor Adrian M. Fenty.

DC is looking at Business Improvement Districts among others.