Value capture

Value Capture strategies operate under the assumption that public investment often results in increased valuation of private land and real estate.

[2] Public investments, such as building transportation or sewer facilities, can increase adjacent land values, generating an unearned profit for private landowners.

Urban planners and finance officials are often interested in value capture mechanisms, for at least two reasons: 1) because they offer a targeted method to finance infrastructure benefiting specific land, and 2) because some such investments can generate private investment in the area, which will more widely benefit the city (e.g., by providing employment opportunities, shopping and other amenities, and a more robust and diverse tax base.)

This can help address public concern about the fact or perception of unfair windfalls when specific owners’ land values increase after urban infrastructure investment is paid from general city revenues.

Thus, even if the rate of taxation does not change, the tax revenue generated from properties which benefit goes up by way of higher land values and increased development.

Municipalities have used numerous means to capture unearned land values increased by the addition of public infrastructure. This image shows how building height and density (and therefore value) have increased near rail transit stations.