High level training workshop on urban land use and ... file10 Transit-Oriented Development and land...

Civitas Catalyst Training Workshop

Bucharest 26-27 may 2011

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High level training workshop on urban land use

and transport planning

Bucharest, Romania – 26-27 May 2011

How to finance implementation of

plans and investments? Financing

transport investments through

spatial development



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Chapter I

Economic impact of public

transportation



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Does public transport economically matter?

• Property values are affected twofold:

- increased property value around pt stops

- improvement of urban environment as a whole

• Privatization of gains, socialization of costs:

- Property owners are making profits

- Public and some investors have to pay the prize



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Land value capture as a financing tool

• Policies to capture land value in order to

finance public transport are common in the

U.S. (e.g. tax increment funding), but can

also be found in many other countries and

cities such as the Prada line in Madrid,

Copenhague Metro extension, contributions

from businesses in Dublin etc.



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How to calculate land value? /1

• According to Prof. Hass-Klau vom Wuppertal University land value of housing buildings along the new Vienna underground line 3 (opened in 1994) has increased up to 105% within a ten years period of time, compared to an increase of only 43% in areas without access to the underground.

• Further expamples:An independent study commissioned by Transport for London on the extension of the Jubilee Line estimated that between 1992 and 2002, the value of the land surrounding two of its 11 new stations (Southwark and Canary Wharf) had increased by €3.6 billion, while the cost of building the line amounted to €4.5 billion. (University of Westminster, The Jubilee Line Extension study, 2004)



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How to calculate land value? /2

• In order to find sources of funding to finance its underground line, Copenhagen’s project combined the development of transport infrastructure with the development of a new local neighbourhood. However, when the project was launched at the beginning of the 1990s, the global economy was in recession. Erstel, situated 2km outside the cen-tre, was jointly owned by the State (45%) and the city of Copenhagen (55%) and had little value because it was largely inaccessible. Plots of land were sold at a time when the market was booming, and the risk paid off. The total cost of the project amounted to €1.7 billion. 50% was paid for through land sales, and the rest was made up through property taxes and the sale of transport tickets to users (Centre d’Analyse Stratégique. Strategic Newswatch n° 129 – March 2009)



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Reasons for Success / 1

• The land was located in a low-value area because of a lack of mobility infrastructures. Building an underground rail-way didn’t just create accessibility, but high quality accessibility.

• Public Authorities were in a position to buy the land, or already owned the land. In certain countries, such as in France, public real estate entities can acquire land and re-tain ownership until completion of the project. This dis-courages speculation.

• The property market was prospering: In Copenhagen, the risk taken on property was successful because the market picked up at the right time. Conversely, the Docklands Light Railway in London, running from the Docklands to Beckton, was supposed to be funded by selling land, but the contract was signed in 1989, and the property market remained sluggish for another 10 years. The land was sold and the private sector captured the land value gains, while the public authorities financed the line.



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Reasons for Success / 2

• Building the underground line and developing and re-selling surrounding land is a jointly managed project. Even though this situation allows for immediate retrocession of the funds collected, it can nevertheless force underground railway companies to shoulder a financial risk by assigning them with the task of land developer, which is not their field of expertise. The land development project around the extension of Copenhagen’s underground railway will be run by an independent company to avoid these disadvantages.

• Underground railway companies benefit financially both in terms of investment and operation. Because the area boasts high accessibility, the residents of the new area rely heavily on the service, thus contributing to its operating balance.

All information according to: Who pays what for urban transport? Handbook of good practices, Agence Francaise de Développement,www.codatu.org



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Chapter II

Examples of land value capture

policies in the US



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Transit-Oriented Development and land value capture /1

Transportation infrastructure

significantly increases the value of

real estate alongside the tracks

(street car) as well as at stations

(subway, rail).

Case studies from Portland, OR,

San Francisco, CA, but also Hong

Kong and Seoul have shown, that

conversion of former freeways into

urban amenities with good public

transit facilities coincide with higher

land prices.

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Transit-oriented Development and land value capture /2

M. Iacono, D. Levinson, Z. Zhao: Value Capture for Transportation Finance

Land value capture best

suited for funding infra-

structure investment,

since gains are most

likely realized upon

completion of the

transport facility.

There is a clear link bet-

ween the land value cap-

ture policies and its im-

pact on efficiency, equity,

sustainability and political

and administrative feasi-

bility.

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Case studies – SeattleKing County

- largest county in WA state

- more than 2,100 square miles surface

- 1.9 million inhabitants

- 39 cities

- Seattle largest city with 600,000 residents

(ranked 1st in ULI’s 2009 “Emerging Trends

in Real Estate” report)

Seattle Streetcar

-1.3 mile route from downtown retail core

to South Lake Union district

- half of the initial $52 million capital

investment paid by private property owners

- attracting 7,500 new housing units and

more than 2 million square feet of

commercial projects (1.3 million square

feet under construction)

Picture O. Mietzsch



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Case studies – Portland /1

Portland Streetcar

- operation started in 2001

- total construction costs were

$103.15 million: $21.50

million from property owners

(LID), 20% financed by TIF

from the City’s urban renewal

agency, 20% from Federal

grants (including HUD)

Portland

- population of 582,130

- "greenest“ city in the U.S.

- Oregon's most populous city with two

million people living in the Portland

metropolitan area

Pictures O. Mietzsch



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Case studies – Portland /2

TriMet

- main transit agency for the three counties

- annual TOD budget of $4 million not sufficient to keep up with

demand (on average $300,000 grant for developers to

increase density to attract more passengers

Picture O. Mietzsch



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Case studies – San Diego /1

San Diego

- California’s second largest city

- population of 1,279,329

- density of 3,771.9 people per square miles

- Rated fifth best place to live in 2006 by Money magazine

- according to Forbes ranks as the fifth wealthiest city in the U.S.

- defense, manufacturing, and tourism three major economy sectors

Picture O. Mietzsch



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Case studies – San Diego /2

2030 Regional

Transportation Plan

- more than one

million new residents,

465,000 new jobs,

and 290,000

additional homes

expected within next

25 years

- new funding sources

such as ¼ to ½ cent

new sales tax, parcel

tax or payroll tax could

provide $205 million,

but would require two-

third majority

TransNet

- half-cent sales tax

for local transportation

projects, first appro-

ved by voters in 1988,

extended in 2004 for

another 40 years (=

additional $16 billion)

-instrumental in

expanding the region’s

transportation system,

but not sufficient in

view of projected

demand

San Diego County Regional Transit Map



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Chapter III

Contributions from the auditorium

High level training workshop on urban land use and ... file10 Transit-Oriented Development and land...

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