Land-Value Capture

From an article on a new funding model for public transit in Quebec:

"Fanie St-Pierre, a spokesperson for the Agence métropolitaine de transport, said the agency is in the process of studying funding models, including land-value capture, in order to raise money for an extension to the métro’s Blue Line.

The idea behind land-value capture is that a transit line adds value to the homes and developments that are close by. Developing a transit line, therefore, brings more wealth to those who had already bought their homes in the area. Land-value capture allows the agency developing the transit infrastructure to get a share of some of the value it has created.

Last October, the National Bank of Canada published a study that showed land-value capture could recoup up to 35 per cent of the cost of the West Island train line, and the light-rail line over the Champlain Bridge.

That study was based on a 2011 AMT study that showed that land values in Montreal were 13 per cent higher within 500 metres of a métro station, and 10 per cent higher within a kilometre.

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."