NYC-WTC_000187725

NYC 9/11 Public Portal Document

10 I burdens in repairing rapidly decaying infrastructure systems in a time of scarce public resources with mounting deficits, declining tax revenues, and accelerating construction costs. Though cities have imposed infrastructure financing requirements on private development for some time, these mandates have been largely for project-related facilities that did not serve the community at large. There were of course exceptions, such as the special real estate assessments levied in New York in early days to help finance subway construction. By and large, however, capital investment in area wide central facilities and systems was funded out of city wide taxes or user charges. Since the 1970s, many cities have curtailed provision or expansion of infrastructure systems to new development by growth management programs. Responding to competing demands on scarce capital resources, cities limited or redirected private growth to areas with adequate capacity, thus controling overall development in phase with manageable public financing. It was not until the late 1970s that dramatically different financing alternatives for public infrastructure provision were widely discussed. In a 1979 study published by UMTA, Financing Transit - Alternatives for Local Government. "value capture” financing or benefit-sharing taxation of real estate value increments received prominent attention. Since then, more than one hundred cities have instituted some form of developer fees or exactions, special benefit assessments, tax increment financing, or non-fund contributions, as a value capture approach. Many of these financing mechanisms were put in place without a rational measurement basis or with an inadequate understanding of the market consequences. The objective of value capture financing, or benefit-sharing of capital investment in public transit systems, is to arrive at an equitable distribution between public and private outlays for new initiatives and normal system rehabilitation that bears a direct relationship to the distribution between diffused public and measureable private benefits, so that capital financing of these systems is placed on a more stable, equitable long term basis. This objective is best achieved by capturing a portion of the surplus (land value) generated for private property owners by the accessibility improvements created by the investment, either as a lump sum or on a recurring basis. For reasons of equity and efficiency in property markets, value capture financing requires accurate measurement of the surplus value conferred by the capital investment, so as not to create dislocations or disbenefits. In practice, however, numerous forms of value capture or benefit sharing financing have emerged, some of which use strategies or revenue raising mechanisms that are highly interventionist in the development process. The major forms of value capture financing are as follows: o property taxation: captured from recurring general real

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NYC-WTC_000187741