City Planning with Land Value Capture: A Comparative Analysis of Capture Policies in New York, London and Toronto
This paper examines the different ways public transit service providers and governments generate revenue through land value capture (LVC) tools in London, New York and Toronto. In this paper, LVC is examined as a levy that captures the betterment of land values caused by a government funded transit infrastructure project, specifically subway systems. LVC provides the public purse a mechanism to generate revenue from augmented land values attributable to their subway project, which is then allocated towards project debt repayment. The City of London applied the Business Rate Supplement (BRS) to non-residential properties coupled with a Community Infrastructure levy (CIL) on new developments to generate revenue for the Elizabeth Subway Line project. To pay for the extension of the Number 7 Subway Line the City of New York implemented a combination of; Payment in Lieu of Taxes (PILOT), Payment in Lieu of Mortgage Recording Tax (PILOMRT), Eastern Rail Yard Transferrable Development Rights (ERY TDR) and District Improvement Bonuses (DIB) throughout the Hudson Yards site. A portion of the City of Toronto’s SmartTrack project will be funded through a municipal version of tax increment financing (TIF) based on TIF zones along the SmartTrack corridor. Each case study is evaluated based on LVC’s ability to recuperate funding for project debt repayment and the effectiveness of facilitating new development surrounding a station stop. A secondary research objective of this paper is an analysis of the legislation in each city, that allows for different land value capture mechanisms to be implemented. In 2009, the United Kingdom’s Federal government passed the Business Rate Supplement Act, whereas, the State of New York passed the Municipal Redevelopment Law in 1984. The Ontario legislature gave Royal Assent to the Tax Increment Financing Act in 2006, but the province has yet to implement regulations for the legislation, rendering the legislation unusable. Through first person interviews I discover two potential reasons why Ontario’s provincial cabinet never implemented regulations for Ontario’s Tax Increment Financing Act (2006). My findings indicate that the Province of Ontario was unwilling to share revenue from the Education Tax Increment during the 2008 recession. Secondly, there was a lack of bureaucratic will to implement regulations for the Tax Increment Financing Act (2006) due to a change in Ministerial leadership. It is determined that the legislation, or lack thereof, is the greatest determinant if a value capture policy will be successful in capturing any increase in land value.