President Trump is turning to Value Capture, to Decide, Which Transit Projects are Awarded Funding.

The Trump Infrastructure Plan Just Might Have One Good Idea for Cities

Donald Trump is no friend to mass transit. But tucked away in the 55-page infrastructure plan released on Monday is an intriguing idea for America's forthcoming subways and light rails, should the administration decide to fund them at all: A demand that all new transit use some form of value capture.

From article, (Donald Trump is no friend to mass transit. But tucked away in the 55-page infrastructure planreleased on Monday is an intriguing idea for America’s forthcoming subways and light rails, should the administration decide to fund them at all: A demand that all new transit use some form of value capture.

Under the proposal, any city that wants federal money must show that it will collect some of the property value gains that accrue to plots along the new line, and use those proceeds to finance the project. There are lots of different technical ways to do this (with boring names like “tax-increment financing district”), but each of them is grounded in a fundamental expectation: Transit is supposed to make the land it touches more expensive.

This forces transit planners to think as hard about real estate development as getting people from place to place, and not always for the better. Many streetcar projects, for example, are rather transparently intended to spur apartment construction, rather than move people, and their abysmal ridership statistics show the peril of that approach. Relatedly, value capture proponents often oppose adding transit to neighborhoods that are already built out, even if ridership would be high.

The Trump administration wants to make the 5309 Capital Investment Grants, a program run out of the Federal Transit Administration, conditional on value capture. CIG, which includes the popular transit funding grant New Starts, has been responsible for funding virtually every new transit project in the country, including the Second Avenue Subway. In many cases, CIG funding is indispensable: Seattle received $830 million from CIG for its $1.95 billion University Link extension, a popular light rail project in the rare city where fewer people are driving to work alone.

Requiring transit planners to recoup real estate gains would dramatically change the selection, viability, and influence of these multibillion-dollar endeavors.

Capturing value from development is above all a political challenge. If a planner commits to boosting property values, she is laying out two potential scenarios. One option: The buildings around the new stations don’t change, and home values, propery taxes (and rents) go up. That’s not a good result when so many residents face daunting rent burdens. Otherwise, the city commits to up-zoning the area around the new stations, raising property values through the construction of larger buildings without necessarily having rents rise. That’s not an easy sell for homeowners who want to have their cake (an unchanging neighborhood) and eat it too (a convenient mass transit link). 

Ultimately, a requirement that new transit include value capture mechanisms would, I think, effectively demand coordination between transit and city planners, and could all but require larger buildings around stations.)

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