Using Value Capture to Help Deliver Major Land Transport Infrastructure

This paper sets out the UDIA’s position with regard to value capture, and answers the questions posed by the Commonwealth’s discussion paper, Using Value Capture to Help Deliver Major Land Transport Infrastructure.

UDIA has the following policy position on “value capture”:

  1. UDIA supports the concept of “value capture” where it accelerates Government investment for major
    land transport infrastructure based on the criteria outlined below.
  2. The following principles must be considered in designing a value capture mechanism:
    1. additional value has been generated through Government investment that increases the
      capacity for uses;
    2. value is captured from all land owners only when and where it is generated;
    3. the proportion of value captured does not diminish the ability for value to be realised;
    4. value cannot be captured after it has already been realised, not retrospectively; and
    5. value is not captured in full “up-front”.
  3. “Value Capture” is not:
    1. an upfront tax, levy or charge for general infrastructure funding;
    2. pure “planning gain” (betterment tax). “Value Capture” is separate in concept and implementation from new taxes, charges and levies; or
    3. a mechanism to fund major trunk and social infrastructure. This is a clear responsibility for government and should always be funded through general revenue.
  4. UDIA’s preferred value capture mechanisms are indirect, including:
    1. Tax Increment Financing – using future tax receipts growth, from the incremental increase in property values, in a declared area, as a result of increased amenity brought about by new public infrastructure; or
    2. Government Owned Lands – where Government has acquired land, or already owns land, that benefits from new infrastructure investment and sells the land that is surplus to that required for the infrastructure for development, at a higher price due to the increased amenity that has or will be delivered. Governments should also use the value of infrastructure
      they have already built to fund new infrastructure, through asset recycling; or
    3. Private Infrastructure Delivery Agreements – where the Government enters transparent development agreements, on government land, with the private sector, in exchange for the developer partially or fully funding and delivering public infrastructure.
  5. If the Commonwealth seeks to capture the uplift in value:
    1. this must be done through a mechanism like a transparent City Deal, in order to influence or control land use planning where new major land transport infrastructure is being built;
    2. a rigorous and robust valuation methodology must be developed, in consultation with industry and stakeholders, to ensure that any increases in property prices, unrelated to the infrastructure is netted out; and
    3. any value captured must be offset by any existing State or Regional infrastructure contributions