April 10, 2015

OLR Report Highlights New Transportation Financing Method

As the cost of developing and maintaining highways, bridges, rail lines, ports, and other transportation infrastructure mounts, municipalities, counties, and states are looking for new ways to finance this infrastructure without busting their budgets. Traditionally, government financed transportation and other public infrastructure by issuing bonds and other debt. But the cost of meeting other pressing needs, like education and health, reduce government’s capacity to incur long-term debt.

This fiscal strait partially explains why governments are looking for other financing methods, such as public-private partnerships and land value recapture (LVC), which is highlighted in a recent OLR report (2015-R-0101).  As the report explains, LVC captures some of the increase in value that accrues to property near a transit facility by converting it into contributions, taxes, or fees. The report goes on to explain how LVC methods capture value and the challenges they face.