What is value capture?

value capture is a special strategy in public financing, which focuses on situations where the market value of private land is strengthened by the development of public land in this area. If this type of phenomenon occurs, local jurisdiction may impose a certain type of change of taxes from real estate, fees or other types of improvements that allow jurisdiction to benefit or capture any of this increased value. Although the capture of the value may be complete, which means that jurisdiction regulates taxes or fees plans to obtain control of all increases, this approach usually includes ensuring part of the newly created value leaving private land with at least some other advantage.

In order to capture the value, it is necessary to prove that the use of public land has actually increased the value of private soil. Public soil, which is in the general vicinity of private soilic impact on the value of this private soil. It can come in the form of creating a new road systemThe construction of schools or any other number of projects that increase the appropriate environment. If the market activity does not miss the fact that there has been an increase in value, it is not possible to engage in value capture, because there is no other value to claim.

As far as urban planning is concerned, it can be a useful tool. Municipalities can try to create a reasonable relationship between private and public land holdings as a means of launching renewal in a part of the city that has become less desirable. Many cities use this approach as a means of revitalizing the center of the center. By using development projects that help increase the suitability of the area, private owners are able to significantly sell their shares that people and businesses will start to renew in this area. Within the capture of the value, the municipality benefits from the ability to raise taxes in some way, while leaving part of the increase in the hands of the handsTels of land. As a result, all parties benefit from agreement, both in terms of market value and in terms of increased economic opportunities in this area.

It is possible to engage in the value of the value that is not in the best interest of all parties involved. If the capture is so complete that all incentives for possession of a private property are removed, the attraction of new owners and businesses can be shown impossible. At this point, real estate values ​​may fall rather than increase. For this reason, municipalities often try to achieve a balance between how much value can be captured without derailment of the whole process.