As vehicles become more fuel-efficient and overall levels of travel stagnate in response to increases in fuel prices, conventional sources of revenue for transportation finance such as taxes on motor fuels have been put under increasing pressure. One potential alternative as a source of revenue is a set of policies collectively referred to as value capture policies. In contrast to fuel taxes and other instruments that impose charges on users of transportation networks, value capture policies seek to generate revenue by extracting a portion of the gains in the value of land that result from improvements to transportation networks. In this report we identify a set of eight policies that contain elements of the value capture approach. These policies include land value taxes, tax increment financing, special assessments, transportation utility fees, development impact fees, negotiated exactions, joint development, and air rights. We evaluate each of the policies according to four criteria: 1) efficiency, which relates to how well the policies allocate scarce resources, 2) equity, which describes the fairness of resource allocation among different strata of society, 3) sustainability, which refers to the ability of the policy to serve as an adequate, reliable source of transportation revenue, and 4) feasibility, which refers to the degree of political and administrative difficulty associated with each policy. Since these policies are targeted toward use at the state and local level in Minnesota, we conclude by examining some legal and administrative issues related to the implementation of each policy with special reference to Minnesota.

Large public investments in transportation infrastructure-such as a new freeway interchange or transit station-can increase the value of adjacent private land, sometimes substantially. Capturing the value of this benefit through various tools is gaining interest as a finance mechanism for infrastructure investments. But many questions remain: Does "value capture" promote or hinder economic development? How does it affect different segments of society? Is the revenue substantial, stable, or predictable? How feasible is adoption and implementation? To answer these and other questions, the Minnesota Legislature appropriated funding to the University of Minnesota's Center for Transportation Studies in 2008 to study the public policy implications of value capture. No previous research has systematically compiled and analyzed the full gamut of policy tools that may be used for value capture. This document summarizes the findings from that study.